In our article “Buying an apartment for a natural person in Poland!” (https://business-in-poland.eu/en/articles/view/Buying-an-apartment-for-an-individual-person-in-Poland/), we have already analysed advantages and disadvantages of buying a flat for a natural person. In this article, we suggest you to read about alternative way of buying an apartment for a company.
Advantages of buying real estate for a company
One of the main advantages of buying real estate for a company is a possibility of using depreciation rates (including the cost of the apartment in the expenses of the company), which significantly increases the cost base. Thus, the taxpayer can effectively and significantly reduce the income tax of the company.
It should be remembered that the tax authority provided that taxpayers may individually set depreciation rates for used fixed assets. This applies only to funds first paid to the taxpayer account, provided that the depreciation period is at least 10 years for certain types of real estate (mostly commercial).
This period can sometimes be up to 10 years, if we choose a depreciation rate of 10% and fulfil one of the following conditions:
- the acquired property has been used by another owner for at least 60 months or more;
- the entrepreneur repaired the property before making fixed assets in the register and spent at least 30 per cent of its value for these purposes.
The profit from the sale of real estate is an operating profit and is subject to corporate income tax. CIT corporate tax rates for companies in Poland:
- 9% if the income from the sale does not exceed 1.2 million euros in the current or previous financial year;
- 19% if the income from the sale exceeds 1.2 million euros in the current or previous financial year.
You should remember that profit in such a company is taxed twice before it reaches the founders. First of all, the company’s profit from activities is taxed (CIT rate of 9% or 19%), and then the dividends (19%) paid to founders from previously taxed profits.
When you buy real estate from the developer, the buyer is obliged to pay VAT from the net amount. 8% VAT tax rate applies to the living area up to 150 square meters and 23% - for rooms over 150 square meters. As you can see, it is advantageous to buy real estate from the developer to a legal entity, because VAT paid will not be lost and can be reimbursed by indicating VAT in the declaration.
Also, the fact that the purchase by a polish company of any real estate in Poland does not require the permission of the Minister of Internal Affairs (an individual is required to obtain a permit, for which he is waiting about 5-7 months, we described in detail the procedure in our article “Permission to purchase real estate” (https://business-in-poland.eu/en/articles/view/razreshenie-na-pokupku-nedvijimosti).
As a result, we can say that from our point of view it is financially profitable to buy real estate for a company, since there are more advantages than when buying real estate for an individual person. It is also worth remembering that you, as the owner of a company, cannot buy real estate for a company and use it only for personal purposes, for example, for living with a family. The purchase, maintenance and receiving an income from real estate will be included in the expenses and income of the company, respectively, you cannot freely use the property purchased at the company solely for personal purposes. In this case, you can draw up and sign a lease agreement between you (an individual) and your company (legal entity).
If you want to buy an apartment for a company in Poland, we are happy to help and answer all your questions, both regarding the registration of the company and the implementation and support of buying an apartment for a company in Poland!