Understanding Taxes When Investing in Polish Real Estate – What You Really Pay

A practical tax guide for foreign property investors in Poland – VAT, income tax, PCC, and legal strategies to avoid overpaying

Buying property in Poland? Great. But how much will you really pay in taxes?
Spoiler: it`s not just VAT. There are at least five different taxes and fees that can hit you – unless you know the rules.

This guide will walk you through all the major tax obligations foreign investors face when buying, owning, or selling real estate in Poland – and how to legally reduce them.

1. VAT – Only on New Properties, But Still Confusing

VAT (Value-Added Tax) applies only to new properties sold by developers or businesses.

8% VAT: residential flats or houses up to 150 m² (flats) or 300 m² (houses)
23% VAT: anything bigger or non-residential (e.g. office, retail, land)
If the property is sold by a private person, there`s usually no VAT

VAT is included in the price shown by developers – but always confirm it`s the final price.

2. PCC – The Hidden 2% Tax

If you`re buying a resale property (from a private seller), you`ll pay 2% PCC (civil law transaction tax).

Applies to apartments, houses, and land bought on the secondary market
Paid at the notary when signing the final agreement
No PCC on new developer sales (if VAT applies)

Translation: You pay either PCC or VAT – never both.

3. Income Tax – When You Sell

Poland charges 19% capital gains tax on property sales – but only if you sell within 5 years of purchase.

The 5-year countdown starts from the end of the year you bought the property.

How to avoid it legally?

Hold the property for 5 full tax years
Or use the "housing exemption" – reinvest all sale proceeds into another residential property within 3 years

4. Rental Income Tax – Flat or Progressive

If you rent out the property, you must declare rental income in Poland. There are two options:

Flat-rate tax: 8.5% or 12.5% (depending on income amount – no deductions)
General tax scale (17%–32%) – with possible deductions (renovations, amortization, etc.)

Foreigners often choose the flat-rate system for simplicity – but the optimal choice depends on income and costs.

5. Local Property Tax – Small, But Recurring

Each year, owners pay a small local tax on the property:

Varies by city and size (a few hundred PLN/year for apartments)
Paid to the local municipality
Required even if the property is not rented out

6. Other Possible Charges:

Planning fee (renta planistyczna) – if the land gains value due to zoning changes
Betterment fee (opłata adiacencka) – if public infrastructure increases land value
Inheritance or gift tax – if you receive a property for free (some exemptions apply)

Summary: What Taxes You Might Pay

Situation	Tax Type	Rate
New flat from developer	VAT	8% or 23%
Resale flat from private seller	PCC	2%
Selling within 5 years	Income tax	19%
Renting out	Rental tax	8.5% / 12.5% or 17–32%
Owning a property	Local tax	~100–500 PLN/year