As of 2026, major amendments to the Polish Corporate Income Tax (CIT) Act are expected to come into force, which may significantly impact real estate companies. The proposed changes aim at eliminating the possibility of recognizing tax depreciation on properties that are not subject to accounting depreciation.
Current rules and disputed interpretations
Since 2022, Article 15(6) of the CIT Act has limited tax depreciation for real estate assets (Group 1 of the Fixed Asset Classification) to the amount of depreciation made in accordance with accounting regulations and recognized in the financial statement. This has raised concerns in cases involving investment properties that are not classified as fixed assets and are valued at fair value - thus not subject to accounting depreciation. The tax authorities have consistently maintained that in the absence of accounting depreciation, tax depreciation is entirely disallowed. However, administrative courts have not supported this interpretation.
Court rulings in favor of taxpayers
In rulings issued on 28th January 2025 (Supreme Administrative Court, ref. II FSK 788/23, II FSK 789/23, II FSK 987/23, II FSK 1086/23, II FSK 1652/23), the court held that real estate companies are entitled to recognize tax depreciation up to the amount of hypothetical accounting depreciation value that would occur if the property was classified as a fixed asset. In another significant ruling dated 3rd April 2025 (Supreme Administrative Court, II FSK 756/23), it was stated that if accounting depreciation does not exist, the limitation under Article 15(6) does not apply at all. A similar approach was presented in the Judgement of the Provincial Administrative Court in Gliwice of 2 September 2025 (I SA/GI 1249/24) and of the Provincial Administrative Court in Gdańsk of 16th September 2025 (I SA/Gd 385/25). Despite technical differences between aforementioned rulings and their underlying argumentation, the key message to the taxpayers (real estate companies) is positive – they are not automatically deprived of tax depreciation write-offs in the case of recognizing the property as investment for the accounting purposes.
What will change in 2026?
The proposed CIT amendment aims to address uncertainties regarding tax depreciation of investment properties valued at the fair value and not subject to accounting depreciation.
According to the proposed new wording of Article 15(6) of the CIT Act, the limitation of tax depreciation to the amount of accounting depreciation applies also in cases where depreciation charges are not made for an asset in accordance with accounting regulations, particularly due to the classification of such an asset as a long-term investment valued at market price or another determined fair value.
Rationale behind the changes
According to the Ministry of Finance, the primary goal is to close the loopholes in the tax system and to ensure that tax depreciation reflects the actual wear and tear of an asset.
Potential impact of the planned changes
The draft legislation lacks transitional provisions. This could mean that, from 2026 the real estate companies may indisputably lose tax depreciation rights with respect to the assets that are not subject to accounting depreciation. This may lead to increased taxable income, reduced profitability and the need to reassess accounting policies and investment strategies. Hence, it should be monitored whether and in what shape the proposed changes come into force.
On the other hand, the proposed changes may potentially strengthen the position presented in court rulings, according to which Article 15(6) in its current wording does not exclude the right of real estate companies to claim tax depreciation on assets classified as long-term investments valued at fair value. Hence, real estate companies may consider applying for a refund of the overpaid CIT for the period 2022-2025.
Our support
Our team can offer comprehensive support in recovery of CIT overpaid in 2022-2025. With respect to the period as of 2026, we are waiting for the final shape of the proposed regulations, as well as the practice that will emerge and we will be happy to assist in analyzing the impact of the new regulations on the company’s tax results, if any, as well as assessment of related tax risks and accounting policies, to ensure compliance while protecting your business interests.
Other important changes
The draft legislation introduces also other important changes, in particular:
- Taxation of early liquidation after corporate-to-partnership conversion – income from liquidation of non-corporate entity (e.g. partnerships), which was formed through conversion from a company will be taxed if liquidation occurs within 3 years.
- Changes to the diverted profit tax – elimination of the condition for taxation under this tax requiring that the related entity receives at least 50% of its total revenue from the taxpayer or other entities related to the taxpayer. As a result, entities may more easily fall within the scope of this tax. However, in the context of real estate structures, the exemption from the diverted profits tax is most commonly based on the condition that the related entity is subject to an income tax rate of at least 14.25%. Hence, the practical impact of the proposed change may be limited for most entities.
- Retroactive depreciation rate changes – taxpayers will no longer be able to adjust depreciation rates after the deadline for filing annual CIT return. This seems to be a substantial change, as until now it has been possible to adjust prior years with relative flexibility by submitting CIT return corrections.
- Limitation of amortization of goodwill – it will no longer be possible to amortize goodwill that arises from paid use of a business.
- Clarification of “new taxpayer” status – entities continuing the operations of other businesses will not qualify as “new taxpayers” under CIT. The proposed new definition may exclude many entities from accessing tax reliefs available to “new” taxpayers. This particularly affects limited liability companies established through the transformation of sole proprietorships. The change is anti-optimization in nature, aiming to restrict the use of preferential tax treatment by entities that do not genuinely start a new business activity.
- Definition of a small taxpayer – the changes clarify how to determine the revenue value for the small taxpayer threshold in the case of a shortened or extended tax year. This is a positive development, as the issue has previously given rise to considerable interpretative uncertainties.
- Modification of minimum CIT rules – differentiation of simplified method of determining the tax base depending on company size; exemptions available if profitability exceeds 2% in at least one of the previous two years (as opposed to the current three years). In practice, this change means that entities will more easily fall within the scope of this tax.
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