During the previous term of office of the Sejm, work continued on the draft law on companies investing in real estate rental, interrupted by the termination of the term of office and abandoned in accordance with the principle of discounting. Now they are resumed.
The Director of the Housing Department of the Ministry of Development, Labour and Technology reported at a meeting with entrepreneurs affiliated in Polish Confederation Lewiatan, that a draft order has already been adopted to set up an interministerial team working on the REIT Act.
Real Estate Investment Trust is a type of investment fund, a financial entity that acts as companies or funds listed on the WSE, which allows smaller investors to place their funds in real estate. In different countries REITs adopt different legal and tax status. The characteristics of this type of instrument are:
- special tax status – in Poland, above all, the CIT exemption,
- investment in real estate in a direct and indirect manner (by acquiring shares or shares of undertakings holding in their property) [1].
These solutions have been in place the longest in the United States – since 1960. In Poland, a bill on real estate rental companies was proposed dated 19 May 2017, rules of operation of REITs in the form of Real Estate Rental Market Companies (SRWN). Work on this solution is to continue.
After looking at the bill, it would be worth extending the scope of the property in which the rent can be invested. It is limited to housing, whereas the new project could also include office and warehouse space.
As far as tax proposals are concerned, the minimum requirement should be to introduce positive solutions, which were also envisaged by the previous project, such as the application of 8.5% the nominal rate of corporation tax on the income of companies investing in immovable property, obtained directly or indirectly from the rental of immovable property; the deferred payment of corporation tax by companies investing in immovable property; and, above all, the exemption from tax on income of subsidiaries investing in immovable property, obtained from the rental of immovable property and from disposal of such income.
[1] The European Fund Classification, EFAMA, 200, p. 19.
Author: Michał Zdanowski, tax consultant At Russell Bedford Poland. Graduate of the Faculty of Law and Administration of the University of Warsaw, Graduate of the Postgraduate Tax and Tax Law Studies of the University of Warsaw, Graduate of the Postgraduate Accounting and Finance Studies of the Warsaw School of Economics.
During his studies, he gained experience in law and tax law firms. Since September 2013 is associated with the law firm Russell Bedford Poland. It specialises in documenting transactions between related parties.