In business practice, it often happens that the spouses are co-owners of real estate, e.g. commercial premises. If one of them conducts economic activity, then he enters this real estate into his register of fixed assets. But what if the other spouse also becomes an entrepreneur, and the common will is that such a fixed asset should belong to the activity of this spouse from now on?
Let’s consider an example in which the spouses share a statutory matrimonial property regime.
From the civil law perspective, this should not be considered as sale, because this ownership is not connected with allocating “percentage” shares. Therefore, from the point of view of civil law, there are no material changes here.
Nevertheless, such an operation has certain tax consequences.
Personal Income Tax (PIT)
From the point of view of the provisions of the PIT Act, there are no obstacles to “withdraw” real estate from the business activity of one spouse and assign it to the business activity conducted by the other spouse.
According to the author, such activity is neutral in terms of PIT, and does not constitute a “sale” of these assets. A similar position was expressed, for example, in the individual interpretation of the Director of the National Tax Information of September 20, 2018, reference number: 0112-KDIL3-3.4011.275.2018. 5.MC:
“Therefore, regardless of which of the spouses uses the assets covered by statutory commonality in their economic activity, both spouses remain their owners. At the same time, it should be stated that when the wife’s business is transferred to her husband, it is not sold, because the same persons (spouses) remain joint owners. “
It should be noted, however, that in terms of depreciation of these fixed assets, there will be so-called the principle of continuation – the initial value of fixed assets is determined at the amount of the initial value specified in the records (list) of the first spouse. The same applies to the method and amount of depreciation. This is due to Art. 22g sec. 13 point 5 in connection with sec. 12 of the PIT Act.
The regulations do not provide for any special documentation form. For example, a written statement or protocol could be prepared.
Value Added Tax (VAT)
Pursuant to Art. 7 sec. 1 of the VAT Act, a taxable activity (supply of goods) is understood as the transfer of the right to dispose goods as owner. At the same time, it should be performed for remuneration.
Pursuant to Art. 7 sec. 2 of the VAT Act, what is also taxable is the transfer by the taxpayer of goods belonging to his enterprise free of charge, if the taxpayer was entitled, in whole or in part, to deduct input tax on the acquisition of these goods.
It should be noted here that, in the opinion of the tax authorities, such “assigning” of assets covered by the joint activity of one spouse to the economic activity of the other spouse constitutes such a taxable activity (e.g. individual interpretation of the Director of the National Tax Information of August 14, 2020, file ref.: 0113-KDIPT1-3.4012.420.2020.2.MWJ). The tax authorities argue that this is a change in “economic ownership” and that one taxpayer deducted the input tax, and then the goods were taken over by another taxpayer.
In the author’s opinion, such an interpretation is incorrect – there is no transfer of the right to dispose of goods as the owner. A change that is effectively made does not have that much significance to define it as a transfer of this right.
It is worth pointing out that this position is also represented in the jurisprudence of administrative courts, e.g.
- judgment of the District Administrative Court in Gdańsk of December 11, 2018, file ref. no. I SA/Gd 939/18;
- judgment of the Supreme Administrative Court of April 4, 2018, file ref. no. I FSK 887/16;
- judgment of the District Administrative Court in Bydgoszcz of May 25, 2021, file ref. no. I SA/Bd 171/21.
In the jurisprudence it is emphasized in particular that we cannot deal here with the free delivery of goods, because this type of joint ownership means that it is not possible to distinguish between shares that can be disposed of.
If an activity is deemed to be taxable as a free supply of goods, it must be determined whether such a supply of real estate will be taxable or exempt. Depending on this, the issue of making an adjustment of the deducted input tax may arise – pursuant to the provisions of art. 91 sec. 1 of the VAT Act.