Poland: VAT and commercial real estate transactions

Poland’s Minister of Finance has issued tax technical explanations concerning the circumstances when a commercial real estate sale transaction is to be classified as a sale of an enterprise or an organized part of an enterprise and thus a transaction that is not subject to value added tax (VAT).

According to the technical explanations, the following factors must be considered in determining whether the sale of commercial real estate assets is to be classified as a sale that is outside the scope of VAT:

• An intention to continue the seller's business activities with the set of assets within the transaction limits
• An actual ability to continue the business activity with the components that are the subject of the transaction

The determination is to be made at the time of the transaction.

The technical explanations also include a “catalogue of elements” that, while forming an integral part of a commercial property sale, are not to be considered in determining whether a sale of a property constitutes a supply of goods subject to VAT or a sale that is outside of the scope of VAT. These elements include:

• Movable property used in the building
• Rights from securities for proper performance of obligations resulting from lease agreements established by tenants (e.g., rights from bank guarantees, deposits, declarations of voluntary enforcement submission)
• Rights from the guarantee of proper performance by contractors of works connected with construction/repair works carried out in the building
• Rights and obligations resulting from maintenance contracts, including contracts concerning the provision of security services, cleaning, real estate services (i.e., a facility management agreement)

Read a December 2018 report [PDF 96 KB] prepared by the KPMG member firm in Poland

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