Taxation of sale of immovable property with tax on civil law activities

The tax on the sale of real estate may take two forms, depending on whether the sale of the property will be carried out in an incidental or organised and continuous manner.

In the case of the incidental sale of immovable property, it is the subject of a tax on civil law activities, since such disposal by non-commercial persons is, in principle, carried out within the framework of a standardised real estate exchange operation for certain cash (under an agreement in which the value of the transferred immovable property corresponds to the value of the price to be paid, i.e.

the sale contract referred to in the Article 535 and other laws of 23 April 1964 Civil Code 1 , hereafter: k.c., also in the framework of the abolition of co-ownership which has been regulated in Article 210 and other provisions of the C.C., with subsidies or repayments) or for certain other assets, including immovable property (under an agreement in which the value of the property being disposed of corresponds to the value of another non-monetary mutual benefit, i.e.

the swap agreement referred to in Article 603(604) k.c., life contracts — Article 908 and other provisions, as well as in the framework of the free abolition of co-ownership, but without payment and subsidies). VAT rules for the sale of real estate are different.

1. Introduction

Act of 9 September 2000 on tax on civil law acts 2 (hereinafter: u.p.c.c.) indicates in its content as the source of the tax obligation a specific civil act, in this case a specific contract named, such as the sale, replacement, donation (in the part concerning the acquisition by a gifted debt and burden or donor's obligations), life, inheritance and abolition of co-ownership, and also indicates the rate of tax to be applied to the calculation of the taxpayer's specific liability.

Therefore, since the civil law activity is not mentioned in u.p.c., it means that it is not taxed on the PCC. However, it should be borne in mind that the qualification of a given activity as a taxed PCC is determined by its content 3 , and in particular its essential elements.

Therefore, it can be concluded that, from the point of view of tax technology, u.p.c.c. in the most simple way possible, addressed to a non-professional taxable person, indicates the type of activity, the rate of tax and the method of calculation and the payment to the competent tax authority.

All the more so, that PCC is a direct tax, in which the entity liable to pay it is at the same time the entity actually charged the economic burden of that tax.

It should also be noted that according to Article 16 Act on 13 November 2003 on the income of local government units 4 (hereinafter: u.d.j.s.t.), proceeds from PCC in the part concerning the transfer of property are transferred to the municipality of the location of the property concerned.

From the perspective of the above-mentioned basic PCC tax rules, the rules concerning the tax on the sale of real estate with VAT are completely different.

Article 1(2) Act on 11 March 2004 on tax on goods and services 5 (hereinafter: (u) stipulates that VAT constitutes the revenue of the State budget, so it is in the interest of the State to create conditions for the pursuit of business, since it is the entities operating it that are taxable persons on goods and services, and VAT is one from the main sources of funding for the state budget.

In the case of real estate, the subject of VAT is the payment of their supply, while u.p.c.c. is based on a terminology grid derived from the tax itself.

Thus, in the case of VAT due to the state budget, the subject of taxation is not the incidental disposal of immovable property by non-economic persons, as in the case of PCC, the place of immovable property due to the municipality, and carried out in an organised and continuous manner, for commercial purposes, by producers, traders, service providers, as well as persons engaged in free trades, business activity, which in this case involves the payment of the right to dispose of immovable property as the owner.

2. Definition of real estate

The definition of real estate is found in the regulations of k.c. Subject to Article 46 that code, the property is part of the earth's surface constituting a separate property (grounds) as well as buildings permanently linked to the ground or parts of such buildings, if, under specific provisions, they constitute a separate property.

Thus, the legislator in a closed catalogue of substantive rights, of fundamental importance to the whole system of law because of their absolute effectiveness 6 , defines properties as properties: land, buildings, premises 7 .

The ground itself, in order to be the object of a separate property, or land property, must be geodetically separated as an accounting plot.

section 9 section 1 Regulation implementing the Act of 17 May 1989 Geodesic and Cartographic Laws 8 defines an accounting parcel as a continuous area of land, legally homogeneous, separated from the environment by border lines.

These lines, placed on the registration map, form the basis of the spatial indication of the ground – the land of registration as the object of a separate property 9 . Only such ground, understood as one or more registration parcels, may be included in the perpetual book by indicating a specific plot in section I-About of that book.

A specific perpetual book can be conducted for one or more registration plots. All registration parcels covered one The perpetual book must be the same in terms of their legal status, which means that the legal status disclosed in the perpetual book is the same for all the land covered by that eternal book, e.g.

the owner of those parcels or their burden.

It should be stressed that for the purposes of tax law, the uniformity of perpetual books does not always apply fully, as the tax-related circumstances will be, for example, the fact that the plot is built or even part of it, which may result in different taxes on the disposal of individual parcels from one – the same perpetual book or even different taxes on the disposal of part of the parcel concerned, after it has been divided in advance, or even different taxes on the disposal one, undivided plot of land.

According to Article 47 k.c. the component of the thing cannot be a separate object of property and other rights in kind. However, according to Article 48 k.c. the components of the land include, in particular, buildings which are permanently connected with the land. This means that every time (i.e.

every time) the owner of the land is at the same time the owner of the building on this ground, which is a component of the land – that is, the building is then such a part that cannot be detached from the ground without a significant change or damage to both the ground and the building itself.

Buildings within the meaning of Article 3(2) Act on 7 July 1994 Construction law 10 (Further: p.b.) is a building which is permanently connected with the ground, separated from the space by building partitions, which also has foundations and roofs, while a building structure within the meaning of Article 3(1) p.b.

there is a building, building or small architecture, together with installations ensuring that the facility can be used as intended, built using construction products.

However, there are exceptions to the rule that each landowner is at the same time the owner of the building, i.e. rules of superficies solo cedit. The most common case is a separate property of the building on land dedicated to perpetual use.

According to Article 235 k.c., buildings erected by a perpetual user on land dedicated to perpetual use are his property. The same applies to buildings which the perpetual user acquired when concluding a land-use contract. Consistently owned by a perpetual user is a perpetual use right.

In such a situation, the owner of the land is the State Treasury or the local government unit, while the perpetual user of the land and the owner of the land is a perpetual user.

However, it should be stressed that in such a situation, the separate property of the building is a right relating to the use of perpetual land, i.e. both rights (the right to use perpetual land and the property of the building) must be entitled to one person.

However, there are cases where there is no identity between the rights to land and the property of the building – this is, for example, due to the operation of the decree of 26 October 1945 about ownership and use of land in the area of Warsaw 11 , when the land is owned by the city of Warsaw, while the property of the building is owned by a person who is entitled only by this decree of law and claim to land.

Part of the building can be itself traded, i.e. a stand-alone property, but the existing rules allow such a situation only in relation to independent premises. Article 2(1) Act on 24 June 1994 ownership of premises 12 provides that independent dwellings, as well as other premises, may constitute separate properties.

In addition, section 2 This Article specifies that a self-contained housing facility is a separate house within the building or a group of chambers for permanent residence of people who, together with auxiliary rooms, serve to meet their housing needs.

This provision also applies to independent premises used for purposes other than housing.

While the objective fact of the autonomy of a given premises is stated by the mayor, the mayor, the mayor of the city in the form of an appropriate certificate, a condition which is final and necessary for the recognition that a certain part of the building in the form of a dwelling may be treated as a stand-alone property by the District Court - the Faculty of Perpetual Books of a separate perpetual book for such a separate premises, most often on the basis of a decision of the Court or documented by a notarial act of a declaration or agreement to establish a separate property.

Only after the establishment of a separate land register for such a premises, the premises under civil law are themselves traded and can be further disposed of.

According to Article 232(1) k.c., land owned by the State Treasury or local government units or their associations may be transferred to perpetual use, the substance of which is donated Article 233 that code, which states that, within the limits laid down by the laws and principles of social coexistence and by the land-use agreement, the perpetual user may use the land excluding other persons; within the same limits, the perpetual user may dispose by law.

Therefore, the content of the perpetual use right is similar to that expressed in Article 140 k.c. the content of the property right, with the difference, of course, that the perpetual user is limited by an agreement to dedicate land to perpetual use.

The consequence of this is expressed in Article 234(237) the code in question provides that the transfer of ownership rules shall apply mutatis mutandis to both land-use and land-use. In addition, according to Article 235 k.c.

buildings and other equipment erected or built on land dedicated to perpetual use are the property of a perpetual user, the property of buildings and equipment on the used land being the right of perpetual use.

In addition to the property and the right of perpetual use, the subject of the sale of which the rules applicable to the sale of the property are the cooperative property rights to the premises and the cooperative rights to the single-family house in the housing cooperative.

According to Article 172(1) Act on 15 December 2000 about housing cooperatives 13 , cooperative property law is a negotiable law; it is a limited right of property, which is therefore not property or perpetual use, as regulated in the book second k.c.

the law, which is absolute and therefore is effective erga omnes, therefore from an economic and tax point of view, this right is treated as a property in principle.

Especially that according to the content Article 1(3) Act on 6 July 1982 on perpetual books and mortgages 14 , Perpetual books may also be kept in order to determine the legal status of the cooperative property right to the premises.

2. Definition of disposal within the meaning of civil and tax law

Civil law as a divestiture understands the transfer of a certain law from one entity to another by means of a specific contract, i.e.

such (conventional) activity, legally relevant, under civil law, which is governed by standards of civil law and gives rise to certain powers and obligations of its parties, in the present case the passage of a certain law from one entity for other 15 .

An important feature of Polish law regarding contracts requiring the transfer of a specific law from one entity for another is its binding-responsible effect, which according to Article 155 k.c.

is that the contract of sale, replacement, donation or other contract requiring the transfer of a particular right shall transfer that right to the purchaser, unless otherwise provided in the special provision or otherwise decided by the parties.

Therefore, a specific agreement may, in accordance with the wishes of the parties, have, at the time of its conclusion, such a binding-responsible effect as a transfer of a specific right from the seller to the buyer.

However, the parties to this agreement may decide that only a further act of regulation will result in the transfer of a specific right from the seller to the buyer – in the performance of the previously existing obligation to transfer that right.

In such a situation, for example, the sale agreement will have a purely compulsory effect, and the material effect of the transfer of the law will be the result of the conclusion of another contract, the so-called regulation, which is also important for the legal consequences of tax.

The definition of divestment at the level of tax law concerns the transfer of a certain right from the seller to the buyer (u.p.c.) or the transfer of the right to the regulation by goods like the owner (u.p.t.u.) or the conclusion of a named civil law contract, e.g.

a sale agreement, provided that it is a contract having material effect, i.e. a transfer of a certain right to the buyer. In the case of both VAT and PCC, it will be important to change the entities of a specific law, namely the passage of a given right, rather than merely a commitment to such a change.

However, u.p.c.c. as the scope of taxation indicates, among other things, civil law acts in the form of contracts listed in that Act, stating that the tax obligation (i.e.

defined in the Act of 29 August 1997 – Tax Ordinance 16 (hereafter: (o) and resulting from tax laws, the unconcrete obligation of a compulsory cash benefit in connection with the occurrence of an event specified in those laws) arises when a civil action is carried out (Article 3(1)(1)) u.p.c.c.), however, this law in Article 3(2) clearly indicates that if the conclusion of the transferor’s contract is carried out in the performance of an obligation resulting from a previously concluded contract requiring the transfer of ownership, the tax liability arises from the transferor’s contract.

This means that, on tax grounds within the meaning of that Law, the transfer of a given right from an entity to an entity is understood as a divestiture, rather than the conclusion of a contract which only obliges that transfer.

On the other hand, the U.P.U., which regulates taxation on goods and services, inter alia, of the paid supply of goods, constitutes in Article 7(1), that the delivery of goods means the transfer of the right to dispose of goods (i.e. items and therefore properties), as the owner. Thus, u.p.t.u.

clearly indicates not only the transfer of a given right, but also the consequence of that transfer, and also the type of transfer of the right – which should give the buyer the full enjoyment of the goods – like the owner – which in the sense of Article 140 k.c.

means the ability to use things except for other persons, to take advantage and income from things, and the right to dispose of things.

4. Taxing on civil law acts

The principal majority of academic tax lecturers 17 includes the PCC as regards the taxation of non-professional acquisition of real estate as a group of so-called turnover taxes, the substance of which is the fact that the mere performance of a legal act (the effect of which is indicated above) is the basis for the tax obligation and, consequently, the tax liability.

The PCC Act indicates that the civil-law transactions exhaustively listed in this Act[18] are subject to tax, which, for the purposes of this study, include, inter alia, a sale agreement, a donation agreement, but only in the part concerning the acquisition by a gifted debt and burden or donor's obligations, and, furthermore, life contracts, inheritance agreements and joint ownership agreements, but only in the part concerning repayments or subsidies.

Basic feature of the benefits provided under the contracts indicated, which are reciprocal agreements, i.e.

those in which the benefits one of the parties are essentially equivalent to the benefit the other parties are equivalent, which results in the benefit resulting from the performance of the civil act in question being exercised on both sides of the contract.

If so, the legislator has an axiological and equitable basis for charging such activities with a tax, the rates of which do not seem excessive and which historically are continuously reduced. (...). According to Article 10 u.p.c.c.

taxpayers are obliged, without calling the tax authority, to make a declaration on PCC and to calculate and pay the tax within the time limit 14 days from the date of the tax obligation (i.e. 14 days from the date of conclusion of the contract concerned), except where the tax is collected by the payer. Article 8 o.p.

provides that the payer is a natural person, a legal person or an entity not having legal personality, required by tax law to calculate and collect the tax from the taxable person and to pay it in due time to the tax authority.

Article 7(1) Act on 14 February 1991 Notary Law 19 ((b) specify that the notary as a payer collects taxes on the basis of separate provisions. In turn Article 10 u.p.c.c.

states that notaries are payers of the tax on civil law acts carried out in the form of a notarial act, which are obliged to make civil law acts subject to prior payment of the tax – which in practice results in full collection by notaries of this tax, of course, if the parties submit statements to the notarial act that take account of reliable data on the value of the activity, as the notary has no basis for verifying them themselves.

Therefore Article 12(3c) u.p.c.c. states that the payers are not liable for the tax not collected if they show no fault in not collecting that tax.

In accordance with the provisions of the Regulation of the Minister of Finance from 25 November 2015 on how to collect and refund tax on civil acts 20 , the payers (in this case notaries) specify in the written notarial acts the legal basis for the collection of the tax and the method of its calculation and, in the case of non-collection, the legal basis for its non-collection.

Therefore, notaries according to section 4 This regulation, but also according to Article 80(2) B.C., when drawing up notarial acts, they shall give the necessary instructions in this respect, including the effects provided for in the Act on 10 September 1999 Tax Penal Code 21 (hereinafter: k.k.s.) if the truth is false or withheld, the tax is likely to be depreciated, with the right to determine, increase or decrease the value of the subject matter of the civil act, as well as the obligation on the taxpayer to pay the tax arrears together with interest for the delay, in the event that the tax authority determines or increases the value of the subject matter of the civil act.

To the extent indicated, the notary instructs in particular the content Article 56 that code, according to which a taxable person who submits a declaration or declaration to another authorised authority or to a payer gives falsely or conceals the truth or fails to comply with the obligation to notify a change to the data covered by it and thereby exposes the tax to depletion, is liable to a fine or imprisonment or both.

The notary shall pay the tax collected to the account of the tax authority responsible for the seat of the notarial office within the time limit until seventh on the day of the month following the month in which the tax was collected, and forward within that period in electronic form a declaration of the amount of tax collected and paid by the payer, including information on the amount of tax due to the individual municipalities together with copies of notarial acts documenting the activities covered by the PCC or exempt from it.

4.1. Taxation of PCC sales and real estate swaps

Article 1(1)(1)) u.p.c.c. states that PCC is subject, inter alia, to civil law acts in the form of sales and exchange of property and property rights. Article 535(1) k.c.

specifies that through the sale agreement the seller undertakes to transfer the goods to the buyer and to give him the item, and the buyer undertakes to collect and pay the seller the price, while Article 603 k.c.

provides that by means of a swap agreement each party undertakes to transfer to second the ownership of the item in exchange for the commitment to transfer the property of another item.

In the context of the above-mentioned double effect, the obligation-to-rule measures should be based on the content of the aforementioned Article 155 k.c., but also for the binding-responsible effect Article 1052(1) k.c., according to which the sale, replacement, donation or other contract requiring the sale of the inheritance (which may include immovable property, perpetual use rights or cooperative property rights) transfers the inheritance to the purchaser unless otherwise decided by the parties.

Consequently, and taking into account the above mentioned Article 3(2) u.p.c.c., the conclusion of the sales and replacement contracts indicated will constitute a disposal of the subject matter of the sale or exchange in question and, therefore, will result in a tax obligation for PCC when the civil act is carried out.

The normative basis for making a given delivery on both sides of this activity, the so-called causa, is causa obligandi a.k.a.

acquirendi 22 , which means that the benefit one of the parties to this activity are justified by the benefit second parties to this activity 23 , which in turn results in a tax base in the case of such activities.

According to Article 6(1)(1)) u.p.c.c., the basis of the PCC for the sale contract is the market value (i.e. the financial surrogate paid for the item or right) of the property or property rights, which is the value, according to Article 6(2) u.p.c.c.

shall be determined on the basis of the average prices applied to trade in goods of the same kind and species, taking into account their location, state and degree of consumption, and in trade in property rights of the same kind, on the date of that activity, without deduction of debts and burdens.

In practice, the determination of the market value of the subject-matter of the activity faces a number of problems, but it seems that the drawing up of a property surveyor to determine the value of a given object or right, particularly in the case of objects of higher value, is a highly recommended solution, in particular in view of the content cited Article 56 k.k.s., especially in view of the fact that the costs of drawing up such an opera are not currently excessive.

Especially as it may appear that subsequent attempts by tax authorities to verify the value of a given item will not be justified in view of the fact that there is an official and impartial confirmation of the value of a given item drawn up for the moment of the civil act.

In turn the ban on the deduction of debts and burdens when determining the value of the subject matter of the activity from one of the parties may appear to be disputing because, in the event of the necessity of carrying out executions on the subject of a burden, the purchaser of such an object becomes obliged to pay (as a debtor in kind), i.e.

he obtains a pass card in the payment process.

This may result in the purchaser's acquisition of the object charged not only that it will not increase the buyer's assets or even constitute a surrogate paid for the object of the price, but that the buyer will lose the item as a result of the execution against the buyer limited to that particular object.

On the other hand, However, the parties to the public interest must be protected from the fictitious charge of the object being disposed of in order to reduce the tax base of PCC in order to pay that tax, but in a lower amount – which constitutes a ratio legis of such a regulation of the definition of the value of the object of the civil law.

On the other hand, Article 6(1)(2)) u.p.c.c. specifies that the taxable amount for the swap agreement is the market value of the goods or property rights on which the higher tax is due (which, in the public interest, is fully justified).

The exception is that the replacement of a dwelling which constitutes a separate property or a property of a cooperative right to a dwelling takes place on the same premises or right to a dwelling – then the basis for the taxation of such a replacement is the difference in the market values of the replaced premises or the rights to the premises – which is a strong justification for railways, since such replacements are most often intended to improve housing conditions, i.e.

to meet the most basic and necessary needs of citizens.

The rate of PCC on sales contracts and conversion was regulated in Article 7 u.p.c., according to which in the case of the sale of real estate, as well as the right of perpetual use and cooperative property rights, it is equal to 2% the market value of the object of the sale, and the rate of PCC on the contract of conversion, when transferring property ownership, perpetual use rights and cooperative ownership rights, shall be equal to 2% the basis of this tax.

4.2. Taxation of property donations

According to Article 888 k.c., through the donation agreement, the donor undertakes to provide free benefits to the gifted at the expense of his property.

A standard basis for the donor's benefit is the so-called causa donandi 24 , which is that the donor provides evidence to the recipient of his or her assets without any mutual benefit, therefore, in principle, the taxation of the donation is made through inheritance and donation tax 25 , resulting from the provisions of the Law of 28 July 1983 on inheritance and donation tax 26 (Further: u.p.s.d.).

In such a form, the proposed donation agreement is not a mutual agreement, which is also a source of tax consequences. If Article 1(1) u.p.s.d.

states that tax on inheritances and donations is subject to the acquisition by natural persons of property in the territory of the Republic of Poland and property rights exercised in the territory of the Republic of Poland, the title of, among others, donations, is u.p.c.c. worth.

1 provides that the PCC is subject to donation agreements, but in the part concerning the acquisition by the donated debts and liabilities or obligations of the donor.

The legislator does not point to the legal form of that takeover, so it may be an arbitrary form, which results in the change of the entity of those debts or burdens or obligations from the donor to the gifted, which usually takes place either by taking over the debt referred to in the legislation Article 519-525 k.c.

either by the accession of the recipient to the debt and then by releasing the donor from the debt.

Therefore, not a donation agreement, but a transfer by a gifted donor's debt or burden or liability is a part of the taxing of such a donation, PCC, because in that sense, the contract is more similar to those concluded under causa obligandi a.k.a.

acquirendi rather than causa donandi, since the royalty of such a donation is distorted by the provision of reciprocally donated debt or burden or liability to the donor, which brings such an agreement in economic consequences towards sale or conversion.

According to Article 6(1)(3)) u.p.c.c., the tax base shall, in the contract of such a donation, be the value of the debts and burdens or liabilities assumed by the recipient. It appears that, as the value of the debts and burdens indicated, all amounts needed to fully satisfy the creditor or creditors in respect of those charges, i.e.

covering not only the principal claims, but also the interest and costs incurred by the creditor for the investigation which are recoverable to him.

It should be noted that the sale by contract of a property donation burdened with limited rights in kind, including a mortgage, does not constitute a basis for taxing this divestment of PCC, since the buyer will, in fact, be obliged to pay because he becomes a debtor in kind, but becomes such a debtor under the law itself (ipso jure) rather than by a separate, specific legal act to take over the debts or burdens or liabilities of the donor (such an effect is not exercised by law) and therefore this act will not give rise to a PCC tax obligation.

This opinion was confirmed by the IRS in Katowice in the content published 5 January 2017 tax interpretation 27 , In which it was stated that: ‘The sole acquisition by the Applicant of the right of use of perpetual mortgaged property does not give rise to an obligation in the PCC, since the transfer by donation of the right of use of perpetual mortgaged property does not result in a transfer to the buyer of debts and liabilities or liabilities of the donor which were the subject of the mortgage, with which u.p.c.c.

binds a tax liability. There is also no basis for a tax obligation on civil law in the case of ground service, transmission and the obligation to maintain the roads and facilities needed to perform these services. These burdens are of a factual nature.

In view of the future event and the legal provisions set out above, it should be stated that the right of perpetual use received by the Applicant by means of a donation agreement will not be subject to PCC in respect of mortgages laid down in this law, land-handling services, transport services and the obligation to maintain the roads and facilities necessary to perform the service obligations imposed on the right to use perpetual property.

Both the mortgages, securing the repayment of the loans of the applicant's husband, as well as the ground and transmission services established under the perpetual use law, are so-called limited rights in kind and charge the property rather than the Applicant."

On the other hand, the taxed PCC will be a real estate donation charged with life imprisonment, which is due to the content Article 910(2) k.c., according to which, in the event of the sale of a property subject to a life sentence, the purchaser is also personally liable for the benefits covered by that right.

Thus, unless the acquirer obtains the property by way of a donation of the property of a material debtor does not give him an obligation to pay the PCC, the acquirer obtains the property by way of a donation of the personal attribute of the debtor will create an obligation on his side to pay the PCC, as confirmed by the Director of National Tax Information in an individual interpretation from 27 May 2019 28 , in which he stated that: “By entering into a life sentence real estate donation contract, which he was legally endowed with, he was responsible for the benefits related to the life sentence contract, thereby taking over the obligations that the donor has in connection with the life sentence contract (which he has concluded with the life sentence).

This means that the Article 1(1)(1) point (d) of the u.p.c.c. applies directly to the case. The conclusion of the donation agreement described in the proposal will therefore be subject to PCC taxation.”

4.3. Taxation of a life contract

According to Article 1(1)(1)) (e) u.p.c. to the tax on civil acts shall be subject to life imprisonment contracts. A life contract is a contract named, regulated in Article 908-916 k.c.

and it is that, in exchange for the transfer of property, the purchaser undertakes to provide the seller for life, in particular by accepting the seller as a householder, by providing him with food, clothing, assistance and care, and by providing the seller with his own expense.

From an economic point of view, the life contract is also close to the contracts concluded under causa obligandi a.k.a. acquirendi rather than causa donandi, as the benefit of transferring property to the buyer corresponds to the buyer’s care of the seller.

From the perspective of PCC, the taxation of this contract is similar to the taxation of sales, therefore it is no doubt applicable to this agreement already quoted Article 6(2) u.p.c.c., concerning the determination of the market value of the object. In addition, Article 7(1)(2)) (a) u.p.c.

indicates that the life contract is subject to the same rate as the sale of the property, i.e. the amount 2% the market value of the property according to Article 6(1)(4)) u.p.c.c.

On the other hand, the value of the mutual acquisition of real estate vis-à-vis the seller is not subject to PCC taxation – it would be very difficult to determine the value of such a benefit.

However, there is no doubt that the life contract is a paid and reciprocal contract, that is to say, one under which the benefit one of the parties are equivalent to the benefit second pages.

4.4. Derivatives or joint ownership agreements, in the property part

According to Article 195 k.c. ownership of the same thing may be indivisible to several persons (share ownership). In such a situation, according to Article 206 k.c., each of the co-owners is entitled to share and use the common property in such a way as can be reconciled with the co-ownership and use of the goods by the other co-owners.

This condition is extremely conflict-ogenic.

Therefore, according to Article 210(1) k.c., each of the co-owners may demand the abolition of co-ownership, which can be accomplished by dividing the common thing, while a thing which cannot be divided may be granted according to the circumstances one of co-owners with the obligation to repay the others or simply sold, and the funds obtained from the sale shared between existing co-owners.

Therefore, for the purposes of the issues discussed, the agreement between at least two co-owners who wish to end joint ownership either by dividing the physical object of joint ownership or by awarding the item of joint ownership one of co-owners with obligation to pay the others.

This abolition of co-ownership is therefore a paid contract under causa obligandi a.k.a. acquirendi rather than causa donandi.

According to Article 1035 k.c., if the inheritance is attributable to several heirs, the commonality of the inheritance and the succession shall be governed by the provisions on co-ownership in accordance with Title VIII of the Book. fourth k.c.

Consequently, the inheritance agreement is de facto an agreement to abolish joint ownership, but in respect of assets acquired through inheritance.

Article 1(1)(1)) point (f) of u.p.c. provides that inheritance and joint ownership agreements are subject to this tax, in the part concerning repayments or subsidies.

The payment is a cash benefit due one with co-owners, in order to equalize the value of the object which he received, which is less than the value of his share of joint ownership so far.

The reimbursement will be the cash benefit obtained by one of the co-owners in exchange for the divestment by that co-owner of his or her share of joint ownership.

Therefore, in the event of receipt under a co-ownership agreement or inheritance or surcharge agreement, the entity that received it will be required to pay the PCC, which in the case of the property is calculated at the rate 2% of the market value of the property (participation in its ownership) according to Article 7(1)(2)) point (a) of that Act.

The proper understanding of both the application of u.p.c. to inheritance and waiver agreements, as well as the grounds and principles of taxation to date, is difficult for both taxpayers and authorities applying u.p.c.

In the explanatory memorandum of the judgment of 22 March 2019 Provincial Administrative Court in Łódź 29 stated that the activity of the inheritance or abolition of joint ownership was taxable only because the contract fixed a repayment or surcharge. Therefore, whenever a surcharge or repayment appears in the content of a particular contract of the inheritance or abolition of co-ownership, it is appropriate to consider the taxation of such a PCC.

On the other hand, the problem arises in the context of the determination of the relationship between the amount of the repayment and the payment concerned and the market value of the goods or rights acquired above the value of the share in or in the decline of the share in the joint ownership of the division or the liquidation of the division.

The NSA replied to that question in the explanatory memorandum of the judgment of 1 March 2018 30 , stating that: ‘Under Article 1(1)(1)(f) and Article 6(1)(5) u.p.c.c.

shows that the tax base for the waiver agreement is the amount of repayment, defined as the market value of the goods or property rights acquired above the value of the share in the joint ownership rather than the value of the repayment, determined by the parties in the waiver agreement.

This would be a subjective — rather than objective — basis of taxation laid down by law’ (SA judgment of 12 October 2016, reference no. II FSK 2718/14, POP 2016, No 6, p. 577-578). Nor is it doubtful that the goal of a worthy one.

1 section 1 point 1 (f u.p.c.) the clarification “in the interest of repayments or subsidies” was to be subject to taxation only of joint ownership agreements (about the inheritance division) which result in payment of the assets for at least one of the sides. A contrario this provision results in that outside the scope of u.p.c.c.

there are these agreements to abolish joint ownership under which such repayments or subsidies are not provided for. Separately and not according to Article 1(1)(1) point (f) of u.p.c.c. should be established as the basis for the tax on PCC for the free abolition of joint ownership’ (judgment of the WSA in Gdańsk 26 June 2013 31 )”.

The free abolition of co-ownership and the unpaid inheritance division take place in the event of their implementation, but without equalising the possible loss that may arise in the property of either party; we are then dealing with an unpaid activity to which the provisions of u.p.c. are not applicable.c.

On the other hand, the development of the definition of remuneration under the agreements discussed can be found in the justification of the above-mentioned judgment of the WSA in Gdańsk from 26 June 2013, According to the Court of First Instance, ‘the abolition agreement may also be free of charge.

First of all, it should be stressed that the payment of civil law acts is related to obtaining by one of the parties to the legal relationship of a certain equivalent in relation to its performance. The element of reciprocity, a kind of reimbursement, is therefore important.

This equivalent, as rightly raised in the complaint, does not have to be expressed in money. [...] As a consequence, when the parties abolish co-ownership without equalising the possible loss that may arise in the assets of any of them, we are dealing with an unpaid activity to which the provisions of the Act do not apply.’

The above information concerning the taxation of the PCC of the inheritance or the abolition of co-ownership leads to the following consolidations: whenever an element of payment and repayment does not appear in a given contract, the provisions of u.p.c.c. do not apply to such contracts at all; it should be stressed that since u.p.c.c.

sets out an exhaustive list and exhaustively enumerates the civil-law transactions subject to that tax, that means that the act does not apply to joint or commercial property division agreements concluded between spouses or former spouses; such an agreement is not mentioned in u.p.c.c. and therefore does not apply to such contracts.

Whenever in a given contract the department of inheritance or abolition of co-ownership is referred to as surcharges or repayments, then u.p.c.c. will apply by charging the rate 2% the market value of the goods or rights acquired by the party concerned above its existing share of ownership or inheritance.

Unfortunately, the market needs make it necessary to conclude inheritance or waiver of co-ownership contracts, in which there are repayments or subsidies, but they do not represent the equivalent of the market value of the purchased goods or rights above the value of the share in the co-ownership or inheritance.

Things are even more complicated in the light of the rules that build the liability of the payer of this tax in the person of a notary.

In accordance with the provisions of B.C., the notary as a payer collects taxes on the basis of separate provisions (Article 7), and is also liable for damage caused in the performance of notarial activities under the conditions laid down in c.c., taking into account the particular care to which it is obliged in the performance of those activities (Article 49).

According to Article 50 B.C., the notary is responsible disciplinaryly for professional misconduct, including a manifest and gross insult to legal provisions, and in carrying out notarial acts it is obliged to ensure that the rights and legitimate interests of the parties and other persons for whom the act may have legal effects are properly safeguarded (Article 80), of course, he is obliged to guard the interests of the tax.

Especially that according to Article 81 The notary is obliged to refuse to carry out an act contrary to the law, including that which is contrary to the general tax law. one The exculpatory condition of the notary lists u.p.c.c.

in Article 10, according to which the payers are not liable for the tax not collected if they show no fault in not collecting that tax.

However, this provision cannot be interpreted without analysis Article 75 section 1 o.p., according to which, if a taxable person disputes the appropriateness of the payer’s tax collection or the amount of tax collected, he may apply for an excess of the tax.

Therefore, as regards the obligations of the payer when determining the amount of PCC, the cited provisions lead to clear conclusions, namely that the notary is obliged under his own responsibility, from his personal property to a proper calculation of PCC.

In the event of any doubts as to the taxation of an act to which PCC is notary, it appears necessary to obtain an individual tax interpretation. If it is not in the interests of the notary, the tax will be collected in the amount specified by the notary, all the more so since the taxpayer has the right to apply for overpayment.

Certainly, a situation which gives rise to doubts about the taxation of PCC is documented by a notarial act abolishing co-ownership or inheritance which provides for subsidies or repayments and which, however, do not constitute the market value of the object or right acquired by the taxpayer above the value of its share of the shared assets.

As indicated above, divisional agreements may be paid and free of charge. Article 1(1)(4)) u.p.s.d. provides that tax on inheritances and donations is subject to the acquisition by natural persons of goods or rights under the free abolition of joint ownership.

It should be stressed that, in the case of the taxation of the PCC division agreement, the rate is 2%, the tax on inheritances and donations in the case of activities between persons who do not have a relationship or affinity, the rate of such taxation may even reach 20% and not the surplus, the value of the entire shared object.

The question therefore arises as to when the abolition of co-ownership is paid and whether the payment or payment will always result in such payment of the division agreement that it will be fully taxed on PCC.

If the normative delivery motive, or the causa already quoted, is causa obligandi a.k.a. acquirendi, then the operation will be paid, and if it is causa donandi, then the operation will be free of charge because one the entity will only provide to another entity at the expense of its assets, i.e. without any equivalent, which may be the payment of a certain sum or the provision of another kind, but which shall amount to a certain ‘equivalent’ asset value.

For the sake of clarity, let us take an example. two natural persons who do not have any relationship or affinity are co-owners of the shares after 1/2 parts of each of them undeveloped land property in the area 2,000 m2, with market value 200,000 PLN.

These persons will abolish the joint ownership of this property without any repayments and subsidies through its physical breakdown into two plots with areas after 1,000 m2 each, of equal value 100,000 PLN Each.

Such abolition of co-ownership will not be taxed on PCC in the absence of any repayments or subsidies in this activity, but this will also not be taxed by inheritance and donation tax because it is a fully paid abolition of co-ownership, that is to say, one in which each party obtains a benefit equivalent to its share of shared property, but in this case neither repayment nor surcharge.

In a situation where these persons will abolish the shared ownership of the property in such a way that the entire property will receive one of the parties to the repayment agreement to the second pages in amount 100,000 PLN, This abolition of co-ownership will also not be taxed on inheritance tax and donations, since it is fully paid, with the benefit (equivalent) received by the party who disposes of its share of the property being a cash payment equal to the market value of the divested share of the joint ownership.

Such abolition of co-ownership will be taxed on PCC at the rate 2% from the market value of the object acquired above the buyer’s share of ownership of the property, i.e. at the rate 2% of amount 100,000 PLN. Both the economic and the tax consequences of this operation will then be compared with the sale, i.e. de facto the sale of a share of 1/2 part of the ownership of the property at a price corresponding to the market value of the object, i.e. 100,000 PLN.

On the other hand, it is worth considering how to tax the abolition of the shared ownership of the property in which it will receive the entire property one of the parties to the repayment agreement to the second pages, but not in amount 100,000 PLN, But 50,000 PLN.

With regard to the content of the justifications for the judgments cited, such an act should be taxed on PCC, but the rate of that tax should be calculated on the market value of the object acquired above the value of the share in the joint ownership, i.e. not on the amount of repayment of 50,000 PLN, but from 100,000 PLN.

However, it is important to consider whether this reasoning is correct.

On the civil law level, to which we refer, because the u.p.c.c. discussed explicitly refers to specific contracts governed by civil law, half of the object is acquired by the purchaser for equivalent value (payment of half the value of the object, or actually causa obligandi a.cquirendi), and second half of the object is acquired under the title of darmy (i.e., actually causa donandi), i.e. without any mutual benefit to the seller.

It is difficult for the author of this study to agree with the tax method of the above rulings for the abolition of the co-ownership of PCC, which in this case would be calculated from the hypothetical ‘market value’ of the object acquired above the share, since in such a case it would be a case of taxing PCC free of charge abolishing co-ownership at the rate of 2%, where, on the other hand, the free abolition of co-ownership should be taxed on inheritance tax and donations which, in the present case, must be counted at a rate of up to 20% from the value of the non-equivalent benefit as a darmy.

Taxation of such an activity in relation to the hypothetical ‘market’ value of the acquired object over participation in the double taxation avoidance principle one and the same activity two With taxes, especially in the face of such a large difference in rates, it offers the opportunity to attempt to circumvent tax law by de facto taxing interest in ownership of real estate by PCC rates (2%), not inheritance and donation tax rates (to 20%).

5. Application of u.p.t.u. and u.p.c.c. to property disposal taxation

The sale of movable property by the VAT taxable person in the course of his VAT-taxed activity is not subject to a civil-law tax; moreover, in the light of these rules, the indicated sale of movable property, even if it is exempt from VAT, is not subject to a civil-law tax either.

It is different in the case of the sale of immovable property and the right to use perpetual and cooperative rights – here it is essential to have the so-called effective VAT taxation of activities.

32 , which means that while the taxation of the VAT sales in question results in the absence of taxation of the PCC sales, it is already the exemption of the sales in question from VAT, for example on the basis of Article 43(1)(9)(43)(1)(10)(10a) U.P.T.U., but also not to cover the VAT sales concerned at all. Article 6(1) u.p.t.u.

will make it necessary to tax this sales of PCC.

The question therefore arises as to how to tax the sale of real estate, the part of which is eligible for VAT and the rest is exempt from VAT? In such a situation, according to Article 2(4) u.p.c.c., PCC is subject to the sale of that part of the property, which is exempt from VAT, and therefore all of this sale will be taxed on turnover taxes, but the part will be taxed on VAT and the remainder will be PCC.

A similar position was taken by the Provincial Administrative Court in Opole, which in the justification of the judgment of 22 December 2015 33 stated that: ‘In the present case, PCC is the subject of a legal act in the form of a contract for the sale of immovable property indicated in a notarial act, where part of the immovable property one of the parties to the operation is taxed VAT and as regards part of the property is exempt from taxation on the basis of Article 43(1)(10a) u.p.t.u.

[...]. It should be noted that both in the literature and in the case law of the administrative courts it is stressed that the exemption provided for in the Article 2(4) u.p.c.

is of a substantive nature and the fact that the sale contract is excluded from the provisions of that law is not determined by the fact that the parties to that contract are VAT payers, but only by the fact that at least one they are taxed or exempt from VAT for the purpose of carrying out this specific activity.

The sale of real estate (perpetual use rights) will require payment of either VAT or PCC. There must not be a situation where at least part of the sale price of the property is not subject to taxation of any of these taxes (see WSA judgment in Gliwice of 3 May 2015, reference no.

I SA/Gl 1343/14 and comments cited there and Zbigniew Saminski to Article 2 u.p.c.c., legal status 1 July 2009. – LEX selection).

This leads to the conclusion that even if within the framework one the civil law activity part of its subject-matter is taxed on VAT and the part exempt, in the light of regulations Article 2(4) points (a) and (b) of the U.P.c.c.

may be subdivided into the tax exemption in connection with the content Article 2(4) point (a) and which, due to its content Article 2(4) point (b) may not benefit from this exclusion. As indicated in the Commentary on Civil Law Tax. Comment for practitioners, ODDK Spółka z o.o. Sp. k., Gdańsk, p. 153, W.

Stachurski – "It cannot be assumed that, in such a situation, sales should be either entirely excluded from the tax of PCC or entirely subject to that tax.

This would lead to the fact that, in part, it would not be subject to any of these taxes or would be subject to double taxation (presumably assuming it does not benefit from other exemptions).

However, the essence of this tax exemption is the introduction of a clear ‘demarcation line’ between PCC and VAT, according to the principle: one either second tax. It should be stressed that the scope of application Article 2(4) u.p.c.c.

in relation to individual states of fact or law is determined by the legal effects of these cases which are born in u.p.u.

Since the possibility of proportional calculation of VAT on the land on which the taxed and exempt buildings (or structures) are located is accepted on the grounds of the u.p.u., this should be consistently translated into the PCC exemption in question.’

Due to the market values of real estate, perpetual use rights and cooperative ownership rights, taxation of their turnover has always been linked to the state apparatus with particular tax advantages.

In particular, this is evident from the example of alternative taxation of the trading of PCC and VAT, which is that every disposal operation is always taxed one of these two taxes, even if disposal is one the property to which the taxation of PCC and of VAT may apply in part.

While PCC covers the divestment of immovable property under non-professional and non-professional activities, VAT is subject to the disposal of immovable property by professional operators, i.e. production, service or activities carried out in the free profession, in circumstances relating to the economic activity.

While, in the case of PCC, the tax obligation is, in principle, imposed on the purchaser of the property, who also bears the economic burden of paying that tax (which is a feature of the directness of that tax), in the case of VAT, although the tax obligation is on the supplier of the goods concerned, the economic burden of paying that tax is ultimately on the consumer who purchases the goods in question, paying the gross price, but without the possibility of reducing the amount paid together with the gross price of the tax due by the amount of input tax, since the consumer is not entitled to charge such tax by which the tax could be reduced (which is a confirmation that VAT is an indirect tax in which its burden is passed on to the final recipient of the goods or services).

The above study contains extensive fragments of the diploma work of Bartłomiej Jabłoński, written at the Postgraduate Tax and Tax Law Studies, at the Faculty of Law and Administration of the University of Warsaw.

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1 T.J. Journal of Laws of 2020, item 1740.

2 T.J. Journal of Laws of 2020, item 815.

3 Yes, J. Głuchowski, J. Patyk, Zrystrz of Polish tax law, Warsaw 2008, p. 267.

4 T.J. Journal of Laws of 2020, item 23.

5 T.J. Journal of Laws of 2020, item 106.

6 Yes, A. Wolter, Civil Law. General part outline, Warsaw 1998, p. 36.

7 Yes, G. Bieniek, S. Rudnicki, Real Estate. Legal issues, Warsaw 2011, p. 197.

8 section 9 section 1 Regulation of the Minister for Regional Development and Construction of 29 March 2001 on land and building records (i.e. Journal of Laws of 2019, item 393).

9 Yes, S. Rudnicki, Perpetual Books and Mortgages Act. Commentary, Warsaw 2004, p. 22.

10 T.J. Journal of Laws of 2020, item 1333.

11 Journal of Laws of 1945, items 278, 279.

12T.j. Journal of Laws of 2020, item 1910.

15 Yes Z. Radwański, Civil Law – General, Warsaw 2009, Nb. 217.

[16] T.J. Journal of Laws of 2020, item 1325 as amended

17 Thus, for example, R. Mastalski, Tax Law, Warsaw 2014, Nb. 535.

18 Yes. M. Mucha (ed.), Tax on Civil Law. Practical comment, Warsaw 2015, p. 18.

20 Journal of Laws of 2015, item 1999.

22 Yes Z. Radwański, Civil Law, op. cit., Nb. 492.

23 Yes Z. Radwański, J. Panowicz-Lipska, Commitments – detailed part, Warsaw 1998, Nb. 38.

24 Yes, Z. Radwański, Civil Law... op. cit.

25 Cf. K. Chustecka, New rules on inheritance tax and donations in 2007, Warsaw 2007, p. 17.

27 Reference No. 2461-IBPB-2-1.4514.608.2016.1.MPu.

28 Reference No. 0111-KDIB2-2.4014.57.2019.1.MM.

29 Ref. Act I SA/Łed 844/18, LEX No. 2651927.

30 reference no. II FSK 437/16, LEX No. 2467934.

31 reference no. I SA/Gd 449/13, LEX No. 1368553

32 Yes J. Zubrzycki, lexicon VAT, p. 1099-1100; Similarly, H. Filipczyk, Tax on Civil Law. Commentary, Warsaw 2015, p. 199.

1. Reference no. I SA/Op 581/15, LEX No. 1975648.