COVID19 impact on real estate market in Poland - measures applied
Tax, 6 April 2020 r.
Certain legal acts implementing regulations aimed at mitigating economic effects of COVID-19 epidemic has been published on March 31st (the “Anti-crisis Shield). Thus, proposed measures are officially binding.
Commercial and legal:
- Obligatory “temporary expiration” of rental agreements of retail facilities of the area exceeding 2000 m2 in the period of epidemic emergency and epidemic status (with the retroactive effect from 14 March 2020). As it seems from wording of the relevant regulations, above shall apply to the agreements with the tenants of above facilities (i) which business operations are banned, (ii) which business operations are not banned (this is, however, disputable taking into account the aim of the regulation).
From practical perspective:
a. in the period of epidemic emergency and epidemic status: tenants of such facilities shall not be obliged to pay rent and other payments related with the agreements (such as e.g. utilities payments). It raises doubts: (i) whether tenant is actually entitled to use the rented facilities, and (ii) how parties shall resolve issue of safekeeping of premises/items subject to rental agreement.
b. after period of epidemic emergency and epidemic status: in the 3 months deadline, tenants of such facilities will be entitled to submit to landlord binding statement of agreement extension (for the rental period as set out in the contract + the duration of the ban + 6 months). In case if such statement will not be submitted by the tenant, the “temporary expiration” of the lease agreement in the period of restrictions is not valid. As a consequence, the landlord may claim all payments for the period of restrictions.
c. it raises doubts whether minimum real estate tax shall be liable for the ban period.
- DIY and construction stores of the area exceeding 2000 m2 shall be banned on weekends for the period from 1 April to 11 April 2020.
- Temporary restrictions on terminating lease agreements and change of lease remuneration – until 30 June 2020.
- The possibility of renegotiating loan agreements - the possibility of renegotiating loan agreements with banks by micro, small and medium enterprises (if, the loan was granted before 8 March 2020) in cases justified by the borrower's situation.
- Support of Bank Gospodarstwa Krajowego (BGK - government owned bank) – BGK could grant guarantees and sureties securing repayment of the loans by entrepreneurs (other than micro and small entrepreneurs) to ensure financial liquidity. The guarantee/ surety may cover no more than 80% of the outstanding loan amount covered.
Tax and compliance:
- Annual CIT tax return submission and tax payment for 2019 has been postponed until 31 May 2020.
- The deadline to pay the minimum real property tax for the period from March to May 2020 shall be postponed until 20 July 2020. Conditions to qualify for the postponement are: (i) a 50 % drop in revenue year-on-year,(ii) in a given month the taxpayer suffered negative economic consequences due to the COVID-19.
- Exemptions / deferrals in the real estate tax payment – subject to individual decision of the municipalities.
- Deferral of the perpetual usufruct fee payment until 30 June 2020 (and could be additionally extended).
- Tax losses can be retrospectively included in CIT and PIT. Taxpayers will be able to deduct their tax loss for 2020 in the amount of up to PLN 5 million from income generated in 2019. To this end, an adjustment tax returns form will be necessary. The option shall be available for individuals/companies whose revenue generated in 2020 drops by at least 50% year-on-year.
- The deadline to issue individual tax rulings extended by three months (with possible extension by additional three months).
- Reporting deadlines regarding tax schemes (MDR- DAC6 implementation) shall be suspended in the period from 31 March to 30 June 2020.
- Preferential deduction of donations for COVID-19 prevention - opportunity to deduct COVID-19 donations on preferential terms: 200% (donations made until 30 April 2020), 150% (donations made in May 2020) or 100% (donations made from 1 June to 30 September 2020).
It has been also announced by the Polish Ministry of Finance – further tax /legal measures related with the COVID-19 epidemic will be proposed within coming days.