What Is the Tax on Civil Law Transactions and When Does the Tax Liability Arise?

The tax on civil law transactions, abbreviated as PCC (Podatek od Czynności Cywilnoprawnych), is a levy regulated by the Polish Act of 9 September 2000. It applies to specific legal transactions carried out outside the VAT system. In practice, this means it mainly covers transactions on the secondary market, where the seller is a private individual rather than a business entity.

The tax obligation arises when a sales agreement, exchange agreement, mortgage establishment, or another activity specified in the Act is concluded. In the case of real estate, this most commonly refers to a sales agreement executed in the form of a notarial deed.

Transactions subject to PCC include, among others:

• sales agreements concerning real estate, movable property, and property rights,
• exchange agreements,
• loan agreements,
• the establishment of a mortgage,
• company formation agreements.

Who Pays PCC Tax: The Buyer or the Seller?

This is one of the most frequently asked questions when purchasing real estate. The answer is straightforward: the obligation to pay PCC rests with the buyer, that is, the purchaser of the property. The seller does not bear this cost.

This rule follows directly from the PCC Act. In the case of a sales agreement, the taxpayer is the buyer acquiring ownership rights. The seller, however, may be required to pay income tax on the sale of the property, but this is an entirely separate matter.

You can also read our blog article, "How to Avoid Tax on Buying an Apartment?"

How Much Is PCC When Purchasing Property?

The standard PCC rate for a real estate purchase agreement is 2% of the market value of the acquired property. The taxable base is the market value rather than the price stated in the agreement. If the tax authorities believe the declared price significantly differs from market conditions, they may challenge it and determine the taxable value independently.

To better illustrate the costs involved, the table below presents example PCC amounts for different transaction values:

There is also an increased PCC rate of 6%, which applies to the purchase of a sixth or subsequent residential property by an individual or legal entity. This provision primarily affects investors acquiring multiple properties either within a single transaction or cumulatively over time.

When Do You Not Have to Pay PCC?

The PCC Act provides a number of exemptions that are worth knowing before making a purchase. The most important is the exemption for first-time home buyers, which has been in force since 31 August 2023.

You can benefit from the exemption if:

• you are purchasing an apartment or single-family house for the first time in your life,
• if you are buying jointly with another person, such as a spouse or partner, each purchaser must satisfy this condition individually,
• the transaction concerns the secondary market, as purchases from developers are already subject to VAT and therefore excluded from PCC by default.

In addition, PCC does not apply when:

• the seller is a VAT taxpayer and the transaction is subject to VAT,
• the transaction qualifies for another exemption provided under specific regulations,
• the value of the transaction does not exceed the exemption threshold specified by law.

How Do You Pay PCC and What Is the Deadline?

When purchasing real estate, the procedure is highly simplified because the transaction must be completed in the form of a notarial deed. In this case, the notary acts as the statutory tax collector.

This means the notary collects PCC directly from the buyer when the documents are signed and transfers the tax to the appropriate tax office. Buyers of apartments or houses do not need to submit a PCC-3 declaration or monitor any additional deadlines themselves.

However, if PCC is not collected by a notary, the taxpayer is responsible for:

• submitting a PCC-3 declaration to the competent tax office,
• paying the tax within 14 days of concluding the agreement.
• Failure to pay the tax on time results in statutory interest for late payment, calculated in accordance with the provisions of the Polish Tax Ordinance Act.

PCC and Buying an Apartment on the Primary Market – What Should You Know?

Purchasing property directly from a developer is generally not subject to PCC. Developers, as business entities, sell properties as part of VAT-taxable business activities. This means that when buying a new apartment, the buyer pays VAT included in the purchase price rather than PCC.

By choosing safe and modern developments from J.W. Construction, you benefit from full financial transparency and support from experts who can help you navigate all formalities smoothly and without hidden costs. This is one of the key differences between the primary and secondary markets from the perspective of acquisition costs.

By purchasing from a developer, you avoid the need to add an additional 2% of the property's value to your overall purchase budget.

Understanding this distinction can have a real impact on deciding which segment of the property market is the right choice for your purchase.

FAQ – Frequently Asked Questions

Who pays PCC when buying property: the buyer or the seller?

The tax on civil law transactions in a real estate sale is paid by the buyer. The seller is not liable for PCC, although they may be subject to other taxes, such as income tax on the disposal of real estate.

When do you not have to pay PCC?

You do not pay PCC when purchasing an apartment from a developer because the transaction is subject to VAT. The exemption also applies to individuals purchasing their first residential property on the secondary market under regulations introduced on 31 August 2023.

Is PCC paid at the notary's office?

Yes. In property transactions, the notary collects PCC directly from the buyer and transfers it to the tax office. In such cases, the buyer does not need to submit the PCC-3 declaration independently.