Uncertainty ahead

According to Justyna Bauta-Szostak, a tax adviser and a partner at MDDP (who moderated the discussion) 2017 brought in many legal and tax changes. In the real estate sector, the most important change was probably the restrictions on trading land, which resulted in an increase in prices across the industry. Regulations that have been introduced in 2018, include limitations to Sunday trading, changes to the minimum property tax and capital restrictions that affect the financing of projects.

Radosław Knap, the general director and member of the board of the Polish Council of Shopping Centres stated that The idea of a Sunday trading ban went back to 2016. The law came into force in March this year and had been delayed by several months. The act includes 32 exclusions in total, which results in complexity and interpretational doubts. Another source of confusion for consumers is the system that specifies some Sundays as being exempt from the ban. This certainly has had an effect on the retail sector and will continue to do so. The future of the logistics sector is also uncertain. “A lot of changes were also made to the tax regime,” noted Łukasz Kosonowski, a eax advisor in the transaction consultancy department at MDDP. “The last few months and years have brought a lot of changes that business had had to deal with. The introduction of the minimum tax could be of great importance to the logistics sector. It has not yet been applied to warehouses but it is a good example of the speed of tax changes – in January this tax was introduced and it is difficult for business to judge what effect these regulations will have. Meanwhile since April the government has been working on amendments to these regulations so that they not only cover retail and commercial facilities (office buildings and shopping malls) but also all other types real estate in principle. There have also been major changes to project financing and the inclusion of interest payment and the purchase of intangible services in tax costs,” adds Łukasz Kosonowski. "Most countries now have similar problems. Governments need more money and are creating new taxes," said Johannes Bauer, the general director at S + B Gruppe AG. “As a group, we do not have a problem with that, provided that we know in advance how to finalise any given transaction. In Poland, however, the changes have affected many transactions in the investment market including one of ours. We had to volunteer to pay a 2 pct fee in order to settle the matter because they were starting to interpret the taxation rules differently. We don’t want something like that to happen again. We pay our taxes but we would like the rules that apply to our payments to be clear,” added Johannes Bauer. “Such situations like the reclassification of transactions from the sale of a business to a sale of assets, shows how an issue that is relatively easy to regulate can create a huge amount of uncertainty on the market,” said Łukasz Kosonowski.