Problems regarding tax on revenues from buildings in CIT

CIT tax on income from real estate – wording of the regulations

The tax on revenues from buildings applies to entrepreneurs who have fixed assets in the form of real estate in their records. If part or all of the building is put into use under a lease, tenancy or other similar agreement, the income is subject to monthly taxation on the basis of taxation reduced by PLN 10,000,000.

CIT tax on income from real estate – the position of administrative authorities

The authorities have repeatedly issued individual interpretations of tax law provisions regarding the taxation of hotel services. They took the position that a hotel service was a contract of a similar nature to a rental contract, thus qualifying hotel revenues for tax on revenues from buildings. The problem is that hotels, in addition to a place to sleep and live, offer more amenities, such as restaurants, swimming pools, saunas, common space and gyms – things that we do not see in regular lease agreements.

CIT tax on income from real estate – the position of the courts

The opinions of the courts are divided.

The Supreme Administrative Court, in its judgment of February 7, 2023 (II FSK 1717/20), recognized the contract for the provision of hotel services as a contract similar to a rental or tenancy contract, thus confirming that the hotel should be subject to tax. The argument for this statement was based on the claim that the hotel contract is indeed a mixed contract, but its dominant feature is the possibility of using part of the property as in the case of a rental contract.

A different position was presented in a number of other judgments of the Supreme Administrative Court (II FSK 372/23, II FSK 71/21). In these cases, the court made a detailed comparison of the legal regulations regarding the lease agreement and the contract for the provision of hotel services. As a result, he stated that the contracts are separate solutions described in the regulations and should not be identified with each other.

CIT tax on income from real estate – what do the experts say?

Taxation of hotel services causes many problems. In addition to accommodation, the standard service includes a range of other amenities – e.g. use of common areas, swimming pools, saunas, bars and gyms. Additionally, the tax on the rental of parts of the building should be paid in proportion to the area put into use. With a constant turnover of guests renting different rooms, of different sizes, for different periods, it is impossible to precisely calculate the proportions.

The described regulation is actually complicated and impractical. For now, taxpayers can only count on the continuity of the courts’ preferential line of jurisprudence for them.