Acquiring real properties in Poland by foreigners
Acquiring real property by foreigners is governed by the provisions of the Act of 24 March 1920 on Purchase of Real Estate by Foreigners with further amendments.
Foreigner’ within the meaning of the Act is:
- An individual who is not a Polish national
- A corporate entity having a registered place of business abroad
- A partnership of persons referred to above, which does not have a legal personality, has a registered place of business abroad and is incorporated under laws of foreign countries
- A corporate entity which has a registered place of business in the Republic of Poland and is controlled directly or indirectly by persons or partnerships referred to above
The general rules
The general rule is that foreigners require a permit from the Minister of Internal Affairs to acquire a real estate located in Poland. Nevertheless, this rule is significantly limited by exemption which applies to entrepreneurs residing or established in the territory of the European Economic Area (i.e. the European Union, Iceland, Norway and Lichtenstein) as well as Switzerland (see comments below).
A permit is required in each case of real estate acquisition, i.e. acquisition of ownership title or perpetual usufruct right to real estate located in Poland on the basis of a legal transaction.
The following actions require a permit:
- acquisition of real estate
- acquisition or taking up of shares in a commercial company which has a registered office in Poland and is an owner or a perpetual usufructuary of a real estate.
The Minister of Internal Affairs may grant the foreigner a permit to purchase real estate or shares in a company owning real estate if there is no probability of threat to national security, public safety or public order and if the foreigner can demonstrate the existence of circumstances confirming his ties with Poland.
The provisions of the Act do not apply to company transformations or transfer of ownership of real estate by intestate succession.
No legal acts or entries of ownership titles or perpetual usufruct rights may be made without a permit from the Minister of Internal Affairs. If effected in breach of the provisions of the Act, the purchase of real estate or shares by a foreigner is null and void.
Purchase of real properties by entrepreneurs from the European Economic Area and Switzerland
On 1 May 2004, the general rule whereby a permit is required for purchase by foreigners of real estate or shares in companies which are legal owners or perpetual usufructuaries of real estate located in Poland ceased to apply to individuals and entrepreneurs residing or established in the territory of the European Economic Area and Switzerland.
Please note that the above exception applies to all entrepreneurs established in the territory of the European Economic Area, even if these entrepreneurs are controlled by entities based outside of the European Economic Area. For example, a company established in Poland and controlled by shareholders from the USA is considered as an entrepreneur from the European Economic Area and does not require a permit for purchase of a real estate. In consequence there are no practical limitations of acquisition of commercial properties by foreign entrepreneurs, even if established outside of the European Economic Area.
Exceptions from the obligation to obtain a permit
There are also additional exceptions from the obligation to obtain a permit (which will apply if a purchaser is not exempted from this obligation under the rule discussed above).
- Acquisition of independent residential premises
- Purchase of real estate by a foreigner who has been residing in Poland for at least five years from the issuance of a permanent residence permit
- Acquisition by a foreigner whose spouse is a Polish national and who has resided in Poland for at least two years from the issuance of a permanent residence permit, of real estate that will become the joint property of both spouses
- Acquisition of real estate by a foreigner if, on the day of purchase, the foreigner is entitled to statutory succession after the assignor of the real estate, provided that the assignor was its legal owner or perpetual usufructuary for at least five years
- Acquisition by a controlled corporate entity, for its statutory purposes, of undeveloped real estate in urban areas if their total area in the entire country does not exceed 4,000 m2
- Acquisition of real estate by a foreign bank, which is a mortgagee, after an ineffective auction under enforcement proceedings
- Acquisition or taking up by an indirectly or directly controlled bank of shares in a company which has a registered place of business in the Republic of Poland and is the legal owner or perpetual usufructuary of real estate in connection with enforcement of the bank’s claims for banking services rendered
The above exemption from the obligation to obtain a permit does not apply to real estate situated in the vicinity of state borders and agricultural land of more than one hectare.
Obtaining a permit
If a permit is required, it is issued by the Minister of Internal Affairs. Permits are issued in the form of an administrative decision on the basis of a foreigner’s application. The provisions of the Administrative Procedure Code apply to these proceedings.
A foreigner applying for a permit must enclose, along with an application, documents supporting the circumstances indicated in the application and his ties with Poland as well as other documents demonstrating that the real estate will be purchased in a proper manner.
The Minister of Internal Affairs should examine the application within two months provided that all documents required by law are submitted with the application and that the authorities issuing opinions will take the position of a particular case in due time.
The permit is valid for two years from the date of issue. An acquisition agreement should be executed within that time limit.
Author: Piotr Łaska
