In this article, we will cover the necessary steps for foreigners to Purchase a Property in Poland, purchase taxes, and the real estate investments.
A QUICK LOOK AT POLAND’S REAL ESTATE MARKET
Poland is one of the leading countries in Eastern Europe where Poland is located in the heart of it. Poland’s population is over 38 million and has a GDP of USD 524,5 billion. Poland is one of the most attractive markets for foreign investors.
Transaction volume reached the record level of EUR 2 billion in the first quarter of 2018. Compare to 2019’s first quarter, the volume of transactions has reached over EUR 745 million. A very important value for Poland’s economy indicates that the Polish market is becoming more and more attractive for both domestic and foreign investors. The trend of high-volume transactions is expected to continue.
The largest market share was held by office transactions which are approximately 72% of all the contracts made. The second and third place is taken by hotel and industrial building transactions with a much smaller number (11%). Lastly, retail schemes occupy 5% of the total market share.
As stated above, foreign investors play a crucial role in the market. They were the most active players who signed over 90% of all contracts. Germany and the United Kingdom occupied the largest share in terms of the nationality of investors.
The low operational costs of regions appeal to more and more investors thus investors have been increasingly interested in those markets. This trend can be explained by 55% of all transactions in the first quarter of 2019 involved properties located outside of the capital city Warsaw (CBRE, Q1 2019)
WHAT DO YOU NEED AS A FOREIGNER TO PURCHASE A PROPERTY IN POLAND?
REQUIRED FORMS
Negotiations for property purchases are done openly in Poland. You may directly negotiate with the owner or through his/her estate agent. Until this point, parts of the negotiations don’t have to follow any form. However, once the parties agree on terms, the contract of purchase must be done in the form of a notarial deed executed by a Polish notary. Failing this form requirement will result in the nullness of the contract. The notary will scheme an initial contract which will include certain terms and details that are needed to be completed before the sale. At this point, 20 % of the written value of the property must be deposited.
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REQUIRED PERMISSIONS FOR FOREIGNERS TO PURCHASE A PROPERTY UNDER THE PROVISIONS OF THE ACT OF 24 MARCH 1920
Poland provides benefits to European Union citizens as a member state. Actually, such incentives go beyond the Union and include the European Economic Area (EEA) which is consists of European Union member states, Iceland, Liechtenstein and, Norway. Investors who are from the EEA don’t need any permits if they intend to have a place of permanent residence and the land bought for permanent residence isn’t over 0,50 hectares.
Whereas, investors from outside of the EEA need a permit from the Ministry of Internal Affairs and Administration for both residential and commercial purposes. The permit will only be issued if the foreigner proves the links with Poland such as a workplace, or a temporary residence.
Lastly, foreign legal entities and individuals can lease real estate without any restriction or requirement. However, any lease contract that is over a year must be done in written form.
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TRANSACTION COSTS
Transaction costs are consist of taxes and fees. Value Added Tax (VAT) is determined at a flat rate of 23% which is also subject to the purchase of a property. There is also a tax on civil transactions which is a flat 2%.
Registration fees and Notary fees are also under the responsibility of the buyer. Registration fee is 0,10% and notary fee is between 0,25% and 3%. If negotiations were done through state agencies, there could be a fee for the real estate agent. The agent’s fee is expected to be no more than 2%.
Note that all the taxes and fees mentioned above are paid by the buyer.
Property Purchase in Poland
Att. Bedrettin Gürcan I Partner
Serhat İlhanlı
All rights reserved. All rights of the Property Purchase in Poland article belong to Gurcan Partners International Law Firm. The author has no responsibility for the information in this article. This article is prepared just to inform.
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