For apartments purchased in the primary market, Value Added Tax (VAT) is already included in the sale price, simplifying the payment process. When funds are transferred to the developer, the VAT obligation is automatically fulfilled.

1.1 VAT Rates Based on Property Size

Apartments below 25 m², often referred to as micro-apartments, are considered commercial premises and taxed at the higher 23% VAT rate.

1.2 VAT Exemptions in the Secondary Market

Purchases from the secondary market do not include VAT, offering a significant cost advantage. Instead, buyers pay the PCC tax, discussed in the next section.

The PCC tax (Tax on Civil Law Transactions) applies to secondary market transactions at a rate of 2% of the property's market value, as stated in the notarial deed.

2.1 Important Considerations

• The PCC tax is not required when buying from a VAT-registered seller applying the VAT exemption (ZW rate).
• When purchasing at unusually low prices, buyers should justify the valuation (for example poor condition or unfavorable location) to prevent the tax office from reassessing the value and imposing additional tax with interest.

2.2 Deadline for Payment

The involvement of a notary is mandatory for all property transactions in Poland. Notary fees, determined by the Decree of the Minister of Justice, are calculated based on the property's value. These fees also cover the notary's responsibilities, including submitting necessary documents to the tax office.

4.1 Rental Income for Individuals and Sole Proprietors

Effective January 2023, private rental income is taxed using a lump-sum system.

Investors operating as sole proprietors can instead choose between two schemes:

• General Rules: progressive tax of 12% for income under PLN 120,000 and 32% above it. Expenses such as renovations, furniture, and repairs are deductible.
• Flat Tax Scheme: a 19% fixed rate on rental income, ideal for high-income earners to avoid higher rates under the general rules.

4.2 Rental Income for Companies

For companies, rental income is taxed as business income.

The sale of real estate in Poland incurs a 19% capital gains tax, calculated on the profit made from the sale.

• Tax is applicable only if the sale occurs within five years of purchase.
• After five years, no tax is due, regardless of the sale price or profit.

Property tax rates in Poland are based on the size and use of the building. This tax is levied annually and payable to the local municipality.

• VAT and PCC Tax Strategy: assess whether primary or secondary market purchases offer better tax advantages, balancing VAT inclusion in new properties against PCC tax in secondary market transactions.
• Rental Income Optimization: choosing the appropriate taxation method (lump-sum, general rules, or flat tax) can significantly impact profitability.
• Long-Term Planning for Property Sales: holding properties for at least five years eliminates capital gains tax, maximizing net returns upon sale.