Poland Topping List Of Cheapest Places To Invest In Commercial Property
Research conducted by Taxand, the world's largest independent global network of specialist tax advisors to multinational businesses, has shown that Poland is one of the cheapest countries in the World in which to invest in commercial real estate deals by total tax take.
The total tax take, currently 15.57%, is the fourth lowest of the 23 countries analysed in the research although this is still a fair way behind India which topped the table with a rate of 4.21%. Poland also has one of the lowest tax takes for residential property transactions too; a significant factor for property investors to consider when looking to generate the greatest return on investments in Europe. The UK, for example, has the second highest tax take on rent from commercial property at a rate of 33.80%.
This move to attract real estate investment is mirrored by the other jurisdictions occupying the bottom of the research table as the cheapest in terms of total tax take. These include Switzerland (13.28), Luxembourg (14.14%), and Finland (15.96%), all of which wish to be seen as business friendly jurisdictions.
The research, conducted in over 20 key global markets, also shows that commercial real estate investors in the USA pay the most amount of tax at a staggeringly high 43.33%. The alarmingly high US total tax rate is made up of the high rate of income tax (35%), additional states taxes (6.6%) and non-recoverable sales taxes on construction.
The USA is closely followed by Argentina (41.34%), Brazil (35.82%) and Malaysia (33.31%) despite Malaysia being the cheapest country of those analysed in which to invest in residential property.
Pawe? To?ski, Partner with Accreo Taxand in Poland, said: "The relatively small income tax in Poland is a factor in explaining the low tax rate on commercial property in Poland, though the key reason behind this percentage is the fact that VAT is recoverable on commercial investments and VAT on leases can be deducted by the tenant. In some other countries, investment VAT is non-deductable, meaning that Poland has relatively favourable conditions for investment in this sector."
Keith O'Donnell, Global Head of Real Estate at Taxand, said: "The research shows us that commercial property investors need to think carefully before investing in new office space around the globe as in key global jurisdictions the taxman may take the lion's share of any profits made."
"This research on real estate investment has dispelled a few myths in the world of tax. What is of particular interest is that the widely held belief that emerging market economies posed a greater commercial property investment risk, in return for the assurance of lower tax regimes, simply is no longer the case."
"On top of this, countries that were traditionally seen as being pro real estate investment in the developed world, such as France and Germany, are in fact only middle of the table with between 20% and 25% tax rates when the whole tax impact is examined properly. When investors look closely at the tax they are being charged it may make them rethink where they should invest in future and have an impact on the development of further commercial property in some countries."
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NOTES TO EDITORS
To arrive at the figures, Taxand has taken into account VAT (or its local equivalent), corporate income tax, and property taxes. The property taxes were usually subject to various country specific assumptions and modifications as they often differ on a municipality basis or sometimes just location basis.
Those were reviewed by the coordinating Taxand team to assure comparability. Administrative fees, notary fees, court fees were excluded as having a relatively low impact on the overall tax take.
To ensure comparability of the results, certain data has been fixed such as size of the building, investment costs, and 100 percent non-interest bearing equity financing. With all of that built into the model, each real estate team from Taxand adopted it to the local law to ensure comparability.
Your Taxand contact for further queries is:
Abigail Tarren, Global Operations Director
T. +44 (0)207715 5243