The Ministry of Finance, by publishing two interactive forms on its website, with which real estate companies and their shareholders are to submit relevant information, has reminded that the extended deadline for reporting to the end of September 2022 is already approaching.
Two interactive forms in PDF format are available:
- CIT-N1 - information submitted by a real estate company about its shareholders;
- CIT-N2 - information submitted by a shareholder about the owned rights to a real estate company.
When to report?
As a reminder, on 29 March, the Ministry of Finance issued a decree postponing the deadline until 30 September for submitting information on real estate companies (those for which the tax year ends at the end of December) and their shareholders, the so-called information on the group structure as of December 31, 2021.
What, who and how should be reported?
This information should be submitted by the real estate companies and their shareholders to the Head of the National Tax Administration and indicate, inter alia, direct and indirect shareholders together with the number of shares held. Taxpayers holding, directly or indirectly, shares in a real property company are also required to inform the Head of the National Tax Administration about this fact.
A majority of the real estate companies, as well as their shareholders, will be obliged to submit the Information on the group structure for the first time.
The relevant regulations are unclear and the guidelines from the Ministry of Finance which appeared on 12 April have still not dispelled any doubts.
There are doubts not only as to the scope of reporting (which shareholders should be reported by real property companies), but also with respect to the entities obliged to submit such information (i.e. how should a taxpayer holding shares indirectly in a real property company be understood).
Already in February 2022, PwC prepared a petition to the Ministry of Finance regarding the notification obligations of real estate companies, containing the doubts stated above. In the reply received on 9 May 2022, the Ministry of Finance provided the following explanations:
1) In the information on the shareholders of a real estate company, only those entities (including taxpayers) that have, directly or indirectly, at least 5% of the rights to the real estate company should be indicated.
2) Real estate companies are required to provide information about entities holding rights to them, not limiting themselves only to the category of taxpayers.
3) The term “taxpayer who owns, directly or indirectly, at least 5% of the rights to a real estate company” should be understood as any entity that has a PIT / CIT obligation resulting from the sale of the rights to a real estate company, regardless of the entity's legal form.
Although the response of the Ministry of Finance shed new light on the new regulations, it did not eliminate all the doubts that arise in practice. The logical structure designed for submission of the information by real estate companies and their shareholders has now become available on Ministry of Finance websites (August 2022).
It still cannot be ruled out that in the case of groups with a complex, multilayer structure, the same real estate firm would need to be reported several times by different shareholders. This would inevitably result in a significant added burden of administrative work for the entire group.
What are the consequences of not submitting?
The consequences for the entities (or their representatives) that fail to fulfill the reporting obligation are still not entirely clear. Most likely, the persons responsible for submitting relevant information should be prepared for the individual penalties under the Penal Fiscal Code.
Who to report to?
Work on the draft of the regulation on accepting, servicing and providing other authorities with information on real estate companies is in progress, according to which the competent tax authority would be:
1) For a real estate company
a) being a CIT taxpayer - the head of the tax office competent on the last day of the tax year,
b) not being a CIT taxpayer - the head of the tax office competent for the registered office address determined on the last day of the tax year,
c) not having the address of the seat in the territory of the Republic of Poland - Head of the Third Masovian Tax Office in Radom.
2) For a shareholder of a real estate company:
a) having the address of the seat in the territory of the Republic of Poland - the head of the tax office competent for the address of the seat established on the last day of the tax year,
b) not having the address of the seat in the territory of the Republic of Poland - Head of the Third Masovian Tax Office in Radom.
Due to the appearance of forms, the reporting is now possible. We strongly recommend that the works related to preparation of the forms are commenced as soon as possible so that you can be sure that the reporting obligation will be fulfilled within the deadline. Based on experience we suggest that any entities obliged to submit relevant information already analyze their thor structure through these lenses, and begin organizing the process (electronic signatures; collection of necessary information and corporate documents, if planning on foreign entities reporting by proxies).
To meet clients' expectations, PwC has already started work and supports the first real estate companies and their shareholders in analyzing the obligation to report the structure of real estate groups. Our experts will be happy to discuss with you any doubts related to the new reporting obligations.