Spring is the time when the work in the plot gardens continues full steam. Sometimes called the GDPRS (Family Land Gardens Surrounded by a Grid) become the object of desire for blocks locked in, and those who use them, who for various reasons do not want or cannot take care of them, would gladly sell the right to use them. In the following text, we provide information on the tax consequences of such transactions.
The question of the possibility of using the land cucumber is governed by the Family Garden Act of 13 December 2013. In addition to the definition of land and land plot, we find the term “right to land”. As per content Article 2(2) This law is a legal title which entitles the use of the land under the Law. This means that land forming part of the family plot gardens is not the property of the person entitled to use the plot.
The plot is therefore not the owner of the plot, but only the beneficiary of the Act. Based on Article 27 The family plot gardens act establishes the right to land under the land lease agreement. The parcel as its user, on the other hand, owns plantings, equipment and facilities (according to Article 30(2) Act on Family Land Gardens). Thus, the user owns the items located in the land garden, as confirmed by the NSA in its judgment of 10 June 2009, reference no. II FSK 265/08.
According to Article 41 Act on the family plot gardens of a plot by contract may transfer the rights and obligations resulting from the right to land to a full-time natural person (transfer of rights to land). The Agreement shall be concluded in writing with notarially certified signatures. Where such an agreement is concluded, the parcel shall not sell the land but merely dispose of the ownership of the plantings, offices and other facilities referred to above.
On the basis of this type of transaction, it was doubtful whether such transfer gives rise to income tax effects on the part of the person obtaining income from the transfer and, if so, what would be the appropriate tax base.
Part of the tax authorities presented the view that the revenue obtained should be classified as a source referred to in Article 10(1)(7) Act of 26 July 1991 on the income tax on natural persons (Dz. U. of 2000 No 14, item 176 amended as follows: ‘PDoFizU’), i.e. as revenue from the sale of property rights.
However, taxpayers mostly argued that the right basis is Article 10(1)(8) point (d) of the PDoFizU, i.e. as revenue from the sale of goods for payment.
A significant difference is that, where such a transaction is considered to be an income from the sale of property rights, it is necessary to demonstrate such income in the tax return and to establish tax on a tax scale.
In the event that the sale in question is considered to constitute the basis for the income for the sale of goods, it can be concluded that the taxable person will be obliged to establish the tax only if, between the construction of the facility, the construction of the plant, the plantings and their sale, less than half a year has passed (after that time, these are the items used so their sales are not taxed).
Eventually, the dispute found the final in the Supreme Administrative Court, which he issued in this respect two substantive judgments, i.e. NSA judgment of 17 May 2018 II FSK 1242/16 and the NSA judgment of the day 6 April 2017 II FSK 3660/16.
According to the court’s position presented in these decisions, the remuneration of the sale of plantings, facilities and facilities on the plot, made or acquired from the plot’s financial resources, is eligible as revenue from the source specified in Article 10(1)(8) point (d) of the Personal Income Tax Act, i.e. revenue from the sale of goods for consideration.
This way of interpreting the sale of the property of the plot means that the parcel transferring the right to a plot to another person will have to pay income tax on individuals only if it makes the aforementioned transfer before the end of the month in which the acquisition took place (construction, planting).
To date, the sale of land rights is worth planning for the moment after 6 months since the construction of the gazebo or planting of plants, which will avoid income tax. From the point of view of the tax on civil law, the purchaser must expect to pay the PCC at the rate. 2%.
Author
Leszek Dutkiewicz, partner of Russell Bedford Poland. Associated with the company from 2011. Director of RBP office in Katowice. In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services.
He specializes in tax and economic law, primarily in international tax law, tax proceedings, VAT and transaction prices. Author of a publication on tax, civil and international law issues. Lecturer in tax law training. He has legal education, in 2008 graduated from the Faculty of Law and Administration of the Jagiellonian University.