I decided to start a new topic in the PS forum so that other users would have the low down on the CURRENT tax rules in Poland with respect to CGT in the one location rather than spread out over a number of different threads. I am also hoping that some users (especially PS staff) may be able to offer their opinion on what I have written, make a correction if necessary and reply to my question at the end of this topic. I have been investing in Poland since 2004 and the following is from my own personal experiences. I am not a tax advisor so always get professional help but this may be a good staring point for some. Poland Capital Gains Tax. (Old Rule & New Rule) N.B. It is the date you sign your final agreement (i.e. close on the property) that determines which rule you are bound by, not the date you sign your preliminary agreement. Old Rule (You signed your final agreement prior to 1 Jan 2007). The old rules prior to 1 Jan 2007 were that if you held your property for 5 years you paid 0% CGT in Poland (note – you are still liable in UK / Ireland depending on where you are a resident). If you sold between years 0-5 then you paid 10% of the SALE price (Note: Sale price NOT profit). You are still liable in UK / Ireland for CGT but can get credit for what you have already paid in Poland. If you decided to sell within years 0-5 then you also had an option that if you reinvested the total SALE proceeds in another Polish property within 2 years of sale that you avoided paying CGT. You have 14 days after signing the sale contract in which to sign a declaration and submit to your Polish tax office stating that you want to take this route (i.e. the reinvestment route). This is commonly known as “roll-over relief”. New Rule (You signed your final agreement after 1 Jan 2007). After the 1 Jan 2007 the CGT rate is 19% on the profit irrespective of how long you hold the property. There is no more roll-over relief. If you are a resident of the apartment and reside there for 12 months you do not pay any CGT. Please note, that you must be registered at that address in order not to pay CGT.
Question: I purchased 3 apartments prior to 1 Jan 2007 therefore I can avail of the old tax rules concerning CGT…….. (Or so I thought). I sold one apartment a few months after closing and signed the declaration to reinvest and therefore paid no CGT. No problems so far. However, I have decided to sell the next apartment later this year after a period of renting. My accountant has told me that I will not be able to use the reinvestment route (0% CGT) as this is primarily used for home owners and it is not meant for investors and therefore I was liable for 10% of the SALE price. He felt it was OK to do it once as I did live in Krakow at the time and could argue that the first apartment was for my private purposes but for the rest of the apartments he said if I was audited I would be penalized if they found out that I had signed declarations to reinevst on all 3. A second opinion confirmed what he had said. Basically that the 0% CGT after reinvestment rule is for Polish homeowners and is not meant for property investors. Both accountants told me that: “Basically one of the problems in Poland is that the whole property investment phenomenon is relatively new and the tax rules are not very clear, that is, in a lot of cases it is open to interpretation”. Anyone got any opinion on this??? Just to put some people at ease, if you are buying an apartment in Poland and are signing the contracts after the 1 Jan 2007 you are subject to the new rule and will simply pay 19% on the profit – simple and uncomplicated – no grey areas!. The problem with me is that I bought prior to 1 Jan 2007.
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