Tax on property income in Poland
Taxation Researcher | November 28, 2020
Effective Tax Rate on Rental Income
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Nonresidents are taxed on their Polish-sourced income. Married couples are taxed separately.
Taxable income is generally calculated by deducting income-generating expenses from the gross income. Taxable income from all sources is then aggregated and then taxed at progressive rates.
|TAXABLE INCOME, PLN (€)||TAX RATE|
|Up to 85,528 (€19,006)||18%|
|Over 85,528 (€19,006)||32% on all income over €19,006|
Rental income is generally taxed at the progressive rates. The taxable income is computed by deducting income-generating expenses from the gross rent.
Capital gains from the sale of real estate are tax-exempt if the individual has owned the property for at least five years before the sale.
Capital gains incurred for properties sold within five years of acquisition are subject to capital gains tax at a flat rate of 19%. The acquisition price and transaction costs are deductible from the selling price to arrive at the taxable gain.
Taxpayers who have acquired the residential property before 01 January 2007 are subject to different rules. A flat rate of 10% is levied on the sales proceeds less transaction costs.
VALUE ADDED TAX
VAT is generally levied at a flat rate of 23%. A preferential rate of 8% may apply in some transactions.
The lease of immovable property for the purpose of accommodation (not for business purposes) is VAT-exempt.
Land sales and building sales are generally subject to 23% VAT. The preferential rate of 8% may apply if the residential premises do not exceed 150 square meters.
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 are as follows:
REAL ESTATE TAX
|PROPERTY QUALIFICATION||TAX PER SQ MT, PLN (€|
|Land used in business||PLN0.90 (€0.20)|
|Other land||PLN0.47 (€0.11)|
|Buildings used in business||PLN23.13 (€5.13)|
|Other buildings||PLN7.77 (€1.73)|
Income and capital gains earned by companies are taxed at the corporate tax rate of 19%. Income-generating expenses are deductible when calculating taxable income.