The SSW tax team won in precedent cases concerning the tax on commercial real estate income
The payer of the tax on real estate income in a capital group is entitled to up to10 million PLN tax-free, if he/she does not hold shares in related entities. This position was confirmed by the Provincial Administrative Court in Cracow in two judgments.
Our tax team represented clients who applied for individual interpretations under the provisions on tax on income from buildings amended from 1 January 2019. In the interpretations issued, the Director of the National Treasury Information stated that the free amount should be divided proportionally across the entire capital group.
We would like to remind you that the amendment to the provisions on tax on income from buildings caused confusion among entities benefiting from rental or lease of real estate.
In accordance with the literal wording of the provisions, if a taxpayer holds shares in the capital of a related entity, the tax free amount is the product of 10 million and the revenues from the taxpayer’s building divided by the sum of revenues from the buildings of the taxpayer and related entities. The provision requiring the calculation of proportions refers to cases in which a taxpayer holds a share in the capital of another related entity. In contrast, there is no comment concerning cases were another entity holds a share in the taxpayer.
The court provided a literal interpretation of the tax law and found that a taxpayer, who does not have shares in the capital of a related entity, is entitled to reduce the income from buildings by the entire free amount, without calculating the proportion.
Congratulations to our tax team: Tomasz Wickel, Beata Krokos and Krystian Trzcinski.