Taxation of rental income by individuals is conditioned by reached revenue threshold. If the annual revenue on rental does not exceed PLN 100 000, then 8.5% tax rate applies. The surplus over PLN 100 000 is taxed at a rate of 12.5%. In this case, the tax base consists of income without deducting any costs. This rules applies to both private and business rental income.
However, in case of business income, if taxation on general principles is chosen a flat tax rate of 19% or progressive tax rates of 12% or 32% are applied. In such cases the taxable base is income constituted by revenues minus the tax-deductible costs. Individuals are not able to depreciate residential buildings and residential premises.
Real property company
A real property company is defined as an entity other than a natural person, obliged under the accounting regulations to prepare a balance sheet, in which:
- in the case of entities starting their activity:
- on the first day of the tax year at least 50% of the market value of its assets is the market value of real estate located in Poland or rights to such real estate, and;
- the market value of such real estate exceeds PLN 10 000 000 (ca. EUR 2,1m).
- in the case of other entities:
- as at last day of the year preceding the tax year, at least 50% of the book value of assets is the book value of real estate located in Poland or rights to such real estate, and;
- the balance value of such real estate exceeds PLN 10 000 000 (ca. EUR 2,1m), and;
- in case of the real property company not being a taxpayer of income tax, in the previous tax year the company obtained at least 60% of tax revenues from (sub)lease, of real estate and agreements of similar nature or from ownership rights relating to real estate/other real property companies.
Real property companies:
- have additional reporting obligations,
- fall within the scope of application of real estate clause,
- are obliged to tax on the profit obtained by the shareholders from the sales of shares.
