12 maj 2004

Is Poland going to be invaded by land-hungry Westerners? Probably not, but those who want to come will find it less problematic.

On April 26, 2004 the Amendments to the Law on Purchase of Real Estate by Foreigners came into force. The main goal of this Amendment is to clarify some provisions of the Law, to simplify the procedures for obtaining the permit for purchase of real estate and to supposedly adjust regulations on purchase by foreigners of real estate in line with EU wishes.

Before the Amendment came into force, any foreigner wishing to purchase real estate in Poland, or shares in a company which is an owner or perpetual usufructor of real estate in Poland, was always (with very few exceptions) required to obtain the permit from the Ministry of Internal Affairs. However, in light of accession on May 1, Poland was required to liberalize the regulations on purchase of real estate by foreigners, but still managed to introduce some transitional periods during the accession negotiations.

The most important change (effective May 1-the accession day) introduced by the Amendment is that companies or citizens from the European Economic Area (EU, plus Iceland, Norway and Liechtenstein) do not have to obtain a real estate permit, except for the purchase of agricultural/forest land or a second house ("second house" meaning real estate destined for the building of a house or for recreational purposes, where such real estate will not be the principal residence of the purchaser). Transition periods of 12 and 5 years respectively apply to these two categories. Although the real estate permit is not defined for the purpose of this provision, it may be interpreted to include the permit for the purchase of real estate as well as the permit for the purchase of shares in a company being an owner/perpetual usufructor of real estate. However, the transitional periods apply only to the direct purchase of real estate and not to purchase of shares. This means that from the day of accession it is not necessary to obtain a real estate permit for the purchase of shares in a company which owns agricultural/forest land.

The transition period for citizens from the European Economic Area for the purchase of agricultural land is limited to either 3 or 7 years from conclusion of a tenancy agreement (umowa dzierżawy in Polish) in a special form (with official confirmation of the date). This depends on the region of Poland involved. Also, the foreigner had to be staying legally in Poland during this period and farming that real estate. Moreover, from accession day a citizen of the European Economic Area will not be required a real estate permit for the purchase of a second house in two cases: if the purchaser has lived in Poland legally and without interruption for at least 4 years; and/or if the second house is purchased for the purpose of providing tourist services.
Michał Mężykowski

Michał Mężykowski is an associate at the Warsaw office of SALANS.
He specializes in banking & finance, corporate, M&A.

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