Poland prepares for REIT

What is a REIT?

Real estate investment trusts (REITs) are investment funds or special purpose vehicles established to invest in the rental real estate market. This solution, present worldwide since the 1960s, operates in more than 40 countries around the world, including a dozen or so in Europe.

REITs most often operate in the form of publicly traded companies, regularly paying dividends to investors from profits generated from rentals. Their business is based on owning or leasing real estate with the goal not of selling them, but of gaining long-term rental income. Depending on the structure adopted by the legislation of a given country, REITs benefit from income tax exemption or preferential taxation.

REITs are meant both for large (institutional) and small (individual) investors as they facilitate passive (not requiring active action by the investor) and low-cost capital investments within the property sector.

Where are REITs in Poland?

REITs have not yet been regulated in the Polish legal system, and therefore currently cannot be established in Poland. There are some alternative legal vehicles used for real estate investing, like investment funds. However, compared to REITs, they are not attractive from the perspective of individual investors, and their market share in Poland is not significant.

The first draft of the Polish REIT Act was put forward by the Ministry of Finance in Poland in 2016. Since then, there have been several attempts to introduce the REIT investment vehicle into Polish legal system, but all of them have failed so far.

After years of discussions, legislation on REITs is being prepared in order to finally enter the Polish legal system. Since 2024, legislative work on REIT regulation is pending again. The complete (draft) Act on Polish REITs, titled Companies Investing in Real Estate Rentals (Polish: Spółki Inwestujace w Najem Nieruchomości or “SINN”) or is still not available, however, in 2024 the Polish Ministry of Economic Development and Technology announced key legislative assumptions of Polish SINN regulation, including:

• SINNs will be regulated and supervised by the Polish Financial Supervision Authority (Polish: Komisja Nadzoru Finansowego).
• SINNs will operate as joint-stock companies with registered offices in Poland and with a minimum share capital of PLN 100 million (approximately EUR 24 million).
• SINNs will be listed on the Warsaw Stock Exchange and/or foreign stock exchange.
• The main goal of SINNs will be to invest in real estate located in Poland. This includes commercial real estate (e.g. shopping centres, office buildings, warehouses, dormitories, and nursing homes). Initially, the Polish government announced that institutional rental housing (PRS) would be included in the scope of investments of SINNs. However, the most recent announcements show that residential properties will not be covered. This is due to concerns of the Ministry of Finance that new regulations would negatively affect prices for residential properties, which are already very high.
• At least 90% of SINN income should derive from the letting or sale of the property.
• At least 90% of SINN income shall be distributed to shareholders in the form of annual dividends.
• The minimum level of maintaining the carrying value of real estate and shares in subsidiaries should be at least 80%.
• Admissible loan-to-value ratio may not exceed 50%.
• Preferential taxation rules will apply to SINNs, such as a single taxation, 10% tax rate (with the tax obligation arising at the time of payment of dividends to investors), and no tax obligations for investors.

The Polish legislation on REITs (specifically SINNs) is currently being prepared at the Ministry of Economic Development and Technology in cooperation with the Ministry of Finance. According to public announcements, further details and the draft Act will probably be available by mid-2025, to be followed by the legislation process in the Polish parliament. According to Ministry of Finance announcements, the legislation on SINNs is one of its priorities for 2025 and the new SINN Act is expected to be made into law in 2025 or at the beginning of 2026.

It is worth noting that there has been much information available publicly, but not officially confirmed by the government, that a new category of REITs focused on real estate for renewable energy installations is being considered. If adopted, they could become an important source of capital for Poland’s energy transition.

Given current market conditions and investor expectations, the introduction of REITs into the Polish legal framework is likely to deliver tangible benefits. In particular, it has the potential to stimulate long-term development of the rental market and promote more stable capital allocation. The proposed tax structure, favourable to both institutional and individual investors, may also position Polish REITs as an attractive long-term savings vehicle. Crucially, the reform is expected to strengthen the role of domestic capital in a real estate market that remains heavily dominated by foreign investors, thereby contributing to greater economic resilience and financial sovereignty.

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Katarzyna Sawa-Rybaczek is a rarity among lawyers in that she uniquely connects transactional real estate work with banking and finance.