The end of the third month of the year is fast approaching. This deadline is crucial for tax settlements. Today, we want to discuss the obligations that real estate companies must fulfill.
What is a real estate company?
This term was introduced into the Personal Income Tax Act and the Corporate Income Tax Act in 2021.
This is an entity other than a natural person, obliged to prepare a balance sheet on the basis of accounting regulations, in which (for entities operating on the market):
- at least 50% of the carrying amount of the assets, directly or indirectly, constituted the carrying amount of real estate located in Poland or rights to such real estate,
- the carrying value of these properties exceeded PLN 10,000,000,
- tax revenues from lease (or similar activities) or from the transfer of ownership of real estate and from shares in other real estate companies constituted at least 60% of total revenues.
For an entity to be classified as a real estate company, the above conditions must be met cumulatively as of the last day of the year preceding the tax year. In 2023, these conditions must be met as of December 31, 2022.
However, different criteria apply to newly established entities. For a new entity to become a real estate company, it must meet the following criteria:
- at least 50% of the market value of the assets, directly or indirectly, constituted the carrying amount of real estate located in Poland or rights to such real estate,
- the market value of these properties exceeded PLN 10,000,000.
These conditions must be met cumulatively on the first day of the tax year.
Information obligations
Real estate companies are obliged to provide the Head of the National Tax Administration with information on entities holding, directly or indirectly, shares (stocks), all rights and obligations, participation titles or rights of a similar nature in that real estate company, by the end of the third month after the end of the tax year, together with the number of such rights held by each of them.
Therefore, if the real estate company's tax year coincides with the calendar year, this obligation must be met by the end of March. Since the last day of March this year is a Sunday, this deadline is extended to the first business day. Easter Monday falls on April 1, 2024, so the last day to submit the information is April 2, 2024.
Within the same deadline, partners in a real estate company, and in some cases, partners in a real estate company, are required to submit information on the number of shares (stocks), all rights and obligations, participation titles, or similar rights held directly or indirectly in a real estate company. Pursuant to the general interpretation of the Minister of Finance of February 28, 2023, reference number DD5.8203.7.2022, a partner indirectly holding rights to a real estate company is an entity whose rights are exercised through a partner or other tax-transparent entities. An indirect owner will therefore be a partner in a general partnership that is not a CIT payer but is a shareholder in a limited liability company that is a real estate company. If the ownership structure of the real estate company and its partners is based solely on CIT payers (e.g., a limited liability company), there is no obligation to report the indirect owner. Only partners in a real estate company holding at least 5% of the ownership rights are required to submit information.
Reporting is required for all entities meeting the definition of a real estate company, as well as their direct and indirect partners, regardless of their tax residency. A real estate company can also be an entity with its registered office and management abroad. Such a company is also required to submit the relevant information. Similarly, a foreign partner of a real estate company may also submit the relevant information. It is also possible for an entity (regardless of its residence) to be both a real estate company and a partner (direct or indirect) in another real estate company. In such a case, such an entity is required to submit two reports.
How do I submit the required information?
Special forms have been prepared for this purpose. Tax-transparent real estate companies submit their information on the PIT-N1 form, while those subject to corporate income tax submit their information on the CIT-N1 form. Partners in real estate companies (direct and indirect) submit their information on the PIT-N2 form (individuals) and the CIT-N2 form (tax-non-transparent entities).
Declarations are submitted exclusively electronically via the e-deklaracje system. A qualified electronic signature is required to sign them. Submitting information on a paper form will be deemed ineffective.
Attention!
Foreign entities will only be able to submit e-declarations if they have a Polish Tax Identification Number (NIP) or Personal Identification Number (PESEL). Entities that do not have a Polish ID must obtain one before submitting the real estate company form.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of March 4, 2024
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