The Ministry of Finance has prepared a draft bill on
Real Estate Investment Trusts, which is currently
being evaluated by government departments. The
Ministry expects that the implementation of this
legislation will make real estate investment more
popular by creating an attractive environment for
investors, while spurring the growth of the Polish
capital market.
The purpose of this legislative proposal is to create
a special status for real estate investment trusts,
defined as companies operating on the commercial
property market, which are to be exempted from
corporate income tax. This is to eliminate double
taxation of income and revenues resulting from the
letting of immovable property at the level of the
company as the real property owner and the level
of the natural person who is a shareholder in it. As
explained in the explanatory statement on the
proposed legislation, “the Polish commercial
property rental market is dominated by foreign
entities. These entities frequently benefit from
preferences under the legislation of their countries
of origin, and these preferences are associated with
a special tax status granted to so-called Real Estate Investment Trusts. As there are no similar
arrangements in Poland, it is reasonable to expect
that the introduction of an institution of similar
nature in the Polish legal system will help to
eliminate the deficiencies of the domestic
commercial property rental market, such as the
dominant position of foreign investors and the lack
of engagement from retail investors”.
Article 2(1) of the draft legislation provides a
definition of the real estate investment trust,
whereby this is a public company within the
meaning of the provisions of the Act on Public
Offering and the Conditions Governing the
Introduction of Financial Instruments into an
Organised Trading System, and on Public
Companies, having its registered office or place of
management within Poland, that meets the
following cumulative conditions: (1) the company’s
share capital is not less than PLN 60,000,000; (2)
the duration of the company is indefinite; (3) its
shares have been admitted to trading on a
regulated market within Poland; (4) at least 70% of
the carrying amount of its assets is real estate (and
also the shares in its subsidiaries meet the criteria
specified in the draft) and shares of other real
estate investment trusts; (5) at least 70% of net
sales revenue comes from the rental of real estate
or parts thereof or from the transfer for valuable
consideration of real estate or parts thereof; (6)
the carrying amount of its liabilities does not
exceed 70% of the carrying amount of the assets;
(7) at least 90% of the profit resulting from the
annual financial statement comes from the rental
of real estate or parts thereof, the transfer for
valuable consideration of real estate or parts
thereof, the transfer for valuable consideration of
shares in other real estate investment trusts or the
dividends paid out to the subsidiaries referred to in
the draft law is distributed to shareholders in the
form of a dividend in each accounting year, or
where the profit resulting from the rental of real
estate or parts thereof, from the transfer for
valuable consideration of real estate or parts
thereof,
from
the
transfer
for
valuable
consideration of shares in other real estate
investment trusts or from any dividends paid out by
the subsidiaries referred to in the draft law, has not
been distributed to shareholders in the form of a
dividend, and such profits are used to purchase
other real estate or parts thereof or shares
representing at least a 95% share in the share
capital of a joint stock or limited liability company
or a partnership limited by shares in the case of
which at least 70% of the carrying value of its assets
is real estate; and 8) the revenue from the rental of
real estate or parts thereof is generated from the rental of at least three real properties or parts
thereof.
This legislation is planned to enter into force on 1
January 2017. However, prior to that date its final
wording may be subject to further change, given
that work on its draft is still in progress.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
ul. Batorego 28-32
81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
gdynia@pl.millercanfield.com
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00-513 Warszawa
Tel. +48 22 447-4300
Fax +48 22 447-4301
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53-125 Wrocław
Tel. +48 71 780-3100
Fax +48 71 780-3101
wroclaw@pl.millercanfield.com
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