Are you planning a property sale or purchase transaction? It will be difficult to avoid the tax on civil law transactions. The sale of a house, flat or land is subject to TCLT. The amount of tax depends primarily on the type and value of what you're selling.
Under a sale contract, the parties undertake to transfer ownership of the object of sale and deliver it and, on the other hand, to accept it and pay the agreed price. The terms of sale, including, among others, price and additional terms, need to be specified.
Tax on civil law transactions applies to sale contracts covering properties located in Poland and abroad if the buyer of the property has its registered office or place of residence in Poland and the contract was concluded in Poland.
The contract for the sale of property and other civil law contracts are subject to the tax on civil law transactions. Tax must be paid on the transaction, and an appropriate tax return must be filed.
As a rule, it is difficult to avoid paying the tax on civil law transactions when buying a flat. All this is because tax payment should not be expected only in certain situations strictly defined by law. A property for residential purposes typically involves more than just costs such as notarial fees, for example. The purchase of a property requires the payment of tax, taking into account the property's market price.
Taxation of the sale of the land is also possible if the party is a VAT payer. If you conduct business activity, the rules applicable to property sales may therefore be slightly different.
As a rule, the tax liability is excluded when purchasing a flat or house in the primary market. A contract to purchase a flat from a developer does not require filing a return with the tax office.
The essence of property development companies is to conduct business activity. Its forms may vary, but, where possible, such entities choose to tax the sale of a flat, house or land under VAT. The purchase document, in this case, is the invoice, and the price includes VAT.
Tax on civil law transactions applies to sale contracts covering not only properties (e.g. a flat, house or land) but also, among others,
• movables, e.g. cars, electronic equipment or mopeds,
• copyrights,
• perpetual usufruct,
• cooperative member's ownership right to residential premises,
• receivables.
The obligation to pay tax will also arise in the case of transactions other than the purchase of a property. This includes the conclusion of donation or inheritance division contracts.
Are you sure that the obligation to pay tax on civil law transactions will arise in your case because a civil law transaction, not necessarily concluded in the course of business activity, is subject to tax on civil law transactions?
TCLT has strictly defined rates in the tax legislation. The amount buyers pay to the head of the tax office depends on this. The obligation to pay a 2% tax rate applies mainly to sale contracts (including property sales), exchange agreements and agreements on inheritance division, donation, life estate and termination of co-ownership.
However, the TCLT amount in some cases is slightly lower. You will pay less tax than for purchasing a flat if you conclude a contract to buy other property rights. In this situation, you will be required to pay a 1% tax rate.
However, the legislator has also provided even more attractive rates. Generally, transactions such as articles of association are also taxable under the TCLT Act. Under this regulation, the tax rate will then be 0.5%.
A joint declaration of intent by the contracting parties when purchasing a property creates a mutual obligation.
The tax liability must be established before the premises are handed over to the competent entity. The tax payment may have to be made even before the day the house or flat is handed over. The tax office expects the tax to be paid within 14 days of the liability arising. When buying land, a flat or a house, we must prepare for an often considerable cost, especially given the growing property prices. TCLT is always paid to the public notary with the final property sale contract, as they are obliged to collect it and remit it to the relevant tax office.
Properties may be subject to VAT. In such a case, the property sale will probably not be subject to TCLT. The imposition of VAT excludes, in principle, liability to tax on civil law transactions. Therefore, VAT modifies the course of tax procedures.
The exemption does not cover agreements the subject of which are, among other things, properties or parts thereof if at least one party is exempt from TCLT. In the case of houses, flats and land, only active VAT payers who are subject to VAT have the option not to pay TCLT.
