Recovery of VAT, expensing vs. capitalization of interest, and compliance with thin cap all need to be looked at separately for each project
Recovery of VAT, recognition of interest, thin cap
It is crucial that a proper acquisition structure is developed prior to investing in Polish real estate. There are a number of factors which need to be taken into account to ensure tax efficiency of the structure, such as transfer taxes on property acquisition, VAT recovery, a financing structure which takes into account Polish thin capitalisation restrictions, capital (stamp) duty on loans, withholding taxes on interest, transfer pricing regulations, etc. Additionally, it is important that exit strategies are also thought through as early as at the investment phase so as to accommodate the investor’s preferences and international tax regulations such as double taxation treaties which may contain real estate clauses.