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Author: adminTS

act legal Poland advises Interpump Group on EUR 278m cross-border transaction

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Interpump Group S.p.A. acquired White Drive Motors & Steering business unit of Danfoss, consisting of three companies based in Poland, Germany and the US. The transaction value is EUR 278 million.

The seller, Danfoss, is a global supplier of mobile hydraulics and electrification products and solutions. White Drive Motors & Steering has manufacturing facilities in the US, Germany and Poland. The deal was made possible by regulatory bodies’ approval (incl. the EU Commission and the US Department of Justice).

act BSWW legal & tax advised Interpump Group on the acquisition of White Drive Motors & Steering sp. z o.o. (formerly operating as Danfoss Power Solutions sp. z o.o.), a Polish company that forms part of the acquired business unit. The company has two production plants in Poland, located near Wrocław.

The services rendered by the law firm included due diligence of the acquired company, drafting transaction-related documents, negotiation support and closing assistance.

The project team was led by Mariusz Grochowski (Senior Associate) and supervised by Jacek Bieniak (Managing Partner).

“We are pleased to advise on such complex transaction, which plays a pivotal role in our Client’s business strategy,” says Jacek Bieniak.

Interpump Group is the world’s largest producer of professional high-pressure piston pumps, as well as one of the global players in the hydraulic components market. It is listed on the Italian Stock Exchange in the FTSE Italia Mid Cap and FTSE Italia STAR indices. Interpump Group manufactures pumps with pressure up to 500 bar, and professional high pressure cleaners, with 75% of the products intended for export.

Danfoss Group is a multinational company with more than 28,000 employees globally. It produces mechanical and electronic components for equipment on a global scale and in a variety of sectors. Danfoss manufactures approx. 250,000 individual products daily in 50 factories located in 20 countries. The Group’s distribution network consists of approx. 110 agencies. The corporate headquarters are located in Nordborg, Denmark.

act legal Poland at the National IT and Administration Convention

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The 3rd National IT and Administration Convention will be held on 13-14 October 2021.

Sebastian Pietrzyk, Attorney-at-law, Partner and Co-Head of Public Procurement Practice, will speak about the traps for the IT industry associated with the new Public Procurement Law.

The event’s program is available here.

The conference is organized by Technopark Pomerania [Szczeciński Park Naukowo-Technologiczny]. act BSWW legal & tax is a partner of the event.

NEWSLETTER: The tax side of real estate / September 2021

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Get the RET right

The tax side of real estate
Periodic newsletter for the Real Estate sector

September 2021

Services related to long-term lease should be covered by the 8% VAT rate, according to the so-called “binding rate information” issued on September 20, 2021 by the President of the National Fiscal Information (0112-KDSL2-1.440.103.2021.2.MK).
The case concerned the VAT rate applicable to the accommodation of students, workers and others.
“According to PWN [Polish Scientific Publishers] Polish dictionary, to ‘accommodate’ means ‘to provide temporary lodging for someone.’ These services are covered by code no. 55 in PKWiU [Polish Classification of Goods and Services] – Accommodation-related services. The VAT Act sets a preferential VAT rate of 8% for such services – article 41 section 2, in conjunction with article 146aa section 1 item 2 and section 1a of the Act, and item 47 of Appendix 3 to the Act,” noted the President of the National Fiscal Information.
“Once again the President of the National Fiscal Information confirmed the possibility to apply the 8% VAT rate for services related to the private rented sector,” commented Małgorzata Wąsowska, Head of Tax and Tax Advisor at act BSWW legal & tax.

Contractual penalties paid for rescission of lease agreements might sometimes be regarded as tax-deductible costs, according to the advance tax ruling issued on August 31, 2021 by the President of the National Fiscal Information (0111-KDIB1-3.4010.498.2017.6.MBD).
The case concerned a company which concluded (following a thorough analysis) that its operations performed in leased premises might be unprofitable, i.e. may result in losses. The President of the National Fiscal Information confirmed that is such case, the payment of contractual penalties is related to maintaining the source of income, and that article 16 section 11 item 22 of the CIT Act does not apply to those penalties.
“(…) Given the fact that contractual penalties under lease agreements match the definition of tax-deductible costs discussed in article 15 section 1 of the CIT Act, and do not meet the criteria applicable to the penalties discussed in article 16 section 1 item 22 of the CIT Act, the Applicant will be entitled to categorize them as tax-deductible costs,” concluded the President of the National Fiscal Information.

In order to apply the housing tax relief before December 31, 2018, it was enough to sign a development agreement and use the funds for residential purposes within 2 years of the date of sale of the previous property, according to the general ruling issued by the Minister of Finance on September 02, 2021 (DD2.8202.1.2021).
“The right to apply the relief is independent from the final acquisition of the ownership right within the deadline specified in article 21 section 1 item 131 of the CIT Act, effective until December 31, 2018,” noted the Minister of Finance.
“This general ruling puts an end to the doubts as to whether the final transfer of the ownership right to real estate until the statutory deadline was required in order to tap into the housing tax relief. The ruling confirms the well-established judicial practice in this respect,” commented Jakub Świetlicki vel Węgorek, Tax Advisor at act BSWW legal & tax.

While selling a real property, a natural person who does not conduct business operations may act as a VAT payer as a result of the powers of attorney and conditions precedent, according to the advance tax ruling issued by the President of the National Fiscal Information on August 31, 2021 (no. 0111-KDIB1-3.4010.498.2017.6.MBD).
The case concerned a natural person who intended to sell a property and authorized the purchaser to obtain the decisions and permits which constituted the conditions precedent for execution of the final agreement, to obtain the utilities connection conditions, to get a construction permit, and to subdivide the property.
“It needs to be noted that the actions which have been taken by the Applicant preclude the sale of land lot no. 1 as part of management of private assets. Hence, the aforesaid sale will be deemed to form part of business operations, as discussed in article 15 section 2 of the Act, and the Applicant will be acting as a VAT payer, as referred to in article 15 section 1 of the Act,” noted the President of the National Fiscal Information.

Establishment of a free-of-charge transmission easement to the benefit of a company shall be regarded as such company’s revenue from free-of-charge services under article 12 section 1 item 2 of the CIT Act, according to the advance tax ruling issued on September 22, 2021 by the President of the National Fiscal Information (0111-KDWB.4010.29.2021.1.ES).
The case concerned a company which builds heat networks and enters into connection agreements with new recipients. In order for such agreements to be executed, it is necessary to establish transmission easements. The heating system and equipment serve the purpose of supplying heat to recipients, i.e. owners and holders of perpetual usufruct right to properties. Thanks to the easement, the company has the right to enter the land in case of any need to perform inspections, repairs or maintenance. As a result, the company can operate, and the recipients can be supplied with heat, in an uninterrupted manner.
“Taking the above into consideration, it has to be concluded that establishment of a free-of-charge transmission easement to the benefit of the company, consisting in the right of access to the property and use thereof, generates revenues arising from free-of-charge services under article 12 section 1 item 2 of the CIT Act,” decided the President of the National Fiscal Information.

Demolition of the acquired buildings in order to implement another project will not entail an obligation to revise input VAT, according to the advance tax ruling issued on September 08, 2021 by the President of the National Fiscal Information (0114-KDIP1-1.4012.362.2021.2.JO).
The case concerned a taxpayer that intends to acquire developed land in order to implement a new project promptly after demolition of the existing developments. The President of the National Fiscal Information fully shared the taxpayer’s opinion that “there is no obligation to revise input VAT due to demolition of the building or structures; this applies to the VAT amount included in the invoice received from the seller, covering the sale of the assets, deducted in relation to the acquisition thereof.”

A “structure,” as defined in construction law regulations, may be regarded as a building under the Local Taxes and Fees Act for the purposes of the property tax if it meets the criteria included in the “building” definition provided in that Act, and its distinctive element is the usable area, according to the resolution adopted by the Supreme Administrative Court on September 29, 2021 (case files no. III FPS 1/21).

Need any assistance? Got any questions? Call or e-mail us

Małgorzata Wąsowska
Tax Advisor / Partner / Head of Tax
+48 691 477 047
malgorzata.wasowska@actlegal-bsww.com

Michał Brzozowicz
Tax Advisor / Attorney-at-law / Senior Associate
+48 665 667 110
michal.brzozowicz@actlegal-bsww.com

Jakub Świetlicki vel Węgorek
Tax Advisor / Senior Associate
+48 505 703 768
jakub.swietlicki@actlegal-bsww.com

Szymon Kokot
Tax Advisor / Trainee Attorney-at-law / Associate
+48 691 557 507
szymon.kokot@actlegal-bsww.com

act legal Poland advises Adventum on EUR 84m acquisition of Sky Tower

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Adventum Group, an investment fund manager operating internationally, is at the final stage of the EUR 84.42 million acquisition of Sky Tower, a landmark development in Wrocław, one of Poland’s biggest and highest mixed-use projects.

Develia S.A. (the seller) and Adventum Group (the buyer) have entered into the preliminary sale agreement, with the final agreement slated to be signed until the end of 2021.

act BSWW legal & tax has provided Adventum with comprehensive legal assistance with respect to the preliminary agreement, and will continue to do so until the project’s completion. The services rendered by the law firm included due diligence of the property, drafting transaction-related documents, and negotiation support.

The project team was led by Marta Kosiedowska (Partner) and Marek Wojnar (Managing Partner co-heading the law firm’s real estate practice). The due diligence audit was prepared under the supervision of Katarzyna Marzec (Partner). The transactional team was supported by Anna Sawaryn (Senior Associate).

“The rapid expansion of Adventum’s portfolio in Poland is very impressive. We are proud to have earned the trust of one of the fastest-developing funds on the Polish market,” says Marta Kosiedowska, Partner at act BSWW legal & tax.

“Adventum’s portfolio is growing to above 125,000 m² of office space with this transaction. Sky Tower expands Adventum’s retail presence in Poland. We are delighted to support this Client yet again in such prestigious acquisition,” adds Marek Wojnar, Managing Partner at act BSWW legal & tax.

Sky Tower is one of the highest office, commercial and residential complexes in Poland (212 metres and 50 floors). Apart from over 30,500 m² of leasable office space, the project covers commercial space (25,000 m²), luxury apartments, comprehensive leisure facilities, and a multi-level underground car park. The total area of the building is approx. 171,000 m².

Adventum Group is a group of boutique investment fund management companies focused on Central European real estate investments. The Group’s personnel includes highly experienced real estate professionals with CFA, NRW and MRICS qualifications, with a combined investment experience of 70+ years. The group has so far executed investments in the CEE region with a total value of over EUR 1.5bn.

The seller was represented by Dentons.

act legal Poland advises Adventum on purchase of Marynarska Point 1

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Adventum Group, an investment fund manager operating internationally, has successfully closed the transaction of purchase from Savills Fund Management GmbH of the Marynarska Point 1 in Warsaw, a modern office building offering 13,000 sqm. of rentable office space. Thanks to this transaction, the Polish portfolio of Adventum’s offices has grown to above 75,000 sqm.

act BSWW advised Adventum throughout the whole purchase process. The services provided by the law firm included due diligence of the property, drafting transaction-related documents, negotiation support and transaction-related advice.

The project team was led by Marta Kosiedowska (Partner) and Marek Wojnar (Managing Partner co-heading the real estate practice of the law firm). Due diligence audit was prepared under the direction of Magdalena Banaszczyk-Głowacka (Partner). The transitional team was supported by Anna Olmińska-Kieżun (Associate).

– It is the fifth real property acquired by the fund in Poland over the last two years; Adventum International has already purchased Poznań Financial Centre (Poznań), Renaissance Plaza (Warsaw), Katowice Business Point (Katowice) and Centrum Orląt (Wrocław) – says Marta Kosiedowska, Partner at act BSWW legal & tax.

– We are delighted with the trust of our Client. We had the opportunity to assist Adventum on all those projects and we continue to advise the fund on its further ventures in Poland – says Marek Wojnar, Managing Partner at act BSWW legal & tax.

Marynarska Point 1 is a A-class office building offering 13,000 sqm. leasable area across 11 storeys.

Adventum Group is a group of boutique investment fund management companies focused on Central European real estate investments. The Group’s personnel includes highly experienced real estate professionals with CFA, NRW and MRICS qualifications, with a combined investment experience of 70+ years. The management has so far executed investments in the CEE region with a total value of over EUR 1.5bn.

The seller was represented by Dentons.

NEWSLETTER: The tax side of real estate / August 2021

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Get the RET right

The tax side of real estate
Periodic newsletter for the Real Estate sector

August 2021

The lease of hotel/commercial premises for residential purposes will be subject to VAT and non-exempt, according to the advance tax ruling issued on August 05, 2021 by the President of the National Fiscal Information (no. 0112-KDIL1-2.4012.265.2021.2.DS).
The case concerned the possibility to apply VAT exemption to the lease of hotel/commercial premises for residential purposes (incl. with respect to students and seconded employees).
“(…) VAT exemption only applies to the lease of residential properties for residential purposes,” concluded the President of the National Fiscal Information.
“This advance tax ruling is important with respect to the long-term lease of premises in condo hotels and apartment hotels, especially in terms of the right to deduct VAT related to their construction and acquisition,” commented Małgorzata Wąsowska, Head of Tax and Tax Advisor at act BSWW legal & tax.

The use of the company’s infrastructure by its manager might sometimes result in the lack of the right to deduct VAT, according to the advance tax ruling issued on August 04, 2021 by the President of the National Fiscal Information (no. 0112-KDIL1-1.4012.368.2021.1.AR).
The case concerned a natural person who was appointed as a member of the management board, while at the same time performing management services under a separate agreement. Given the fact that pursuant to the agreement, the manager is entitled to use the company’s infrastructure, receives a fixed fee and does not bear liability towards third parties, he was unsure whether he was acting a VAT payer.
“(…) As part of the agreement with the Company, the Manager is / will be bound by the legal relation with the entity that requests the performance of specific tasks as regards the conditions applicable to such performance, the remuneration and the aforesaid entity’s liability towards third parties,” noted the President of the National Fiscal Information, deciding that the manager does not act as a VAT payer, meaning that the services performed by him will not be covered by VAT.

A company that leases residential premises to students in its own building should pay the property tax in the same way as for premises intended for business operations, according to the Provincial Administrative Court in Gliwice (judgment of July 14, 2021, case files no. I SA/Gl 487/21).
The Provincial Administrative Court decided that if the Company had not leased premises, it would not have generated income from business operations. Consequently, the lease of premises for residential purposes is not crucial for taxation purposes.
“In order to apply an adequate property tax rate, it is vital to take into account the company’s object of business, and (consequently) the role that a residential building (student house) plays in generating the results of such operations, i.e. profits. Without using the residential building or its part, the company will be unable to reach its business goals, meaning that in the case at hand, the building is occupied for the purposes of the company’s business operations,” concluded the Provincial Administrative Court in Gliwice.

The sale of a share in the perpetual usufruct right to a real property is not regarded as business operations as there are no criteria pointing to the taxpayer’s professional activity, according to the Provincial Administrative Court in Warsaw (judgment of February 10, 2021, case files no. III SA/Wa 658/20).
The taxpayer wanted to sell the right of perpetual usufruct as part of management of private assets. In relation to the executed lease agreement and the actions taken with respect to the property, the authority decided that the taxpayer acts as an entity that is not subject to VAT.
“Summing up, it needs to be concluded that under the circumstances specified in the case description, the planned sale of a share in the perpetual usufruct right to the Property will not constitute business operations that are subject to VAT as there are no criteria pointing to the Applicant’s activity that would be comparable to the activity of entities whose professional operations cover such transactions. There are no reasons to believe that such actions are professional, regular and organized in nature,” noted the Provincial Administrative Court in Warsaw.
“This judgment shows that not every single sale of a real property needs to be automatically regarded as made as part of business operations. It is always necessary to analyze a range of circumstances related to the transaction,” commented Michał Brzozowicz, Tax Advisor at act BSWW legal & tax.

Income from participation in a limited partnership [spółka komandytowa] through an ordinary partnership [spółka jawna], generated by a natural person, is not subject to the so-called solidarity levy, according to the advance tax ruling issued on June 09, 2021 by the President of the National Fiscal Information (no. 0113-KDIPT2-3.4011.308.2021.1.MS).
The case concerned a natural person who is a partner in an ordinary partnership and generated income from participation in the profits of a limited partnership (through the ordinary partnership). The authority believes that such income is not included in the taxation base for the purposes of the solidarity levy.
“The Applicant’s income (revenue) from participation in the profits of a limited partnership, generated through the ordinary partnership, will not be taken into account when determining the taxation base related to the solidarity levy,” concluded the President of the National Fiscal Information.

Independent residential unit owned by the Company are not regarded as buildings, and are this not covered by income tax on revenues from a fixed asset (building) referred to in article 24b section 1 of the CIT Act, according to the advance tax ruling issued on August 26, 2021 by the President of the National Fiscal Information (no. 0111-KDIB1-2.4010.253.2021.1.ANK).
The case concerned a company that owns independent residential premises that are successively sold to tenants. While selling those apartments, the company establishes a separate ownership title to them.
“It needs to be noted that if the tax referred to in article 24b of the CIT Act (effective as of January 01, 2019) was supposed to cover independent residential units that are subject to a separate ownership right, the lawmaker would make that clear through an unequivocal legal regulation that refers specifically to residential units categorized as separate property,” concluded the President of the National Fiscal Information.

In order to decide that a given entity meets the criteria of a “real estate company,” all applicable statutory requirements have to be fulfilled, according to the advance tax ruling issued on August 24, 2021 by the President of the National Fiscal Information (no. 0111-KDIB1-2.4010.235.2021.1.AK).
The case concerned an SPV that had doubts as to whether the sale of its shares, held by a Dutch tax resident, will mean that it is subject to CIT in Poland even though it does not generate revenues from lease, and the balance sheet value of the property in the preceding year did not exceed PLN 10 million.
“Given the fact that the Applicant does not meet the criteria for being classified as a ‘real estate company,’ as defined in article 4a item 35 of the CIT Act, it will not be obliged to pay a tax advance in relation to the Transaction under article 26aa section 1 of the CIT Act,” concluded the President of the National Fiscal Information.

Need any assistance? Got any questions? Call or e-mail us

Małgorzata Wąsowska
Tax Advisor / Partner / Head of Tax
+48 691 477 047
malgorzata.wasowska@actlegal-bsww.com

Michał Brzozowicz
Tax Advisor / Attorney-at-law / Senior Associate
+48 665 667 110
michal.brzozowicz@actlegal-bsww.com

Jakub Świetlicki vel Węgorek
Tax Advisor / Trainee Attorney-at-law / Associate
+48 505 703 768
jakub.swietlicki@actlegal-bsww.com

Szymon Kokot
Trainee Attorney-at-law / Associate
+48 691 557 507
szymon.kokot@actlegal-bsww.com

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Michał Wielhorski – Managing Partner at act BSWW legal & tax – has been recommended as Notable practitioner by IFLR1000.

For nearly 20 years Michał has been advising on all types of real estate projects, including financing of real estate investments.

IFLR1000 is an international legal directory dedicated to ranking law firms and lawyers on the basis of financial and corporate transactional work.

Click here for more information.

act BSWW advises on sale of two retail parks

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act BSWW legal & tax has acted on behalf of Rank Progress in relation to the sale of Miejsce Piastowe retail park and the preliminary sale agreement for Pasaż Wiślany retail park in Grudziądz.

On July 29, 2021, Progress XXXVII sp. z o.o. (subsidiary of Rank Progress S.A.) entered into an agreement for the sale of 2.4963 ha of developed land in Miejsce Piastowe (near Krosno), together with a 4,752.67 m2 GLA retail park and additional developments.

On August 5, 2021, Progress XXXVI sp. z o.o. (subsidiary of Rank Progress S.A.) entered into a preliminary agreement for the sale of 1.8299 ha of developed land, together with Pasaż Wiślany retail park whose GLA is 5,188.64 m2. As long as all conditions precedent are fulfilled, the final agreement will be signed until October 28, 2021.

The law firm assisted the client at all stages of the sale of the property in Miejsce Piastowe, and with the preliminary sale agreement for the property in Grudziądz.

The project was managed by Mateusz Prokopiuk, Partner at act BSWW legal & tax. Aneta Gierzyńska, Senior Associate, was also advising on the transactions. The team was overseen by Michał Wielhorski, Managing Partner.

“These are just two out of a large number of ambitious projects on which we are advising Rank Progress,” says Michał Wielhorski.

Rank Progress is an investment and development company, listed on the Warsaw Stock Exchange.

 

act legal Poland advises STRABAG Real Estate on sale of real property in Warsaw

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Due to its dynamic growth and a number of new investments focusing on large development projects, STRABAG Real Estate is currently selling selected minor real estate assets. One of such transactions is the sale of real estate on Canaletta Street in Warsaw Downtown to the PURO Hotels chain.

Thanks to extensive experience in hotel projects, STRABAG Real Estate prepared the asset for sale together with the final construction permit.

The scope of services provided by act BSWW legal & tax included comprehensive transactional and tax advice. Previously, the law firm advised the Client on the acquisition of the property.

The project was managed by Marek Wojnar, Co-Head of Real Estate, Managing Partner at act BSWW legal & tax and by Marta Kosiedowska, Partner at act BSWW legal & tax. The tax team was led by Małgorzata Wąsowska – Head of Tax, tax advisor and Partner at the firm.

“STRABAG Real Estate is developing very dynamically – its portfolio is changing and in some cases the Client decides on disinvestment. This transaction is one of such examples and takes place in parallel to a number of acquisition projects on which we are currently advising STRABAG Real Estate” – says Marek Wojnar.

“The excellent location of the property undoubtedly proves its investment attractiveness” – adds Marta Kosiedowska.

act BSWW reinforces its real estate practice

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The law firm’s team was joined by Robert Woźniak (attorney-at-law). Robert specializes in real estate law, with a strong emphasis on lease agreements for office space and commercial premises in shopping centers, as well as in real estate transactions.

He has participated in projects related to the sale of companies and real properties, due diligence audits and investment financing.

He has over a dozen years of transferrable experience in providing comprehensive day-to-day legal services in civil, commercial and corporate law to companies operating mostly in the real estate industry, including international groups.

Robert has served as a member of management boards and supervisory boards of companies from the real estate sector (including ones with local authorities and banks as shareholders).

“Robert is a seasoned practitioner, who has been successfully supporting entities from the real estate sector for over a dozen years. We are happy to welcome him on board,” says Michał Wielhorski, Managing Partner at act BSWW legal & tax.

Real estate is one of our firm’s core strengths, with a team made up of 20 lawyers. Our achievements in this field have been recognized by leading international legal directories, i.e. Chambers and Partners, and The Legal 500.