Buying costs are low in Poland
Taxation Researcher | June 28, 2022
How high are realtors´ and lawyers´ fees in Poland? What about other property purchase costs?
|Real Estate Agent Fee||3%||buyer|
|Tax on Civil Transactions||2%||buyer|
|Notary Fee||0.25% - 3%||buyer|
|Total cost paid by the buyer||5.35% - 8.10%|
|Total round-trip costs:||5.35% - 8.10%|
| See Footnotes
Source: Global Property Guide
Value Added Tax (VAT)
A purchase of the second-hand residential property (i.e. older than 2 years) is not a subject of VAT.
VAT is payable in case of buying of newly-built residential properties as well as commercial land and buildings.
The sale of undeveloped land for construction purposes is subject to VAT at flat rate of 23%.
The sale of undeveloped land, other than a construction area (e.g.agricultural land), is subject to mandatory VAT exemption.
The sale of newly-built residential building (up to 300 sq. m.) or condominium unit (up to 150 sq. m.) is subject to a VAT rate of 8%. The sale of other sort of buildings or structures (e.g. commercial buildings) is subject to a VAT rate of 23%. How difficult is the property purchase process in Poland?
How difficult is the property purchase process in Poland?
Foreigners who are citizens or entrepreneurs from EEA countries (EU + Norway, Lichtenstein, Iceland) and from Switzerland are free to buy any type of real estate.
Foreigners from other countries may freely purchase condominium units throughout Poland, with the exception of areas located in the border zone.
This applies, for example, to popular tourist destinations located on the Baltic Sea or in mountain areas along the southern border of Poland.
Non-EEA or non-Switzerland citizens need MIA permits to buy any kind of land, residential or commercial. They also need MIA permit to buy condominium unit in the border zone. The MIA permit will only be issued if the foreigner can prove that he has links with Poland - temporary or permanent residence in Poland, among other things.
Foreigners, both legal entities and individuals, can freely lease land or real estate, without restrictions. Any lease for a period of more than a year should be executed in writing.
Property negotiation is done openly in Poland. The price can be negotiated directly with the owners or through the estate agent. Once the parties have reached an agreement, the contract for the purchase of real estate must be made in the form of a notarial deed executed by a Polish notary. A contract in any other form is null and void. . A notarial deed containing sale agreement will be written in Polish. Therefore, if a buyer does not speak Polish, a participation of the sworn translator during signing of the sale agreement is required by the law.
In many cases, it is not possible or advisable to conclude a sales contract immediately due to legal or business reasons. In such a situation, the purchase transaction takes place in stages by:
- Conclusion of a preliminary sale contract which outlines the essential provisions of the final sale contract as well as conditions precedent that must be satisfied before the sale completes. At this time, a completion date is set and usually a deposit (market standard is between 5 and 20% of price) is paid by the buyer.
- Compliance with condition precedent by the parties (e.g. obtaining
approvals from various state authorities, obtaining financing from a
bank by the buyer, changing the qualification of the land, obtaining development conditions),
- Conclusion of a final sale contract. The real estate purchase process is practically never limited to determining the sale price and signing the contract at the notary. The purchase of real estate should be preceded by an examination of the legal status and technical condition of the real estate and negotiations of commercial and legal conditions of the transaction. After concluding a real estate purchase agreement, it is necessary to fulfill a number of obligations (tax, reporting or contractual). Therefore, it is advisable to hire English-speaking lawyer experienced in the field of the law of real estate and contracts.
The purchase of the real estate is reported to the land and mortgage register kept by the courts. Disclosure of the ownership of real estate in the registers is not a condition for the successful purchase of real estate as it is only an official confirmation that the buyer has become the owner of the property.
The buyer becomes an owner of the real estate at the moment of the sale agreement is signed. In case the sale agreement is conditional, the legal title is conveyed at the moment of signing a separate transfer agreement.
Disclosure of real estate purchase in the land and mortgage register usually takes around 3-6 months.
Footnotes to Transaction Costs Table
The round trip transaction costs include all costs of buying and then re- selling a property - lawyers´ fees, notaries´ fees, registration fees, taxes, agents´ fees, etc.
Real Estate Commission:
For the purchase of a residential apartment, most agents will apply 2-3% commission. However, agent fees are negotiable for larger purchases (such as a building).
Civil Transaction Tax:
Civil transaction tax (CTT) of 2% is paid on transfer of second-hand buildings and land. Properties under CTT are VAT-exempt.
The basic fee for entry of a buyer as a new owner in the land and mortgage register is PLN 200 (€45). The fee may increase if, together with the disclosure of ownership, the buyer makes other entries regarding the property, e.g. a mortgage to the bank financing the purchase, predial easement, rectification of the area of the land.
Notary fees are capped at PLN10,000 (€2,222). Notary fees are calculated on the value of the transaction based on the following schedule:
|PURCHASE PRICE, PLN (€)||FEES|
|up to 3,000||PLN 100|
|above 3,000 up to 10,000 PLN 100||3% surplus above PLN 3,000|
|above 10,000 up to 30,000 PLN 310||2% surplus above PLN 10,000|
|above 30,000 up to 60,000 PLN 710||1% surplus above PLN 30,000|
|above 60,000 up to 1,000,000 PLN 1,010||0.4 % surplus above PLN 60,000|
|above 1,000,000 up to 2,000,000 PLN 4,770||0.2% surplus above PLN 1,000,000|
|above 2,000,000 PLN 6,770||0.25% surplus above PLN 2,000,000, maximum PLN 10,000|