In this article we give a general overview of the most important tax rates for the purchase, rental and sale of your property in Poland. Taxation in Poland is very transparent and generally slightly cheaper than in Belgium.
Taxes on Purchase
Just like in Belgium, the purchase of your new-build property in Poland consists of a land value and a construction value. You pay 23% VAT on the land value and 8% VAT on the construction. In this respect, a purchase of a new property to be established in Poland is taxed at a much more favorable tax rate than in Belgium, where you pay 10% registration on the land value and 21% on the construction.
An example makes this clear:
You are buying a new build home off plan in Wytowno Baltic Residences. The purchase price is 131,500 euros, of which 31,500 euros are land value and 100,000 euros are construction value.
The tax payable on your purchase is therefore: 23% * 31,500 (i.e. 7,245 euros) and 8% * 100,000 (i.e. 8,000 euros). In total you pay 15,245 euros in taxes on your purchase. This brings the total investment to 146,745 euros .
The tax payable on a similar purchase in Belgium is: 10% * 31,500 (i.e. 3,150 euros) and 21% * 100,000 (i.e. 21,000 euros). In total you pay 24,150 euros in taxes on your purchase. This brings the total investment to 155,650 euros .
By investing in Poland you save 8,905 euros in taxes.
Taxes on rental income
The landlord is a natural person
If you rent a property as a private person in Belgium (non-professional rental income), you will be taxed on the so-called cadastral income. Depending on when your purchase was made, whether it is your first ‘own’ home, second, third, … etc, numerous exceptions and systems have been developed in the past. In Poland, on the other hand, you are also taxed as a private person on your real estate income (rent) in your personal income tax at a transparent rate: 8.5% (fixed amount on your declared gross rent) to PLN 100,000 (+/- 23,000 euros) or 12% up there. You can also opt to state your actual costs in your personal income tax and have your net rent taxed at 18% (lowest personal income tax bracket)
The landlord is a natural person who has a business or a limited partnership
If the landlord is a natural person running a business (commercial rent), the rent is taxed at 18%. (gross rental income – expenses related to the rental activity)
The landlord is a limited liability company
If the landlord is a company, the rent is taxed at the company rate of 19%.
Capital gains taxes (sales)
As in Belgium, the capital gain on the sale of a property in Poland is taxed.
The seller is a natural person
If the sale of the property is sold within 5 years, a capital gains tax of 18% applies. This tax can be avoided if you invest in real estate again within 3 years after the sale. If the property is sold after more than 5 years after the purchase is not subject to capital gain.
The seller is a company
The sale of a property by a limited liability company is taxed at 19% (i.e. corporate rate)
The personal income tax Poland
If you have income in Poland, you must declare it to the Polish tax authorities. This is done by filling in a PIT form (Personal Income Tax) and declaring it to the tax authorities in Poland.
The rates of the personal income tax in Poland are:
Taxable income < PLN 85,529 (EUR 19,705) → PIT: 18% – PLN 556.02 (PLN 14.839)
Taxable income > PLN 85,528 → PIT: PLN 14,839 + 32% on everything > PLN 85,528
Double tax treaty PL – BE (DBV)
To avoid double taxation on your income from Poland, Belgium has concluded a double taxation treaty with Poland (as with many other countries).
Way of avoiding double taxation.
In Belgium, double taxation is avoided in the following way:
Article 23 DBV: “If a resident of Belgium obtains income or owns components of an asset that are actually taxed in Poland under the provisions of this Agreement, Belgium such income or items of property free of tax. “
Tax return in your Personal income tax in Belgium
If you own 1 or more real estate abroad, you must also declare the income (even if they are already taxed in Poland) in your PB in Belgium.
If rented properly : you must the gross rent declare, less the foreign tax on this income, paid in 2018. Gross rent means the rent and the rental benefits (taxes, major repairs, insurance premiums, etc. paid) by the tenant and not by the landlord) of the year 2018.
If the property is not rented out : you must the gross rental value declare, less the foreign tax on this income, paid in 2018. The gross rental value of a property corresponds to the annual average gross rent you could have received during the year, if the property was rented out.
Where do I have to declare foreign rental income in my personal income tax?
If the property is located in a country that has not concluded an agreement with Belgium to avoid double taxation, this amount must be included in box III, section B. 1.
If the property is located in a country that has entered into an agreement with Belgium to avoid double taxation (which is the case for Poland), this amount must be included in box III, section B. 2.
Poland Invest – Real Estate in Poland (V.i.P.): your partner for a profitable real estate investment in Poland
Real estate in Poland represents one of the market leaders in project development in Poland. We are active in the field of residential real estate, commercial real estate and leisure (hotels, SME zone, apartments and holiday parks). Our local presence in Poland and in Belgium makes us the ideal partner for those looking for a very profitable real estate investment in Poland and do not want to take any risks. We have suitable investment opportunities for both private individuals and institutional investors. Many investors have already found their way to our prime locations in Poland.
Interested in learning more? Make an appointment with one of our advisors.