The Act on Reducing Certain Administrative Burdens in the Economy of 16 November 2012 (Journal of Laws no. 1342 of 30 November 2012) came into force on 1 January 2013. The amendments include among others simplification of the tax system, making interpretations issued by public authorities open to the public, new principles governing settlement of pro-family and Internet tax benefits, and numerous facilitations for undertakings relying on the leasing on assets.
The good news is above all the reduction of the mandatory term of the leasing agreements for real property subject to depreciation. Until the end of 2012 they had to be concluded for at least 10 years. The legislators decided that the term was too long, thus making it difficult for the lessee to assess the risk involved, and reduced it to 5 years. These amendments resulted in corresponding amendments to the provisions of the Act on Personal Income Tax (Article 23b(1)(1)) and the Act on Corporate Income Tax (Article 17b(1)(1)).
The provisions governing assignment of the leasing agreement were also refined. Under the previously effective regulations, in the event of replacement of the parties to the agreement, the term of the leasing agreement had to be extended under pain of the agreement losing its operating lease status (beneficial tax-wise as lease payments are tax deductible). This is no longer necessary under the new regime, as long as the other provisions of the agreement are not amended. A similar interpretation was adopted earlier by courts: among others, the Supreme Administrative Court in its judgement of 18 April 2012 (case file II FSK 1755/10, LEX no. 1133362) and the Regional Administrative Court in Warsaw in its judgement of 15 November 2012 (case file III SA/Wa 649/12, Gazeta Prawna 2012/223/3).
The facilitations introduced covered also conclusion of further leasing agreements. Above all, the value of the object of a further leasing agreement is now based on its market value at the time a subsequent agreement is concluded. It is irrelevant for the agreement whether the lessee under the previous agreement or another entity becomes a party to the agreement. Under the previous regulations for a further leasing agreement to be treated as an operating lease, the sum of lease payments agreed less applicable tax on goods and services (VAT) had to correspond at least to the initial value of the fixed or intangible assets concerned.
One of the most significant amendments is the newly introduced availability of the right of perpetual usufruct as the object of a leasing agreement. Under the previous regime, leasing agreement could be concluded for fixed and intangible assets subject to depreciation and for land not subject to depreciation. The rationale for the amendments stresses the difficulties that undertakings concluding leasing agreements for a building situated on land in perpetual usufruct came up against. In such a situation, two agreements had to be concluded: a leasing agreement for the building and a tenancy agreement for the right of perpetual usufruct. In this particular case, the amendments covered the provisions of Article 23a(1) and Article 23i of the Act on Personal Income Tax and Article 17a(1) and Article 17i of the Act on Corporate Income Tax. It must be noted that leasing agreements for perpetual usufruct will be settled for taxation purposes in the same manner as lease agreements for freehold land, thus making mutual settlements between the parties much easier.
Summing up, it must be concluded that the amendments to legislation outlined above go some way towards meeting the expectations of the business community. The added flexibility of the regulations on leasing will without any doubt make this vehicle for financing business operations more attractive which will most likely increase its popularity among undertakings.