PRCH Legal Club – 25th November 2016 – REPORT
29-11-2016
On 25th November 2016 during the meeting of PRCH Legal Club experts of Law Firms CAUSA FINITA and AXELO have discussed the basic principles of the Bill on Real Estate Investment Trust companies (REIT).
In their presentations speakers have presented, among others, current trends of legislation on tax issues relating to real estate, including the trade tax, Sunday trading ban, changes in the Tax Ordinance Act and the planned taxation of closed-end investment funds.
Subject of subsequent discussion was the advantages of REITs and tax benefits, which the legislator has provided for these vehicles. The subject concerning the benefits that developers of commercial real estate will be able to achieve becoming a REIT has enjoyed high interest. Finally, the experts have proposed an outline of the procedure by which developers will be able to become companies of rental market and to benefit from the exemption from Corporate Income Tax.
According to the Bill, Polish REITs must be public companies with a minimum registered capital of 60 million PLN. One of the requirements is at least 70 percent of assets of such companies were real estates or shares and stocks of subsidiaries or other companies of the rental market and the carrying amount of the liabilities does not exceed 70 percent of the carrying amount of assets. Further restrictions say that the rental market company will have to achieve not less than 70 percent income from rental market or its parts (as rent) or from paid disposal of real estate or its parts. Furthermore, the income of such companies shall be obtained from the rental of at least three real estates or their parts. In the opinion of the Ministry of Finance this will provide a portfolio diversification.
An entry into force of the new rules is scheduled for the beginning of next year, so you should closely monitor the activity of the legislator in this regard.
