Acquisition of real estate by foreigners

Acquisition of real estate by foreigners

 

• Can foreigners freely acquire real estate in Poland?
• Does the need to obtain a permit for the acquisition of real estate apply to all foreigners?
• When is it not necessary for a foreigner to obtain a permit for the acquisition of real estate?
• What conditions must a foreigner fulfil to obtain a permit for the acquisition of real estate in Poland?
• What is the procedure for obtaining a permit?

Can foreigners freely purchase real estate in Poland?

 

An acquisition of real estate by foreigners in Poland is limited by the Act of March 24, 1920 on the acquisition of real estate by foreigners. As a rule, foreigners need to obtain a permit from the minister competent for internal affairs (currently the Minister of Internal Affairs and Administration) to purchase real estate in Poland.

 

The acquisition of real estate is understood as the acquisition of the ownership right to real estate or the right of perpetual usufruct on the basis of any legal event, e.g. a purchase agreement or by way of inheritance.

 

The permit is also required for the acquisition of shares or stocks in a commercial company with its registered office in Poland, being the owner or perpetual usufruct user of real estate, if:

1. the company becomes a controlled company or
2. the company is a controlled company and the shares or stocks are acquired by a foreigner who is not a shareholder or stockholder of the company.

 

A controlled company is a commercial company in which a foreigner or foreigners have directly or indirectly more than 50% of votes at the shareholders’ meeting or general meeting, or in which they have a dominant position within the meaning of the Commercial Companies Code. It will be, for example, a limited liability company in which a Chinese citizen will acquire 51% of shares as a result of the acquisition of shares.

 

The acquisition of real estate and acquisition of shares or stocks in a commercial company without the required permit is invalid.

 

Does the need to obtain a permit to acquire real estate apply to all foreigners?

 

No. The requirement to obtain a permit does not apply to citizens and entrepreneurs having their place of residence or seat in the territory of the European Economic Area and Switzerland.

 

The fact that the company is controlled by foreigners from outside the European Economic Area or Switzerland does not matter here. The mere fact of having a seat in the territory of the EEA or Switzerland entitles it to acquire real estate in Poland without the need to obtain a permit.

 

For example, a limited liability company whose only partners are Indian citizens, but having its seat in Germany or Poland (i.e. within the territory of the EEA), is not required to obtain a permit to acquire real estate in the territory of the Republic of Poland.

 

Pursuant to the Act on the acquisition of real estate by foreigners, “the foreigners”  are:

1. natural persons who do not have Polish citizenship (e.g. a Bangladeshi citizen),
2. legal persons based abroad (e.g. a limited liability company based in India)
3. companies without legal personality of the persons mentioned above, established abroad, established in accordance with the laws of foreign countries (e.g. a general partnership established in China and having its seat there, the partners of which are Chinese citizens),
4. legal persons and commercial companies without legal personality established in Poland, controlled directly or indirectly by the persons or companies mentioned above. (e.g. a limited liability company based in Warsaw, in which the majority of shares are held by a citizen of Ukraine or another company established in Ukraine and having its seat there).

 

However, the last category, although defined in the act as a foreigner, in practice is able to acquire real estate in Poland without a specific permit. This is due to the fact, as mentioned above, that the company has its seat in the territory of the EEA or Switzerland entitles it to acquire real estate in Poland without the need to obtain a permit.

 

When is it not required to obtain a permit for the purchase of real estate by a foreigner?

 

A foreigner is not required to obtain a permit to acquire real estate in the event of:

• purchase of an independent apartment,
• purchase of real estate by a foreigner residing in the Republic of Poland for at least 5 years from the granting of a temporary or permanent residence permit or a long-term resident of the European Union,
• acquisition by a foreigner who is a spouse of a Polish citizen and residing in the Republic of Poland for at least 2 years from the granting of a temporary or permanent residence permit or a long-term resident’s European Union residence permit, real estate which, as a result of the acquisition, will constitute a statutory community of spouses,
• acquisition of real estate by a foreigner, if on the day of purchase he is entitled to statutory inheritance from the seller of the real estate and the seller of the real estate is its owner or perpetual usufructuary for at least 5 years
• purchase by a „controlled legal person”, for its statutory purposes, of undeveloped real estate, the total area of which in the entire country does not exceed 0.4 ha in the area of cities,
• purchase of real estate by a foreigner, who is a bank and at the same time a mortgage creditor, in the procedure of taking over the property as a result of an unsuccessful auction in enforcement proceedings,
• acquisition by a bank of shares or stocks in the company in connection with the pursuit of claims by that bank resulting from banking activities performed.

 

However, the above-mentioned exemption from the obligation to obtain a permit does not apply to the acquisition of real estate located in the border zone and agricultural land with an area exceeding 1 ha.

 

What conditions must a foreigner meet in order to obtain a permit to acquire real estate in Poland?

 

According to Art. 1a of the Act on the acquisition of real estate, a permit to acquire real estate is issued to a foreigner if:

1. the acquisition of real estate by a foreigner will not pose a threat to defense, state security or public order, public policy and health considerations;
2. there are circumstances that prove his ties with the Republic of Poland.

 

The circumstances confirming the foreigner’s ties with the Republic of Poland may include, in particular:

1. having Polish nationality or Polish origin;
2. entering into a marriage with a citizen of the Republic of Poland;
3. having a residence permit:
   1. temporary (excluding a temporary residence permit for victims of trafficking in human beings and a temporary residence permit due to circumstances requiring a short-term stay of a foreigner on the territory of the Republic of Poland) or
   2. permanent or
   3. long-term resident of the European Union.
4. membership in the management body of legal persons and commercial companies without legal personality, based in Poland, controlled directly or indirectly by foreigners,
5. carrying out economic or agricultural activity on the territory of the Republic of Poland, in accordance with the provisions of Polish law.

 

In addition, the area of real estate purchased by a foreigner in order to satisfy his / her vital needs may not exceed 0.5 ha, and in the case of a foreigner pursuing economic activity in the territory of the Republic of Poland, it should be justified by actual needs resulting from the nature of the economic activity.

 

What is the procedure for obtaining the permit?

 

In order to obtain a permit to acquire real estate, a foreigner should submit an appropriate application.

 

When submitting the application to the Minister of Internal Affairs and Administration, all documents confirming the relevant circumstances should be attached.

 

The number of required documents can be overwhelming. Submission of those documents may cause difficulties to a person who has no experience in this field, and thus the period for obtaining the appropriate permit may extend.

 

It should also be noted that the application must be made in Polish, and foreign-language documents should be translated into Polish by a sworn translator.

 

Then, the Minister of National Defense and the Minister of Agriculture and Rural Development (in the case of agricultural land) or the Minister of the Environment (in the case of forest properties) submit their opinion on the purchase of real estate by a foreigner.

 

If there are no contraindications for granting the permit, and the application meets all formal requirements, the Minister of the Interior and Administration issues a decision on granting a permit to acquire real estate.

 

Provided that all documents required by law are submitted with the application and that other Ministers submit their opinion within 1 month, the Minister should issue a decision within 2 months.

 

In the event of delays in obtaining a decision, the assistance of a lawyer who specializes in this field, who will be able to speed up the process of issuing the permit, may be useful.

 

The permit is valid for two years from the date of its issuance and within this period the real estate can be purchased.

 

The administrative fee for issuing a permit to acquire real estate is PLN 1,570.

 

For detailed information related to the acquisition of real estate by foreigners, please feel free to contact our Law Office. A team of experienced lawyers will willingly answer all your questions and prepare required documents.

 

Prepared by:

Ada Szczecińska
junior lawyer

Piotr Sawicki
attorney-at-law