SLIM VAT 2 – optional VAT taxation of real estate sale now possible in notarial deed
REal Knowledge - about the Polish real estate market #4
The so-called Slim VAT 2 regulations came into force in Poland on October 1st, 2021. According to the Ministry of Finance, their purpose is to make it easier for taxpayers to settle VAT liabilities. An important change concerns the real estate market: as of 1st October parties to a real estate transaction may resign from the VAT exemption including an appropriate statement directly in the notarial deed.
VAT option regarding real estate sale
In accordance with art. 43.1.10 of the Polish VAT Act, delivery of buildings, structures or their parts is exempt from VAT, except where:
- the delivery coincides with or precedes the first-time occupation thereof;
- less than two years have passed between the first-time occupation and the delivery.
Before October 2021, Polish VAT regulations allowed resigning from the exemption and opting for VAT taxation of a real estate sale transaction in the form of submitting an appropriate statement to the head of the tax office competent for the buyer before the real estate delivery date, which was highly impractical and often deferred such transactions.
What is new?
On October 1st 2021, a new provision came into effect, allowing transaction parties to opt for VAT taxation of deliveries of buildings, structures, or their parts in the form of a statement included in the notarial deed. For taxpayers, who often prefer to include the relevant provisions in the notarial deed rather than submit an additional VAT option statement to the competent head of the tax office, this is a very good solution that eliminates the need to submit such statement several times to reflect the date of each sale transaction. The new solution means less paperwork both for taxpayers and for the tax authorities.