Reporting by real estate companies for 2023

Real estate companies are required under the CIT Act to report annually to the tax office on their shareholders. The reporting deadline expires soon.  However, there are many doubts. So who is exactly covered by the reporting obligation? What information must be submitted?

Reporting obligations for real estate companies - who is covered?

With regard to the reporting obligation, the first step is to determine whether an entity belongs to the circle of obliged entities. As we read in the interpretation of the Minister of Finance No. DD5.8203.7.2022 of 23 February 2023, the entities on which the information obligation is imposed are:

• real estate company,

  and

• taxable persons holding, directly or indirectly, in a real estate company, shares (stocks) conferring at least 5% of the company's voting rights, or an aggregate of rights and obligations conferring at least 5% of the right to share in the profits of a company that is not a legal entity, or at least 5% of the total number of participation titles or rights of a similar nature.

But what is a real estate company?

A real estate company is, according to Article 4a para. 35 of the CIT Act, an entity, other than a natural person, which is obliged to prepare a balance sheet on the basis of accounting regulations, in which:

• for entities commencing operations - on the first day of the tax year, at least 50% of the market value of the assets, directly or indirectly, was the market value of real estate located in the territory of the Republic of Poland or rights to such real estate, and the market value of this real estate exceeded PLN 10,000,000 or an equivalent amount determined according to the average exchange rate of foreign currencies indicated in the Act,
• for other cases - on the last day of the year preceding the tax year, at least 50% of the balance sheet value of the assets, directly or indirectly, was the balance sheet value of real estate located within the territory of the Republic of Poland or rights to such real estate and the balance sheet value of such real estate exceeded PLN 10,000,000 or an equivalent amount determined according to the average exchange rate of foreign currencies indicated in the Act.

According to the Ministry of Finance's General Interpretation of 28 February 2023 No. DD5.8203.7.2022, a taxable person holding (directly or indirectly) the rights to a real estate company is:

• a partner of a real estate company, being an entity listed in Article 1 of the CIT Act,
• an entity listed in Article 1 of the CIT Act that holds the rights to a real estate company indirectly, where such holding of rights is realised through a partner or subsequent entities, i.e. so-called tax transparent entities,
• a partner in an estate company, being a natural person or an inherited company,
• a natural person or an inherited company holding rights to a real estate company indirectly, where such holding of rights is realised through a partner or subsequent entities, i.e. so-called tax transparent entities.

Reporting by real estate companies - what is the scope of the information obligation?

As a general rule, a real estate company, as defined above, is obliged to provide information to the tax office about:

• entities holding, directly or indirectly, in that real estate company shares (stocks), total rights and obligations, participation titles or rights of a similar nature conferring at least 5% of the company's voting rights, or total rights and obligations conferring at least 5% of the right to share in the profits of a company that is not a legal entity, or at least 5% of the total number of participation titles or rights of a similar nature, and
• the number of rights held by each of the above-mentioned entities.

Whereas, taxable payers with rights in a real estate company, i.e., as we mentioned earlier, taxable persons holding, directly or indirectly, shares in a real estate company, are required to file information on the number of shares, total rights and obligations, titles or rights of a similar nature held, directly or indirectly, in that company.

The information obligation applies both to entities that are Polish tax residents and to entities that are not Polish tax residents, i.e. entities that do not have their place of residence or registered office or board of management within the territory of Poland.

Real estate companies - when to report?

The information obligation concerning real estate companies and taxable payers with rights to a real estate company is realised as at the last day of the tax year of the real estate company or, if the real estate company is not an income tax payer, as at the last day of its financial year.

The information must be submitted to the tax office by the 3rd month after the end of the real estate company's tax year, or the company's financial year if the real estate company is not an income tax payer.

In 2024, the reporting deadline for real estate companies is generally 2 April (due to the Easter holiday).

Reporting information late or failing to report it is subject to criminal and fiscal sanctions.

Reporting by real estate companies - how can we help?

The deadline for reporting by real estate companies is getting closer. Due to the ambiguity of regulations and interpretations, some entities may encounter problems in meeting the obligations described above. Therefore, we offer assistance in determining whether and to what extent a given entity is obliged to report. Our support covers the entire reporting process, from analysing whether an entity is subject to the regulations to determining the scope of reporting and preparing the necessary information.