A Luxembourg-based fund identified a Warsaw office complex as a target acquisition. The asset sat inside a Polish special-purpose vehicle. The fund's investment committee needed a clear answer within six weeks: buy the shares or buy the property directly? The wrong choice would cost months of restructuring and trigger tax exposure running into seven figures.
Real estate M&A in Poland typically proceeds either as a share deal – acquiring the spółka z ograniczoną odpowiedzialnością (private limited liability company, sp. z o.o.) that holds the asset – or as an asset deal involving direct transfer of the real property. Each route carries distinct tax, regulatory, and title consequences under Polish civil and corporate law. The National Court Register (KRS) must reflect any ownership change within seven days of completion, and the Land and Mortgage Register must be updated promptly to protect the buyer's title against third-party claims.
This case study traces the strategy, due diligence process, and lessons from that Warsaw transaction. It illustrates how structure selection, title analysis, and commercial lease review interact in a live deal – and where complexity tends to concentrate.
What was the background and why did structure matter?
The target was a mid-size office building in the Mazowieckie region, generating stable rental income from three anchor tenants under long-term commercial leases. The seller was a Polish entrepreneur who had held the asset through a sp. z o.o. for over a decade. Accumulated depreciation and low book value made a share deal attractive from a seller's perspective. For the buyer, however, the same structure meant inheriting every historical liability of the company – tax arrears, undisclosed encumbrances, and any construction defects that had never surfaced.
Polish civil law distinguishes sharply between these two routes. An asset deal requires a notarial deed, triggers civil-law transaction tax (podatek od czynności cywilnoprawnych, PCC) at two percent of the property's declared value, and resets the depreciation base. A share deal avoids PCC on the property itself but does not reset depreciation and exposes the buyer to the company's entire liability history. The Polish Financial Supervision Authority (KNF) oversight was not directly engaged here, but the fund's internal compliance rules required KNF-equivalent regulatory clearance in the fund's home jurisdiction before signing.
The six-week deadline was tight. Choosing the wrong structure – or discovering a title defect after signing – would have been irreversible. The team recommended a share deal with an extended warranty package and a price adjustment mechanism tied to due diligence findings. That decision shaped everything that followed.
How was due diligence conducted and what did it uncover?
Due diligence ran across four parallel tracks: title and encumbrances, commercial lease review, tax and corporate history, and technical/construction status. The Land and Mortgage Register (Księga Wieczysta) showed one registered mortgage and two unregistered usufruct rights that the seller had not disclosed in the data room. Identifying those rights within the first ten days allowed the team to negotiate their release as a condition precedent to closing – rather than discovering them post-completion.
The commercial lease review produced the most commercially significant findings. One anchor tenant had exercised a break option that the seller had not flagged. That option, if valid, would reduce projected rental income by roughly 30 percent in year two. Counsel analysed the lease language carefully. The break notice had been served one day outside the contractual notice window – rendering it ineffective under Polish contract law. The fund's financial model was preserved, but the episode illustrated why detailed lease analysis is non-negotiable when you buy property in Poland through a share structure.
On the tax track, the sp. z o.o. had an open Value Added Tax (VAT) audit covering three prior years. Polish tax authorities – operating through the National Revenue Administration (Krajowa Administracja Skarbowa, KAS) – can issue assessments up to five years after the tax year in question. The team quantified the maximum exposure at approximately PLN 1.4m and negotiated an escrow of that amount held for 18 months post-closing. That mechanism protected the buyer without killing the deal.
We secured a price adjustment of over PLN 2m for the fund's acquisition vehicle in the Mazowieckie region (winter 2026), reflecting the combined effect of the unregistered encumbrances and the VAT escrow. The seller accepted the adjustment rather than face a collapsed transaction.
What are the transferable lessons for buyers?
Three lessons emerge clearly from this matter. First, structure selection must precede due diligence scoping, not follow it. The decision to pursue a share deal determined which risks were material – historical tax exposure became central, whereas PCC calculation became irrelevant. Reversing that sequence wastes time and distorts risk weighting. For cross-border transactions, buyers should also review the Luxembourg real estate holding structures that frequently sit above Polish special-purpose vehicles, since the upper-tier structure affects withholding tax on dividends and exit taxation.
Second, commercial lease review must be granular. Break options, rent review mechanisms, and service-charge caps all affect asset value directly. A single missed break notice – or one that is incorrectly served – can swing projected income by millions of PLN over a five-year hold. Buyers who treat lease review as a checkbox exercise routinely overpay. Where a tenant is in financial difficulty, buyers should also consider whether simplified arrangement proceedings could affect the lease's enforceability post-closing.
Third, tax tail risk in share deals requires a quantified escrow, not a warranty alone. Warranties are only as good as the seller's balance sheet. An escrow ring-fences the actual exposure and removes the need to pursue the seller after completion. The 18-month escrow in this matter aligned with the remaining KAS audit window – a deliberate calibration, not a round number.
What to prepare before signing a real estate share deal in Poland:
- Full Land and Mortgage Register extract and search for unregistered encumbrances
- Copies of all commercial leases, break notices, and rent review correspondence
- Three years of corporate tax returns and any open audit correspondence with KAS
- Corporate documentation confirming the seller's authority to transfer shares
- Technical survey and any outstanding construction permits or FIDIC disputes
For buyers unfamiliar with Polish title mechanics, a practical starting point is the firm's full guide to buying property in Poland, which covers the notarial process, PCC, and KRS registration in accessible terms.
The Warsaw transaction closed on schedule. The fund acquired the shares, the mortgage was discharged at completion, and the escrow was released in full after the KAS audit closed without an assessment. The outcome was not accidental – it followed from a structured approach to due diligence and a willingness to adjust price rather than accept undisclosed risk.
We also obtained a full release of unregistered usufruct rights for a commercial buyer in Lower Silesia (autumn 2025), preventing a post-closing dispute that would have taken at least 24 months to resolve through the courts.
Frequently asked questions
Q: How long does real estate M&A due diligence typically take in Poland?
A: A focused due diligence exercise covering title, leases, and tax history typically runs four to eight weeks for a single-asset transaction. Complex portfolios or assets with construction history may require twelve weeks or more. The Land and Mortgage Register search can be completed within days, but KAS audit correspondence and historical corporate records often take longer to compile from the seller's side.
Q: Is it a common misconception that a share deal avoids all transaction taxes?
A: Yes. While a share deal avoids PCC on the property itself, it does not eliminate all tax exposure. The transfer of shares in a Polish sp. z o.o. is subject to PCC at one percent of the declared share value. More significantly, the buyer inherits the company's entire tax history, including any VAT or corporate income tax liabilities that have not yet been assessed. Structuring the deal correctly requires accounting for both the upfront tax and the inherited tail risk.
Q: What role does a real estate lawyer in Warsaw play in cross-border transactions?
A: Local counsel coordinates the notarial process, manages KRS filings, reviews the Land and Mortgage Register, and liaises with KAS on open audits. In cross-border deals, local counsel also bridges the gap between Polish legal requirements and the expectations of foreign investors unfamiliar with Polish title mechanics or commercial lease law. Engaging local counsel early – before term sheet stage – avoids structural decisions that are costly to unwind later.
Specific circumstances of each transaction require individual analysis. A structure that worked in one deal may expose a buyer to significant risk in another, and the consequences of a flawed structure are difficult to reverse after completion.
To receive an expert assessment of your real estate acquisition structure in Poland, contact info@kordeckipartners.com.
KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to real estate transactions, due diligence, and cross-border M&A. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.