In May 2017, the Polish Government published the second, improved draft bill introducing Real Estate Investment Trusts (“REITs”) in Poland, following the first one which was announced in October 2016.

The new draft REIT law is intended to come into force on 1 January 2018. It covers a very interesting solution in terms of taxation of REITs' profits, namely the taxation rate on profits distributed from the REIT to its investors would be 8.5% irrespective of whether the investor is an individual or institutional, Polish or foreign entity.

Under the envisaged bill, REITs would have various unique features. They will have to be registered by the Polish Financial Supervision Authority specifically as a REIT company and at the same time shares in REITs will need to be listed in Poland. At least 70% of their assets must consist of real properties or shares in subsidiaries, as defined in the bill on REITs.

The main aim of the REIT will be to distribute profits derived from lease of real properties to its shareholders. Namely, it will be obligatory to annually distribute 90% of their profits derived from lease and sale of real estate to their shareholders by the end of the third quarter of the following year. By the time of distribution, a REIT’s profits would be fully exempt from income taxation, and profits earned by a REIT's subsidiary, under certain conditions, will be fully exempt from taxation by the time they are distributed to investors. Undistributed profits would be subject to a general 19% taxation.

Currently, the second process of public consultations is pending. The bill has not been filed with the Polish Parliament so far.