Legal News 2 – December 2018
Below we present the recent legal press articles and the most significant changes to the law.
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Liberalization of the Act on Trading in Agricultural Land
Gazeta Prawna, 26.11.2018 r., Emilia Świętochowska
The Ministry of Agriculture and Rural Development is in the process of preparing a draft of an amendment to the Act on the suspension of the sale of the real estate of State Treasury’s Agricultural Property Reserve. The draft provides for provisions that will enable the purchase of agricultural parcels up to 1 hectare by those who are not farmers, as well as their acquisition during the enforcement or bankruptcy proceedings, as a result of the transformation of companies or the division of property after the cessation of marriage or inheritance. The possibility of acquiring agricultural lands located in administrative areas of cities is also announced. The draft provides also for the extension of the catalogue of persons to whom the property can be sold – siblings, parents and stepchildren.
As of 1 January 2019 the act dated 20 July 2018 on transformation of perpetual usufruct right to lands developed for residential purposes into ownership right of these lands. However, due to many doubts raised mainly by the investors, there will be amendments to the act. The amendments will cover the following: for new investments, the transformation will occur at the moment of transfer of the rights to the premises onto the residents. There will also be a possibility to file a motion to pay the fee for transformation in rates and in a longer period of time. For new investments there is a proposal to „shift” the moment of transformation in such a way, so that the beneficiaries of the transformtion are residents being the owners of the premises, and not the investor who usually transfers the rights to houses/premises within 3 years from giving the investment away for occupancy. There is also a proposal to shorten the waiting period for receiving the certificate on transformation.
Tax on commercial real estate
The Ministry of Finance plans to introduce changes to the provisions of the Corporate Income Tax Act and Personal Income Tax Act within the scope of regulations regarding the minimum income tax on commercial real estate. These changes have been developed as a result of working consultations with the European Commission (EC) and aim to tighten the regulations, which, as a consequence, is to lead to a more effective elimination of aggressive tax optimization. The planned modifications consist of: taxing with the minimum income tax only those buildings (parts of them), which are put into use for consideration under lease, tenancy, etc., and changing the way of applying the threshold of PLN 10 million in the value of the building, by departing from applying this threshold for each building, and applying it to the sum of the initial value of all buildings owned by the taxpayer, regardless of the number of buildings owned.
Change in the regulations regarding the sale of real estate after their purchase by the heirs.
On 1st January 2019 the regulations regarding the sale of real estate after their acquisition by the heirs will change. According to the current regulation the sale of real estate within 5 years of its acquisition is connected with the obligation to pay personal income tax, while the term of 5 years counts from the date of testator’s death. The amendment of the Act provides, that a five-year term after which a property may be sold without the obligation to pay personal income tax will be counted from the date of its acquisition or construction by the testator. Moreover, if the testator has not owned the real estate for at least five years at the moment of his death, the period during which he owned the property may be included in the five-year term required to sell the property by the heir. The amended regulations will also cover the sale of real estate by widowers and divorcees. Those will be able to sell the real estate within 5 years from the date of its acquisition to the joint property, and not as currently – from the day of becoming widowed or divorced. The changes will include anyone who decides to sell the property after 31th December 2018.