Poland: Taxes and Costs

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Income taxes are moderate in Poland

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	17.4%	19.4%	19.7%
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INDIVIDUAL TAXATION

Income Tax

All income is aggregated and then taxed at progressive rates. Taxable income is generally calculated by deducting income-generating expenses from the gross income.

Rental Income Tax

Rental income is generally taxed at the progressive rates.

Assets which have a useful life of more than one year can be depreciated. Residential buildings have a 1.5% annual depreciation rate using the straight-line method.

Capital Gains Tax

Capital gains from the sale of real estate are tax-exempt if the real estate was sold more than five years after the end of the year in which the acquisition was made.

Capital gains incurred for properties sold within five years of acquisition are taxed at a 10% flat rate. The acquisition price and transaction costs are deductible from the selling price to arrive at the taxable gain.

But this capital gain can also be exempted from tax if a statement is filed with the tax office within 14 days from the date of sale and if the income from the sale will be invested on other housing properties located in Poland within two years of the date of sale.

Value Added Tax

The lease of immovable property for the purpose of accommodation (not for business purposes) is VAT-exempt.

Land sales are subject to 22% VAT. Sales of residential buildings and separate apartments are subject to 7% VAT, till 31 December 2007.

CORPORATE TAXATION

Income Tax

Net rental income is taxed at the general corporate income tax rate of 19%. Interest paid is deductible for corporate income tax purposes.

Capital gains is treated as an ordinary income, and taxed at the standard 19% corporate income tax.

PROPERTY TAXES

Real Estate Tax

Property owners are liable to pay this tax. The annual real estate tax liability depends on the location and type of the property. The tax rates for 2007 are as follows:

Poland - more data and information

• Guide to buying houses and registering property sales in Poland

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