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Minimum tax on commercial properties – the Minister of Finance communicates changes

2018-04-18

As of 1 January 2018, every taxpayer (both of PIT and CIT) who owns a building[1] specified in the law the initial value of which exceeds PLN 10 million has to pay every month a tax in the amount of 0.035% of its initial value (minimum tax).

The Ministry of Finance has recently communicated that in consultation with the European Commission it wants to modify the regulations on the minimum tax. The proposed changes – called “sealing” in the communication – will result in most cases in an increase in the proceeds from the new tax.

Below we present changes communicated by the Minister of Finance. The final wording of the provisions will be known only after the legislation procedure has been completed.

  1. The minimum tax will be charged on all buildings (including warehouses and logistics centres which have been exempt to date), provided that taxation will be limited only to those buildings (or their parts) which are subject to a lease or tenancy agreement;

  2. The current tax exemption threshold of PLN 10 million per each building will be changed so that the threshold (in the same amount) will be calculated per each taxpayer, regardless how many buildings he owns;

Example: If a taxpayer has 2 buildings, with the initial value of 12 million and 9 million, at the moment only the first one is subject to tax (monthly tax calculation: 12 million – 10 million = 2 million x 0.035% = PLN 700).

According to the new regulations, taxation will be as follows: 12 million + 9 million = 21 million – 10 million = 11 million x 0.035% = PLN 3,850 per month. 

  1. A novelty will be also the possibility to claim a refund of overpaid tax (paid in the amount higher than due CIT or PIT). Such refund would be made at the request of a taxpayer, after the tax authority has confirmed that transactions with related parties were effected on an arm’s length basis. The right to file an overpayment claim will apply also to 2018.

It is worth analysing already now individual items of initial value calculation of owned buildings. In most cases, by appropriate separation of built-in fixtures in the building (e.g. lifts, alarm systems, air conditioning) – the minimum tax burden may be effectively reduced.

Daniel Więckowski, Tax Advisor, ATA Tax Sp. z o.o. 

 

[1] Tax is payable on buildings classified as:

  1. shopping centres,
  2. department stores,
  3. smaller stores and fashion boutiques,
  4. other type of retail and service premises,
  5. office buildings.

No tax is chargeable on buildings on which depreciation charges are no longer made and buildings which are used solely or predominantly for taxpayer’s own needs.