TAX ON CIVIL LAW TRANSACTIONS
Tax on civil law transactions (TCT) is a tax applicable in Poland and covering certain types of civil law transactions. The legal act, which defines the principles of TCT is the Act on Tax on Civil Law Transactions.
This tax will arise if the subject of the concluded agreement are items or property rights located in Poland or abroad, provided that their purchaser has a place of residence or registered office in Poland and if the agreement itself was concluded in Poland.
From the point of view of entrepreneurs conducting business in the form of commercial companies (limited liability company or joint-stock company), the most common activities subject to TCT are:
- Conclusion of articles of association of a capital company – the taxable base here is the value of the share capital or the value of its increase, and the tax obligation arises when the company contract is concluded or when a resolution on the increase of the share capital is adopted.
- Conclusion of a partnership agreement – the taxable base is the value of contributions to the partnership and an amendment to the agreement in the form of a contribution or an increase in the contribution (also in the form of a loan granted to the partnership by a partner), the value of which increases the partnership’s assets.
The aforementioned actions are subject to TCT at the rate of 0.5%, and the obligation to pay the tax rests with the company itself.
- Agreement of sale (e.g. purchase of shares, purchase of an enterprise or an organised part thereof) – the purchaser of shares is obliged to pay TCT at the rate of 1% of the market value of the shares, whereas in the case of the purchase of an enterprise or an organised part thereof (OPE) the tax rate is 1% or 2% (depending on the type of asset) and should be calculated on the basis of the market value of particular assets and property rights constituting the enterprise or OPE.
It should be emphasized that generally TCT involves the necessity of preparing of a tax return as well as calculating and paying the tax within 14 days from the date the tax obligation arose. The only exception is a situation when a taxpayer makes an activity in the form of a notarial deed – then the tax will be collected by a notary who will also prepare an appropriate declaration.