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Government draft REIT (Real Estate Investment Trust)

CIT exemption for companies investing in real estate is the most important assumption of a government bill.

CIT exemption for companies investing in real estate is the most important assumption of a government bill.

Similar regulations already exist in other EU countries and the United States.

They allow investors to obtain regular income from the rental of real estate, however, without their necessity...

CIT exemption for companies investing in real estate is the most important assumption of a government bill. Similar regulations already exist in other EU countries and the United States. They allow investors to obtain regular income from the rental of real estate, however, without having to directly acquire them.

Currently, the revenues generated by companies investing in real estate (mainly rental) are taxed double. First the company must pay the CIT tax, then the tax must be paid by individual investment partners. The government's draft bill assumes a waiver of double taxation by exempting taxpayers from CIT in this respect. A flat rate tax will apply in the assumptions 8.5% income (similar to natural persons) landlords property outside business.

According to the project, the exemption from CIT will cover revenue from:

  • • rental of immovable property or parts thereof
  • • free disposal of immovable property or parts thereof
  • • the sale, by real estate companies, of their shares in subsidiaries.

The planned changes are justified by the need to stimulate the home property rental market. Currently, the possibility of obtaining regular income from this source is available to persons with funds to purchase real estate, for example, housing for rent.

The entry into force of the new regulations would also allow investments to be made to entities that do not have the sums needed to acquire the property. Instead of direct purchase of real estate, an option would appear, for example, to acquire shares of a company that manages the entire rental process and regularly pays dividends.

The project is also worth attention because Poland is one from the leaders of Central Europe in the market segment described, this applies especially to office space. The entry into force of the planned regulation may mean a new safe form of capital placement as an alternative to traditional bank deposits.

Author:

Paweł Kula From 2016 related to Russell Bedford Poland. Graduated from law school. Tax Advisor No. 12969. He specializes in excise duties and transfer pricing records. Author of tax-related articles published on industry websites.

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