Real Estate 2026 Comparisons

The main sources of real estate law in Poland are:

• the Civil Code of 1964, providing definitions of real property and limited property rights, as well as key requirements governing property transactions;
• the Real Estate Management Act of 1997, which regulates, inter alia, the management of public real estate, expropriation of private-owned property and its use for public purposes, as well as such matters as pre-emption rights, the division and consolidation of real estate, and valuation;
• the Development of the Agricultural System Act of 2003, which sets out conditions for the acquisition of agricultural land;
• the Protection of Agricultural and Forest Land Act of 1995, establishing rules for changing the designated use of agricultural or forest property for other purposes;
• the Acquisition of Real Estate by Foreigners Act of 1920, introducing a requirement to obtain permits for the acquisition of real estate by selected foreigners;
• the Spatial Planning and Development Act of 2003, which sets out the procedure for adopting zoning plans that are the basis for the granting of building permits; and
• the Construction Act of 1994 (Building Law), which provides the rules governing the development of property and the process of obtaining required building permits and occupation permits.

The warehouse, logistics, and industrial property sector is a significant segment of the Polish real estate market. Although the number of newly commissioned projects in this area increased in 2025 year-on-year, this growth was primarily attributable to a reduction in the volume of development projects in the preceding years. The vacancy rate remains relatively low (approximately 7–8%). Thus, tenants’ demand for new assets of this kind clearly persists, supported by such factors as the ongoing expansion of the e-commerce sector, the rising prominence of nearshoring, the continuing robust presence of established logistics, distribution, and transport operators in Poland, and the entry of new market participants. Combined with a high share of renegotiations in total transactions (approximately 50%), this shows a market currently in a phase of stabilisation.

Over the past 12 months, a clear trend of freezing investments in office properties has emerged, which was particularly visible in regional markets. Due to the low supply of new office space and a high share of renegotiations and lease extensions within the overall transaction volumes (renegotiations and expansions collectively accounted for approximately 60% of lease market transactions in 2025), coupled with elevated vacancy rates (13% nationwide and even over 21% in certain regional locations), many projects originally planned for office use were suspended or repurposed into residential or mixed-use developments. Additionally, obsolete office properties (particularly Class B and lower, which are economically not feasible to modernise) are disappearing from urban landscapes. While these are occasionally replaced by more modern office buildings, they are just as frequently demolished to accommodate new functions.

A similar scenario occurs with respect to certain shopping centres constructed in the 1990s or early 2000s; such demolitions have taken place, eg, in Warsaw, Poznań, and Wrocław. Concurrently, the retail property market has undergone a significant transformation. Due to the high saturation of retail space in the capital city and major regional markets, investors have shifted their attention toward smaller towns and more peripheral locations. Currently, the vast majority (approximately 90%) of new retail developments consist of medium-sized retail parks – typically single-storey structures with direct access from an outdoor surface car park, featuring a high concentration of discount-oriented shops. Meanwhile, vacancy rates in retail properties remain at a relatively low level, below 3% (on average for Poland in 2025).

In the coming years, the real estate market may be substantially influenced by new infrastructure projects, most notably the construction of “Port Polska” (“Port Poland” - a centrally located airport integrated with a high-speed rail network hub) as well as the commissioning of new seaport terminals and the further expansion of the express road and highway network. The central airport especially has the potential to act as a catalyst for the growth of the central market and drive the development of the logistics and warehouse market around the new transport hub.

The introduction of legislation regulating REITs would have a positive impact on the development of the real estate market, even if restricted solely to commercial properties (excluding residential assets); unfortunately, their implementation in the near future remains unlikely.

There is strong public pressure regarding the regulation of the short-term lease market, aimed at restricting the depopulation of historic city centres and mitigating the nuisances such premises generate for their neighbours. Legislative process is already underway, and its completion could positively impact the hotel real estate market and stabilise residential property prices in tourist destinations.

The statutory obligation, effective from 1 July 2026, requiring every municipality to adopt a master plan covering the entire municipality is a positive step toward coherent and logical spatial planning. However, given that only a very small percentage of municipalities have fulfilled this obligation so far, it is anticipated to slow down investment processes during the transitional period, especially since, following the entry into force of the new regulations, it will be impossible to issue planning permission in the absence of a general plan. Furthermore, even after such a plan is adopted, these permissions will be issued exclusively for areas explicitly designated therein.

Ownership is the primary property right. It applies to both developed and undeveloped real estate, and its scope and legal nature basically do not vary based on the intended use of the property.

Apart from ownership, there is also the right of perpetual usufruct, which entitles the holder to use land for a period of 99 years (with an option to extend for another 99 years). The scope of rights vested in a perpetual usufructuary is similar to those of an owner, including the right to develop the land and utilise it for commercial purposes. Perpetual usufruct may be transferred, contributed to a company as an in-kind contribution, and inherited.

It is possible to acquire fractional shares in both the right of ownership and perpetual usufruct.

The transfer of title to real estate (the right of ownership, the right of perpetual usufruct, or shares therein) is governed by the Polish Civil Code of 1964, which applies to all types of real estate.

In addition to the Civil Code, restrictions on the transfer of title may apply under:

• the Real Estate Management Act of 1997, for the acquisition of real estate from the State Treasury or local government units;
• the Development of the Agricultural System Act of 2003, for the sale of agricultural real estate;
• the Ownership of Premises Act of 1994, for the acquisition of residential or commercial premises constituting independent properties; and
• the Acquisition of Real Estate by Foreigners Act of 1920.

To effectively transfer the rights to real estate (including shares therein), an agreement must be executed in the form of a notarial deed, under pain of nullity.

Any change regarding the owner or perpetual usufructuary of real estate must be recorded in the relevant land and mortgage register; the application is submitted by the notary officiating the transaction. If a property does not have an established land and mortgage register, this does not prevent the transfer of title, but such a register must be mandatorily opened as part of the transaction. Land and mortgage registers are maintained online and are publicly accessible, although access to the underlying source documents (such as title transfer agreements) is restricted.

Title to real estate transfers immediately upon the execution of the agreement, except for the establishment and transfer of perpetual usufruct, where title passes only upon the registration of the entry in the land and mortgage register. 

Title insurance is not a commonly utilised solution in the Polish market due to the legal guarantees afforded by the disclosure of relevant information in the land and mortgage register.

The scope of due diligence depends on the type of real estate being acquired and typically encompasses the following areas:

• verification of legal title to the real estate;
• analysis of encumbrances, such as mortgages or easements;
• verification of whether the rights of pre-emption or other acquisition restrictions apply;
• analysis of parameters arising from the zoning plan;
• verification of access to a public road and utilities;
• analysis of lease or tenancy agreements;
• review of construction documentation, such as building permits or occupancy permits;
• verification of environmental decisions; and
• description of any disputes involving the property.

Due diligence is conducted on the basis of both publicly available documents and those delivered by the seller.

Representations and warranties refer to both the seller itself and the property; their scope is negotiated individually for each transaction and depends on the information disclosed during the due diligence process. Commonly, they concern:

• the legal status of the seller and its representatives;
• the existence of corporate approvals required on the part of the seller;
• the absence of outstanding public law liabilities;
• the existence and legal status of the real estate;
• the absence of encumbrances other than those disclosed in the land and mortgage register;
• the non-existence of any undisclosed lease, tenancy, or similar agreements;
• the absence of disputes or third-party claims;
• the legal status of buildings and structures;
• the absence of rights of pre-emption or other sale restrictions; and
• environmental matters, eg, the absence of contamination.

As a general rule, there is no expiry date for the seller’s representations, but the seller’s liability is subject to statutory limitation periods. Claims of the buyer who is a business entity against the seller generally become time-barred after three years.

The seller’s liability for misrepresentation is rooted in the general provisions of the Civil Code governing claims for damages, but it may be contractually restricted (eg, by excluding or limiting liability under guarantee or statutory warranty).

Representation and warranty insurance is not commonly used in Poland.

The most important areas of law that an investor acquiring real estate must consider include:

• planning and spatial development laws, which provide general guidelines regarding the type of development;
• building regulations defining the technical conditions that buildings and structures must satisfy;
• environmental protection laws containing restrictions on the use of real estate;
• laws relating to the protection of historic monuments;
• regulations governing relationships between neighbours, eg, protection from noise or pollution; and
• laws on real estate access to the public road network.

Polish law currently adheres to the "polluter pays" principle, and if the buyer did not cause or contribute to the pollution, it is only liable in exceptional cases. If the party responsible for polluting the real estate cannot be identified or if enforcement actions against it cannot be executed, remediation measures are carried out by a specialised administrative authority.

Separate rules govern the so-called "historical contamination" of real estate, defined in The Environmental Protection Law as contamination that occurred prior to 30 April 2007 or contamination caused by an event that occurred more than 30 years ago. As a general rule, the current owner of the real estate is liable for historical contamination and is obligated to carry out remediation unless it can prove that the contamination occurred after the date it acquired the property and was caused by another party.

The permitted use of real estate is, as a rule, dictated by the zoning plan, which determines, inter alia:

• the intended land use (eg, for residential, production, warehouse, or retail purposes) and the boundary lines separating areas with different intended uses;
• the lines beyond which building is not permitted;
• development design parameters, such as the construction density ratio, permissible number of storeys, minimum green space percentages, maximum building height, minimum number of parking spaces;
• environmental and historic monument protection guidelines; and
• rules for the transport network expansion.

In the absence of a zoning plan, the permitted use is determined in an individual planning permission (see 4.1 Planning and Zoning Framework).

Expropriation is possible with respect to real estate (or portions thereof) designated in the local plan for public purposes. Expropriation is effected via an administrative decision, the beneficiary of which is either the State Treasury or a local government unit. The expropriation procedure is structured as follows:

• The first step involves negotiations with the real estate owner, during which an offer is made to purchase the property or exchange it for another real estate.
• If negotiations fail to yield a result, the relevant authority sets a two-month deadline for the sale; if the sale is not finalised, formal expropriation proceedings are initiated.
• During the proceedings, a real estate appraiser is appointed to establish the market value of the property, which serves as the basis for calculating compensation.
• The proceedings end with the issuance of an expropriation decision, against which the owner has a right of appeal to the second-instance administrative authority, followed by a right to file a complaint with the administrative courts (also operating in two instances).
• The ownership right transfers at the moment the decision becomes final and binding.

In certain instances, a municipality also has a statutory right of pre-emption. This applies, for example, to:

• the perpetual usufruct of undeveloped land;
• undeveloped real estate previously acquired from the State Treasury or a local government unit;
• real estate designated in the local plan for public purposes; and
• real estate entered into the register of historic monuments.

In such scenarios, the parties to a commercial transaction execute a conditional title transfer agreement, which takes legal effect if the municipality does not exercise its right of pre-emption within a month.

VAT

The sale of real estate as part of business activities is subject to VAT at 8% for residential properties and 23% for all other types of real estate. VAT is charged by the seller and, as a rule, may be deducted by the buyer (provided that the buyer is an active VAT taxpayer and meets statutory conditions for deduction).

Real estate sale transactions structured as a sale of a business or an organised part thereof are not subject to VAT.

Tax on Civil Law Transactions (PCC)

Where a real estate sale falls outside the scope of VAT (due to general principles or statutory exemptions), it is subject to the tax on civil law transactions at the rate of 2% of the market value of the property. The obligation to pay this tax rests with the buyer.

Income Tax 

A real estate sale triggers revenue recognition for the seller. Income obtained by a corporate seller is taxed at 9% for small taxpayers and 19% for other taxpayers. If the seller is an individual, the income tax rate on income obtained from a real estate sale is 19%.       

The acquisition of real estate (as well as shares in companies that own real estate) by foreign nationals requires a permit issued by the Minister of Internal Affairs and Administration. A foreign national is defined as:

• a natural person who does not hold Polish citizenship;
• a legal person or partnership having its registered office abroad; or
• a legal person or partnership having its registered office in Poland but controlled by foreign persons or entities.

To obtain the permit, the applicant must demonstrate ties to Poland and prove that the acquisition will not pose a threat to, in particular, national defence, security, or public order. The procedure usually takes several months. Any acquisition of real estate without the permit is null and void by operation of law.

There are numerous exemptions from the permit requirement, including:

• the acquisition of real estate by foreign nationals who are citizens or entrepreneurs of the European Economic Area or Switzerland;
• the acquisition by a foreign national residing in Poland for at least five years from the date of being granted a permanent residence permit;
• the acquisition through enforcement proceedings by a foreign bank that holds a mortgage over the property; and
• the acquisition of residential premises.

There are two primary methods for financing real estate acquisitions:

• Businesses’ own funds or funds sourced from their corporate groups; the latter is achieved via intra-group loans or capital increases in the company acquiring the property, eg, through the issuance of shares.
• Bank debt financing; this most commonly takes the form of investment or special-purpose loans secured against the real estate and the revenues generated therefrom.

Alternative financing mechanisms include raising capital via the issuance of bonds or shares, or securing funds from entities that are not financial institutions, eg, through joint-venture arrangements.

Security instruments typically provided by investors borrowing funds for the acquisition or development of real estate are directly tied to the transaction or the underlying property, and include:

• a mortgage;
• an assignment of revenues from the property, eg, from lease; or
• an assignment of rights under the property insurance policy.

In addition, there are also:

• ordinary and registered pledges over shares in the acquiring entity or over its assets, such as the business itself, machinery, or bank accounts;
• powers of attorney to manage bank accounts;
• corporate guarantees or sureties; and
• notarial statements on submission to enforcement proceedings.

There are no restrictions on granting security over real estate to foreign lenders, but, in certain instances, restrictions regarding the enforcement of claims may apply.

A foreign bank that is a mortgagee and acquires a real estate in the course of enforcement proceedings is exempt from the obligation to obtain a property acquisition permit. However, this exemption does not extend to lenders that are not banks.

The establishment of a mortgage over real estate in Poland is subject to the tax on civil law transactions. This tax amounts to:

• 0.1% of the claim secured by the mortgage; or
• PLN19 where the amount of the secured claim is unspecified.

The entity making the declaration of intent to establish a mortgage (usually the buyer) is liable to pay the tax.

Since a declaration to establish a mortgage generally requires a notarial deed format and an entry into the land and mortgage register maintained by the court, notarial and court fees also apply. The court fee is PLN200. The maximum amount of the notarial fee depends on the value of the secured claim, but it cannot exceed PLN10,000.

Apart from litigation costs, the enforcement of real estate security involves court fees for obtaining an enforcement clause and the costs of enforcement proceedings conducted by a court enforcement officer (typically 10% of the value of the enforced claim). The creditor must advance the enforcement officer's expenses, but upon successful enforcement they are borne by the debtor and reimbursed with the debt.

The granting of security over real estate may require corporate approvals for limited liability companies and joint-stock companies, to the extent provided for in their articles of association.

Furthermore, the provisions of the Commercial Companies Code require that the general shareholders’ meeting’s approval should be obtained to establish security over the entire business or an organised part thereof. If the business or its organised part includes real estate, this requirement indirectly applies to the real estate asset.

In the event of a borrower's default, the method of enforcing the claim depends on the types of security granted over the real estate. Lenders most frequently employ a combined security package consisting of a mortgage and a notarial statement on submission to enforcement proceedings. In such an event, the creditor must obtain an enforcement clause affixed to the notarial deed, which combined together replace a court judgment. On this basis, the creditor can initiate foreclosure proceedings against the real estate.

Real estate foreclosure is generally a time-consuming process (ranging from several to over a dozen months), with the following stages:

• seizure of the real estate and the disclosure thereof in the land and mortgage register;
• preparation of a property valuation report;
• sale of the real estate in a public auction;
• if the sale is successful, the auction proceeds are applied toward the satisfaction of the debt, with the mortgagee enjoying priority of satisfaction; and
• if two consecutive auctions fail to result in a sale, the mortgagee is entitled to take ownership of the property.

Polish law does not contain provisions governing debt subordination; however, subordination may be achieved through contractual arrangements. Typically, the parties to a subordination agreement include the bank, the borrower, and entities from the borrower's corporate group. Under the terms of the agreement, the subordinated creditors (the parent company and/or holding company) undertake toward the bank to refrain from demanding payment of any sums due on specified accounts from the borrower until the bank loan has been repaid in full. In practice, this means suspending the repayment of the borrower's debts to specific corporate group entities until the final bank loan repayment date.

As a general rule, a lender is not liable for environmental contamination caused by the borrower, even if the lender takes ownership of the real estate through foreclosure proceedings. The general principles of liability described in 2.7 Soil Pollution or Environmental Contamination apply in this case.

In the event of the borrower's bankruptcy, the most critical security interests for the lender include:

• a mortgage; and
• an ordinary or registered pledge.

These security interests survive the declaration of bankruptcy, subject to some exceptions. The proceeds generated from the sale of the assets encumbered with a mortgage or a pledge form a separate bankruptcy estate, which is utilised to satisfy the secured creditors on a priority basis.

However, security interests established by the debtor to secure non-matured debt within six months prior to the date of filing the bankruptcy petition are ineffective by operation of law. Nonetheless, the creditor may file a lawsuit requesting the court to declare such acts effective if the creditor was unaware of the existence of grounds for bankruptcy.

Furthermore, the bankruptcy judge may declare the establishment of a mortgage or pledge ineffective if the encumbrance was established to secure the debt of a third party (eg, an affiliated company) and was established within one year prior to the date of filing the bankruptcy petition, provided the debtor received no consideration or inadequate consideration for its establishment.

Loan agreements are subject to the tax on civil law transactions at the rate of 0.5% of the loan amount. However, this tax does not apply if the lender is a professional lending entity, in particular a bank, a financial institution, or a loan company.

As a rule, a lender may deduct interest on loans relating to business activities as tax-deductible expenses for income tax purposes (PIT/CIT). For corporate income tax purposes, interest may only be deducted up to the statutory limits.

The permitted use of real estate is determined by the local zoning plan, the scope of which is outlined in 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law. The local zoning plan is adopted by the municipal council, which for this purpose:

• adopts and publicises a resolution to initiate work on the plan;
• collects and reviews motions submitted by residents;
• notifies institutions that are required to approve or issue opinions on the local plan;
• drafts and discloses the proposed plan; and
• conducts public consultations.

The municipal council's resolution adopting the local zoning plan is published in the official journal; a graphic appendix (map) forms a mandatory part thereof. The entire procedure takes from several months to even several years.

In addition to local plans, all municipalities are now under an obligation to adopt by 30 June 2026 a general master plan that will cover the entire municipality. This plan must define, inter alia, general planning zones, urban standards in place in the municipality, and areas designated for infill development. All local zoning plans adopted after this date must conform to the master plan.

In the absence of a zoning plan, the head of the municipality or mayor issues an individual planning permission. From 1 July 2026, the issuance of such permission will be restricted exclusively to areas specified in the master plan, meaning that the lack of a master plan will freeze the ability to obtain a planning permission (except for permissions based on applications submitted prior to that date). Additionally, a limited validity period has been introduced for planning permissions: those issued after 1 January 2026 will only be valid for five years (older ones remain valid indefinitely).

The construction of buildings and structures is governed by the Construction Law of 1994, which divides construction works into three categories:

• works requiring a building permit issued by the county office head;
• works exempt from a permit but requiring a formal notification; and
• works requiring neither a permit nor a notification.

Large-scale construction projects normally require a building permit, which takes several months to obtain. The parties to the proceedings include the project owner and the owners of those adjacent properties that are located within the new property’s impact zone; consequently, neighbours have a limited influence over the construction process.

If the project may potentially have an environmental impact, it is mandatory to secure an environmental impact decision prior to obtaining a building permit. Entities holding a legal interest as well as NGOs may become parties to these proceedings, with the right to lodge appeals and ability to potentially prolong the process.

Various types of commercial companies are available to investors, but limited liability companies (sp. z o.o.) are the most popular vehicles for real estate acquisitions. Joint-stock companies (spółka akcyjna) are less commonly used.

Additionally, a registered partnership (spółka jawna), limited partnership (spółka komandytowa), and joint-stock limited partnership (spółka komandytowo-akcyjna) are also available but rarely utilised by real estate investors.

Foreign investors typically form limited liability companies in Poland as special-purpose vehicles (SPVs), separate for each real estate investment. This allows for the limitation of financial risk (no shareholder liability) and better management and control over a specific investment. Establishing an SPV for each real estate project also enables the sale of selected properties via a share deal rather than an asset deal.

There are no REIT regulations under Polish law.

The minimum share capital requirements are as follows:

• PLN5,000 for a limited liability company;
• PLN100,000 for a joint-stock company; and
• PLN50,000 for a joint-stock limited partnership.

No minimum share capital requirements apply to registered partnerships and limited partnerships.

Limited liability companies require a management board comprising at least one member to represent the company and manage its day-to-day operations. Key corporate decisions are adopted by the shareholders' meeting by way of resolutions. Every limited liability company must submit annual financial statements, which are made publicly available.

Under the Anti-Money Laundering and Counter-Terrorist Financing Act, a limited liability company is required to report and update all information regarding its ultimate beneficial owner.

The aforementioned rules also apply to joint-stock companies, which additionally need to appoint a supervisory board, whose members take over some responsibilities from the shareholders’ meeting.

The primary fixed costs of operating as a limited liability company or a joint-stock company include the costs of:

• maintaining full accounting records;
• preparation of financial statements and audits thereof by a statutory auditor (where required);
• corporate legal maintenance, including the drafting of necessary resolutions (at least annually); and
• remuneration of the members of the management board and supervisory board (if appointed).

These costs are unregulated and depend on market conditions.

Lease Agreement (Najem) and Tenancy Agreement (Dzierżawa) 

In exchange for rent, these agreements allow one to occupy and use real estate for either a fixed term specified in the contract (fixed-term agreement) or an indefinite period, which terminates upon notice by either party (indefinite-term agreement). Under a tenancy agreement, the user is additionally entitled to collect the fruits/revenues obtained from the real estate. Lease agreements are more prevalent; tenancy agreements are more commonly used for undeveloped land, including agricultural land.

Serviced Office Agreement 

In recent years, serviced offices have gained increasing popularity in the office property market. These agreements are based on general legal rules concerning the provision of services, unlike the typical agreements for the use of property. Serviced office agreements offer "tenants" significantly greater flexibility and fewer obligations compared to traditional leases. However, this solution also involves substantially less control for the "tenant" over the office space and a higher price.

Leases are categorised by the type of leased property:

• office;
• warehouse and production;
• retail; or
• mixed-use,

and by contractual structure:

• standard lease agreements – concerning space in existing buildings;
• BTS (built-to-suit) agreements – executed with the tenant before the building is constructed, offering the tenant maximum customisation and influence over the design process; or
• serviced space agreements – including serviced office agreements (see 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time) and warehouse or logistics space agreements, which regulate not only the use of the property but also on-site goods handling.

Polish law contains no separate regulations for specific types of commercial leases; each type relies on different contractual standards developed in the market.

The terms of commercial lease agreements may be freely negotiated by the parties. Polish law imposes no restrictions in this regard.

Despite the absence of statutory restrictions, the Polish commercial lease market has developed a number of contractual standards that must be considered during negotiations. In the vast majority of cases, commercial space leases are structured on a triple-net basis (see 6.4 Typical Terms of a Lease).

In the office and retail sectors, it is standard practice for rent to be payable on the gross area (the usable area increased by an add-on factor proportional to the tenant’s share in the entire building).

Office and retail leases are typically executed for a term of five years (or longer), occasionally with an option to extend for subsequent periods. For warehouse and production properties, the lease term is frequently longer; in the case of BTS projects, it may extend up to 15–20 years. Under a fixed-term lease, the agreement may be terminated early only in the cases of a breach (for cause). Indefinite-term agreements, while formally permissible, are virtually non-existent in practice.

In the Polish market, the triple-net model, where the rent is intended to constitute the landlord's net profit, is the primary solution for commercial leases. All costs associated with the management or maintenance of the property (including real estate taxes, insurance, and all types of fees and expenses) are passed through to the tenant via service charges managed on an open-book basis. This also applies to the costs of necessary repairs and preventive maintenance. In addition, minor maintenance duties relating to the upkeep of the leased premises are the tenant’s responsibility.

Rent and advance service charge payments are typically payable monthly.

As a rule, rent remains fixed throughout the lease term, subject to the following standard practices in the Polish market:

• landlords granting rent discounts for the initial months of the lease; and
• annual indexation of rent based on inflation.

In retail space leases, landlords usually collect turnover rent in addition to base rent.

When entering into commercial leases, the parties generally exclude the possibility of changing the rent during the lease term, except for the indexation referenced in 6.5 Rent Variation or turnover rent in the case of retail premises. However, advance service charge payments vary annually, reflecting changing management and maintenance costs.

Commercial leases are subject to VAT at 23%. Long-term residential leases are exempt from VAT, whereas short-term residential leases are treated as a hospitality service and subject to VAT at 8%.

The primary initial costs borne by a tenant comprise the costs of securing payment and securing the handover of the property. Typical security instruments for commercial lease include:

• bank/insurance guarantees or cash deposits;
• insurance for the leased premises; and
• a notarial statement by the tenant on voluntary submission to enforcement proceedings.

The costs of repairs and maintenance of the building itself and the common areas used by all tenants are initially incurred by the landlord and subsequently passed through to all tenants of the specific building or complex via service charges, in proportion to their share in the common property. Service charges are payable throughout the year in the form of advances and are reconciled after the end of the year based on actual maintenance costs and expenses incurred.

Telecommunications services are typically paid for by the tenants under direct agreements with telecom operators. Regarding utilities supplied to the leased premises, the landlord usually incurs these costs and subsequently re-invoices them to the tenant based on actual consumption (via sub-meters), unless it is technically feasible to execute an agreement directly with the utility provider. In BTS agreements, the tenant generally enters into all utility supply agreements directly with the providers.

The costs of utilities supplied to the common areas of buildings or complexes (not covered by individual tenant meters) are borne by all tenants via service charges, in proportion to their share in the common property.

The property owner is obliged to pay real estate tax and other charges associated with the ownership or perpetual usufruct of the property. However, as a rule, they are passed through to the tenants via service charges.

Landlords maintain property insurance for buildings covering a standard set of risks associated with events such as fire, flood, and similar occurrences, and occasionally also loss-of-rent insurance. The costs of such insurance are passed through to the tenant via service charges.

In addition, landlords require tenants to procure:

• property insurance covering all assets brought onto the premises;
• third-party liability insurance to cover potential tenant-caused property damage; and
• Construction All Risks (CAR) insurance if the tenant performs fit-out works on the premises.

The permitted use of the real estate must always be specified in the lease. Any other use of the property without the landlord's consent is prohibited and may result in the termination of the lease. Landlords typically add contractual provisions that also prohibit:

• introduction of hazardous materials into the building;
• operations that disturb other tenants or neighbours of the property; and
• obstruction of windows or display of promotional or advertising materials therein.

In any case, the manner of use must comply with the occupancy permit issued for the building.

The tenant may alter or improve the leased premises only with the landlord's consent. Such consent is frequently subject to numerous contractual requirements, including the submission of relevant designs or the procurement of dedicated insurance policies, and, in the case of retail premises, compliance with the Tenant’s Book’s guidelines. In office leases, the landlord often performs an agreed fit-out for the tenant prior to handover, with the costs shared between the parties. In BTS industrial leases, the tenant is generally permitted to introduce minor alterations upon notifying the landlord.

Before deciding to introduce alterations and improvements, the tenant should consider the status of such improvements after the lease expires. Unless otherwise provided in the agreement, the landlord has the discretion to either retain the improvements against payment or demand their removal by the tenant.

Residential leases are subject to specific regulations. They provide for the protection of tenants' rights, primarily by limiting the freedom to terminate the lease and make sudden changes to the rent amount. Additionally, a separate Timesharing Act regulates consumer agreements regarding the periodic use of holiday real estate.

If bankruptcy of the tenant is declared after the property handover, the bankruptcy trustee may terminate the lease, even despite the absence of grounds for doing so under the contract. The landlord may pursue claims for damages solely against the bankruptcy estate.

If the handover has not yet taken place, either party may withdraw from the lease agreement within two months of the declaration of bankruptcy. Such withdrawal does not result in an obligation to pay damages.

Provisions of lease agreements granting either party the right to terminate the lease if the tenant files for bankruptcy or is declared bankrupt are null and void.

After the expiry or termination of a lease, the tenant cannot occupy the property. Timely vacation of the leased premises is secured by contractual penalties, usually exceeding 200% of the rent amount, and a notarial statement on voluntary submission to enforcement proceedings required when signing the agreement, which significantly shortens eviction proceedings.

As a rule, agreements in Poland prohibit the assignment of the tenant’s rights under a lease; if allowed, such assignment requires a tripartite agreement that also includes the transfer of security instruments. Subleasing is subject to the landlord's consent; sometimes subleasing to entities within the tenant’s corporate group is permitted upon prior notice. If the landlord consents to a sublease, the tenant is required to guarantee that the subtenant will comply with the terms of use of the property stipulated in the lease.        

Fixed-term leases, which dominate the market, may only be terminated in the instances specified in the agreement. These instances are most frequently breaches, making this type of termination a termination for cause.

Typical grounds for lease termination by the landlord include:

• rent arrears spanning two full payment periods;
• delay in the payment of advance service charges;
• use of the property contrary to its intended purpose;
• sublease of the property or its transfer for use free of charge without the landlord’s consent;
• alterations made to the leased premises without the landlord’s consent;
• failure to provide or timely replenish security instruments; and
• material or persistent breach of the property’s house rules.

As regards tenants, termination for cause is rarely stipulated in agreements. If included, it concerns the lack of access to the property for an extended period or a material delay in handing over the property.

In indefinite-term leases, the notice period is generally three months. Termination does not require stating a cause

There is no requirement to register a lease. A lease may be entered into the land and mortgage register of the property, which is sometimes done for BTS buildings. In such a case, the lease or the landlord’s separate statement to this effect must be certified by a notary public.

A tenant may be evicted in any case where the lease has ended, whether by lapse of time or early termination. Typically, eviction requires lengthy court proceedings ending with a court judgment, followed by enforcement proceedings conducted by an enforcement officer. However, it is standard practice for landlords in Poland to require a notarial statement on voluntary submission to enforcement proceedings, enabling enforcement without a court judgment. In the latter case, it is only necessary to obtain an enforcement clause for the notarial deed, which usually takes a few weeks.

No third party can terminate a lease, except for the tenant's bankruptcy, where the bankruptcy trustee acts on the tenant's behalf.

There are no statutory limitations regarding the landlord's pursuit of damages. Damages may cover both missing payments from the tenant and the consequences of breaches or early termination. Agreements routinely contain contractual penalties for specific breaches or early termination, significantly simplifying the pursuit of damages by the landlord. Furthermore, it is standard practice for landlords to require security in the form of a cash deposit or a bank guarantee (usually no less than the rent and service charges for three months), which landlords may utilise during the lease term and for a specified period after its expiry.

Fixed-price contracting is the dominant method of engaging contractors. Project owners use it to mitigate the financial risks associated with the project execution. In fixed-price contracts, a precise and comprehensive definition of the scope of works is critical from the owner's perspective. Lack of clarity and overly general terms in the description of fixed-price works are assessed by Polish courts to the detriment of the owner.

In Poland, construction projects are carried out using two models:

• separate contracting of the designer (for design development) and the general contractor (for construction works); and
• concluding a Design & Build contract with the general contractor, who is obliged to both design and construct the project.

In separate contracting, the liability of the designer is independent of the general contractor’s liability. The owner’s associated risks must be properly addressed in both contracts; typically, the owner expects the contractor to submit a statement confirming the review of the design and the absence of objections to it. In Design & Build contracts, liability is concentrated and rests with the general contractor. Although this is a convenient solution for the owner, it is less frequently used in the market.

Regardless of the model applied, the primary mechanisms for pursuing claims for improper design/construction of the project by the designer/general contractor consist of statutory implied warranty rights (five years for real estate) and rights under a contractually structured quality guarantee, the proper exercise of which is secured by the instruments referenced in 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance.

As a rule, from the moment of taking over the construction site from the owner, the contractor is liable for any damage occurring there. Additionally, contracts require contractors to provide:

• third-party liability insurance covering construction works;
• CAR/EAR insurance, unless agreed that the owner will procure such a policy; and
• indemnification of the owner in the event of third-party claims relating to the improper performance of works.

Post-handover construction risks (such as for instance: collapse or nuisances) rest with the owner. However, this does not preclude the pursuit of recourse claims against the contractor if they resulted from the contractor's negligence.

The contract sets out contractual penalties for the contractor's delays in completing the project and sometimes also intermediate milestones. The market standard in construction contracts is to limit contractual penalties to a certain fraction of the remuneration (usually 10%). If the delay is significant, the owner has the right to withdraw from the contract.

Another method of securing the timeliness of works is the owner's right to arrange the so-called “substitute performance”, that is commission the performance of specific works at the contractor’s risk and expense. However, this is rarely utilised in practice.

Performance security is usually provided in the form of:

• security for the proper performance of the contract until the fault-free final acceptance of the project – usually 10% of the remuneration; and
• security for the proper performance of the contract with respect to repairs resulting from the quality guarantee or statutory implied warranty (during their validity periods) – usually 5% of the remuneration.

Project owners strongly prefer bank or insurance guarantees. Where contractors are unable to obtain a guarantee, retention money is used, which is accumulated during the term of the contract by deducting a specified part of the contractor's remuneration (eg, 10%) from each payment.

In Poland, there are no statutory liens or encumbrances on the owner’s property to secure payments for designers and contractors. Neither are these commonly practised contractual security instruments.

However, contractors are entitled directly under statutory law to demand a remuneration payment guarantee from the owner in the form of a bank/insurance guarantee, the costs of which are split equally between the contractor and the owner. If the payment guarantee is not provided on time, the contractor may withdraw from the contract.

The contractor's right to demand a payment guarantee cannot be excluded under a contract. The owner’s withdrawal from the contract as a result of the contractor demanding a payment guarantee is deemed ineffective.

There are numerous requirements that must be fulfilled before a property can be used, and these depend on its type and surface area. For larger construction projects, commencement of use must be preceded by formal acceptance by the fire service and the sanitary inspectorate, following which an occupancy permit is issued for the property by the building supervision inspectorate.

As mentioned in 2.10 Taxes Applicable to a Transaction, the commercial sale of real estate in Poland is subject to VAT at 8% for residential real estate, and 23% for other real estate. If VAT does not apply to the sale, the tax on civil law transactions is due (see 2.10 Taxes Applicable to a Transaction).

The VAT Act provides for a number of exemptions from VAT on a real estate sale:

• Undeveloped land not designated for development – where the sale concerns undeveloped land not designated for development (according to the local zoning plan or a planning permission), it is exempt from VAT.
• Sale two years after the “first occupation” – the sale of buildings or parts thereof is exempt from VAT if it occurs after two years from their first occupation following construction, or after incurring expenditures on their improvement in an amount exceeding 30% of their initial value. Where both parties to the transaction are active VAT taxpayers, they may opt out of this exemption.

The tax risk is mitigated by applying for an individual tax interpretation, which gives the parties certainty regarding the tax authorities' position on the tax consequences of a given transaction.

Buyers also limit their tax risk by obtaining certificates confirming that the property is free from any compulsory mortgages, and by requiring the seller to provide certificates issued by public authorities regarding any outstanding public law liabilities of the seller.

Owners and perpetual usufructuaries of land, buildings, and structures must pay municipal real estate tax. This tax is paid based on square footage in the case of land and buildings, and on the initial value of the structure as stated in the fixed asset register in the case of structures. The relevant statutory law provides for maximum rates which municipalities cannot exceed when determining the tax amount. Properties used for business activities are subject to the highest taxation, while residential properties enjoy the lowest. In order to attract investors, municipality authorities use various types of tax incentives.

The obligation for Polish contracting parties to withhold flat-rate withholding tax (WHT) from non-residents arises exclusively in the case of payments for specific types of services (such as in particular: interest, remuneration for advisory, accounting and legal services, and license fees,). Non-residents' income obtained from real estate in Poland is taxed on general terms applicable to taxpayers with limited tax liability (under PIT or CIT).

Poland has the so-called minimum tax on revenue from commercial buildings. It applies to companies that are owners or co-owners of commercial buildings located in Poland that have been given over in whole or in part for use under a lease or similar agreement. The rate of this tax is 0.035% of the initial value of the building per month. The initial value of the building is stated in the fixed asset register. A tax-free revenue threshold applies to this tax, amounting to PLN10 million per annum (in total, regardless of the number of buildings). The minimum tax may be deducted from CIT, and in cases where the CIT paid in Poland exceeds such minimum tax, it is economically neutral.

As a rule, tax depreciation of commercial real estate amounts to 2.5% of its initial value per annum (thus, full depreciation takes 40 years). However, under the conditions specified in relevant statutory law, businesses may apply individual tax deprecation rates for improved or second-hand properties, which cannot exceed 10% per annum. In any case, tax depreciation cannot exceed accounting (balance-sheet) depreciation.