Extended scope of investment fund taxation as of 1 January 2018 – real estate income becomes chargeable | SSW TAX Alert

Following the significant limitation of income tax exemptions for investment funds effective 1 January 2017, as of the beginning of the new year, the law makers are planning to introduce further regulations to broaden the scope of taxation for such funds.

Starting from 1 January 2018, the array of taxable sources of income generated by investment funds is to be expanded by income from commercial real estate recognised for the purposes of Fixed Assets Classification as office and commercial buildings (shopping centres, department stores, standalone stores and boutiques, or other commercial buildings), if their initial value exceeds PLN 10 million.

The new regulations are not specific enough but it should be assumed that that the intention of the legislators is to cover all income generated by such kind of real estate assets held by the funds with taxation (i.e. both income from settlements with lessees as well as the income generated in case of sale).

Should you be interested in discussing the ways how you can prepare for the new regulations in order to limit their impact on the adopted business model, please do not hesitate to contact us.

Patrycja Goździowska – Partner, Tax Advisor

Tomasz Wickel – Partner, Attorney at Law