Renting Property from a Shareholder Does Not Automatically Create a Hidden Profit Under Poland’s Estonian CIT

253.32 square meters of office space for PLN 3,000 a month, roughly EUR 700: that works out to PLN 11.84 per meter in a county where comparable offices fetch up to PLN 100 per square meter. A company taxed under Poland’s Estonian CIT rented the space from its own general partner and asked the Director of National Tax Information, the authority that issues Poland’s advance tax rulings, whether the tax administration would treat those payments as a hidden profit. In a ruling of 12 May 2026 (ref. 0114-KDIP2-2.4010.113.2026.1.PK) the authority said no. Less than three weeks later, in a ruling of 1 June 2026 (ref. 0111-KDIB2-1.4010.53.2026.3.KW), it confirmed the same in the mirror configuration: market-level rent, siblings as the only shareholders, and premises received as a gift from their mother. Both cases lead to a conclusion worth stating plainly at last, because for three years it has circulated in a distorted version: the mere fact that you rent your own property to your company does not create a hidden profit. The automatism built into this construction runs in one direction only, and it switches on only once the rent exceeds market value.

The question advisers hear most often

It always sounds much the same: I have a company on Estonian CIT, and I rent it the office or the warehouse from myself, because the property stayed in my private assets. Is that a hidden profit? The question is anything but theoretical, because the stakes are high and payable at once. The lump-sum tax on income from hidden profits is 10% of the tax base for a small taxpayer (broadly, one with annual revenue up to two million euros) and for a business in its first year, and 20% for everyone else (Article 28o(1) of the Corporate Income Tax Act of 15 February 1992, consolidated text: Journal of Laws of 2026, item 554; the CIT Act), and it falls due during the year, not at the moment profit is distributed. That timing is the whole point. Poland’s lump-sum tax on corporate income, known as Estonian CIT after the Estonian model it borrows from, has a single selling proposition: corporate tax is deferred until profit leaves the company. The hidden-profits charge is precisely where that proposition evaporates. Readers from other systems will recognize the family resemblance at once: the hidden profit is Poland’s cousin of the constructive dividend, or of the German verdeckte Gewinnausschüttung, transplanted into a regime that otherwise taxes distributions alone.

The scale of the phenomenon is far larger than the volume of commentary would suggest. The model in which the property remains with the shareholder and the company rents it is the standard in Poland’s small and medium business sector, not an exotic arrangement, and for reasons that have nothing to do with tax: a property held outside the company sits beyond the reach of its creditors, and the company does not freeze capital in an asset it can use anyway.

Two cases, two poles of the same rule

The May case is atypical, and that is what makes it interesting. A limited joint-stock partnership (spółka komandytowo-akcyjna, a Polish hybrid of a limited partnership and a joint-stock company), taxed under the lump-sum regime since 1 January 2025, concluded a lease on 1 February 2026 with its general partner, the sole owner of a building that had never been contributed to the partnership in kind and had never been its fixed asset. The rent is PLN 3,000 net a month, plus a PLN 1,600 flat utilities fee broken down by item (water and sewage PLN 100, electricity PLN 400, heating with hot water PLN 900, waste collection PLN 200), PLN 4,600 net in total, or PLN 18.16 per meter all-in. The county market, documented with three listings from otodom.pl, a Polish property portal, as of March 2026, runs from PLN 30 to PLN 104 per meter. In the town itself there are no office listings at all.

The June case is textbook typical. A Polish limited-liability company on Estonian CIT runs a trading business in premises co-owned in equal shares by its only shareholders, who are siblings. They received the premises as a gift from their mother, the lease was concluded privately, outside any business activity of the shareholders, and the rent is at market level. In its conclusion the authority lists the market rate, the functional connection between the premises and the business, and economic rationality; the evidentiary weight in this set is carried by history: the present company continues a family firm handed to the siblings by way of a gift of the entire enterprise, with equipment, stock, cash, back office and staff, run successively as a civil-law partnership, a limited partnership and a limited-liability company. The company has fixed assets of its own, also rents premises from unrelated parties, and buys nothing from its shareholders beyond this one property. In both cases the Director held the taxpayers’ positions correct in full.

Start with the strongest counterargument

The opposing view is neither invented nor weak, and over the past three years it has been losing chiefly in the courts, far less often in the ruling practice of the Director himself. Its source is the Minister of Finance’s official guidance on the lump-sum regime of 23 December 2021, issued under Article 14a § 1(2) of the Tax Ordinance, Poland’s general tax code, and carrying protective effect for taxpayers who follow it. That is where the formula both rulings repeat verbatim first appeared: in assessing a transaction with a shareholder, what matters is whether the shareholder took care to equip the company with the assets its business requires, and whether a shortage of those assets is being remedied by capitalizing the company in a form other than a contribution, for instance by making real estate available to it.

A shareholder who does not contribute the property but rents it to the company keeps the asset in his personal wealth and at the same time draws from it a steady, monthly stream of money he would never touch had he contributed it. Economically this resembles a dividend paid in instalments and taxed “cheaper”: 8.5% flat-rate tax on private rental income instead of the burden that falls on a distribution of profit. The interests of the two sides of this dispute are, incidentally, perfectly legible and worth naming: the Ministry of Finance defends the tax base of a regime it itself designed to be attractive, while taxpayers look for the cheapest legal route to extract the income they have earned.

The May case, moreover, hands the opponents an argument all by itself. The taxpayer asserts two things at once: that the transaction would also have been concluded between unrelated parties, and that renting from an unrelated party in this location would be impossible or considerably more expensive. Those sentences are hard to reconcile. The authority noticed the inconsistency and wrote it into the reasoning expressly, observing that it is precisely the relationship between the parties that makes the rent so favourable to the company. And it still held the taxpayer’s position correct, because a more important criterion decided the matter.

What the provision actually says: the catalogue and its limits

Under Article 28m(3) of the CIT Act, hidden profits are benefits performed in connection with the right to a share in profit, other than distributed profit, whose direct or indirect beneficiary is a shareholder or a party related to one. The statute then lists twelve examples, among them a loan granted to a shareholder, gifts, entertainment expenses, interest on a capital participation, and profit allocated to an increase of share capital. Rent is not in that catalogue. What is there is point 3, which regulates this territory in the negative: a hidden profit is the excess of the transaction’s market value, determined under Article 11c of the CIT Act, the transfer-pricing provision, over the price actually agreed.

Read in isolation, that point would paradoxically strike at underpriced rent, since that is when market value exceeds the price; the Supreme Administrative Court, Poland’s court of final instance in tax matters, in fact reads it in both directions, as covering any situation in which the price agreed between related parties diverges from market value (case no. II FSK 797/24, para. 5.10 of the reasoning). Direction is given to the construction only by the provision’s introductory sentence: the beneficiary of the benefit must be the shareholder, and the benefit must stand in connection with the right to a share in profit; point 3 merely quantifies the excess. That is the crux of both rulings. What matters is not whether the parties are related, nor even whether the price departs from the market, but who gains from the departure. When the company pays its shareholder more than it would pay a stranger, the excess is a hidden profit, and here the provision genuinely does operate automatically. When it pays less, the benefit accrues to the company, not to the shareholder, so the definition is not met and no amount is taxable. The general partner in the May case, as the authority put it, ultimately derives no benefit from the transaction. That is why rent at half the market rate proved safer than rent set one zloty above it.

And here we reach the argument that has somehow slipped past recent tax commentary, although it is the strongest one available to tenants, and it grows out of the judgment least favourable to “Estonian” taxpayers. In its judgment of 9 October 2024 (case no. II FSK 797/24) the Supreme Administrative Court held that a loan granted by a lump-sum company to a related party, all the more to a shareholder, is a hidden profit, because the legislature listed it in the catalogue expressly, and what decides is the linguistic reading of the provision, not an economic assessment of its effects. The very same way of reading the provision protects rent. If it was presence in the catalogue that determined automatism, then absence from the catalogue must mean that qualification requires passing through the full definition in the introductory sentence, including the condition of a connection with the right to a share in profit. The reasoning says so outright: the introductory sentence sets out the general criteria a benefit must meet, and the catalogue items always meet them (para. 5.9). The judgment that stung also disciplines the method, to the landlords’ advantage.

The regional administrative courts, the first instance of Poland’s two-tier administrative judiciary, have in any event been saying the same for years and have repeatedly set aside negative rulings in this area. The court in Gorzów Wielkopolski, in a judgment of 7 December 2023 (I SA/Go 276/23), held that making a shareholder’s private assets available to the company is not prohibited and cannot of itself found a hidden-profit charge, because no provision obliges anyone to endow a company with ownership of real estate. The court in Łódź ruled to the same effect on 23 March 2023 (I SA/Łd 137/23) and 17 October 2023 (I SA/Łd 513/23), as did the court in Gdańsk on 11 July 2023 (I SA/Gd 176/23). In the autumn of 2024 the court in Poznań joined that line, in a case where the company rented from its shareholder not only the production hall but the machinery as well (I SA/Po 282/24 of 10 October 2024). And a fundamental point, easy to forget in disputes with the authority: the ministerial guidance protects those who comply with it, but it is not generally binding law and does not bind the courts.

The levels of certainty therefore stack up as follows. It is certain that rent does not appear in the statutory catalogue, and that qualification requires identifying the beneficiary of the benefit. It is equally certain that in the published judgments deciding the dispute on the merits, the first-instance line on property rent remains uniformly favourable. Two decisions sometimes cited as breaking that line turn out, once their reasoning is read, to be something else: the court in Łódź did dismiss the complaint of a company that rented from its shareholder a property withdrawn from his sole proprietorship immediately before its transformation into that company, yet it did not hold the rent to be a hidden profit; it held that such an arrangement should not have received a ruling at all, because it falls to be assessed under the general anti-avoidance rule (I SA/Łd 509/24 of 29 October 2024; Article 14b § 5b of the Tax Ordinance), while the negative decision on the merits fell where a company leased from its sole shareholder an entire set of assets, brand included (I SA/Łd 753/22 of 21 February 2023), that is, in a configuration listed below among the red flags. It is probable that the ruling practice will also hold, because both rulings discussed here apply exactly this test. What remains unresolved is how the Supreme Administrative Court will decide once a pure rent case reaches it. The divergence between II FSK 797/24 of 9 October 2024 and II FSK 733/23 of 25 February 2026, in which the court carved loans financed from pre-regime profits out of taxation although the letter of the provision knows no such exception, proves that literalism is applied selectively in this field. The two panels, incidentally, differed by a single judge, and the rapporteur of the February judgment also sat in the October one.

The arithmetic that explains the authority’s calm

It is worth showing why underpriced rent causes the tax administration no anxiety, although at first glance it looks like an intra-family transfer. Run it through a simplified model: a limited-liability company with small-taxpayer status on Estonian CIT; a shareholder taxing private rental income under the flat-rate regime, at 8.5% up to PLN 100,000 of annual revenue and 12.5% on the excess; the floor area from the May case; and a market rate taken conservatively at the bottom of the range in the file, PLN 50 per meter. The effective burden on distributed profit in this regime is 20% (10% lump sum at company level, plus 19% shareholder personal income tax reduced by 90% of the company’s tax due, under Article 30a(19)(1) of the PIT Act).

The net benefit is the avoided distribution burden less the flat-rate tax paid on the rent. The difference comes to PLN 11,259 a year, and it runs against the underpriced rent. The conclusion is counterintuitive but arithmetically robust: lowering the rent you charge your own company is not optimization; it is a voluntary top-up paid into the state budget, because it shifts income out of a regime taxed at 8.5% into one that will charge 20% on the way out. The authority has no reason to pursue a taxpayer who has taxed himself at the higher rate.

Both walls of the corridor this construction moves through are now visible, and only one of them is fiscal. That observation, however, is not an invitation to raise rents. Raising the rate to market level is safe only when the rate genuinely is a market rate and can be documented as of the day the lease is signed, not two years later, on the authority’s demand. Crossing that level moves the excess straight into Article 28m(3)(3) of the CIT Act, the one spot in this construction where the tax office has to prove nothing beyond comparing two numbers.

Safety conditions derived from the two rulings

Not from doctrine, but from what both applicants actually demonstrated and what the authority highlighted in its reasoning. First, a documented market level of rent: in the May case this meant three specific listings of comparable premises, with floor areas, rates and a date, not a general assurance. Second, the company’s own asset base: the June case is the model here, because the company holds its own fixed assets, and from its shareholders it rents this one property and nothing else, which the applicant stated expressly. Third, a functional connection between the property and the business, and the property’s necessity to it, best supported by history, as with premises where the family has traded for generations. Fourth, the economic rationality of the model: showing that renting lets the company keep capital out of a property purchase and in its operating business. Fifth, basic documentation: a lease bearing the signing date and the commencement date, a handover protocol, and utilities itemized rather than rolled into a single aggregate figure. Sixth, internal consistency of the application itself, of which more below.

The red flags are the mirror image of that list. Renting from the shareholder not one asset but everything the company needs. A company that owns nothing and lives entirely on contracts with its shareholder. Rent revised after a good year, or tied to the company’s results. No trace of any market check at the time the lease was signed. And finally, a property withdrawn from a sole proprietorship into private assets just before the business is converted into a company, then leased back to that company at once, because that is the configuration in which the thesis of capitalization in a form other than a contribution sounds most convincing. That variant already has its case number and its procedural track: case I SA/Łd 509/24 ended not in a dispute over hidden profit but in a holding that a ruling should never have been issued at all. One flag is a topic for a conversation with your adviser. Three at once is a ready-made fact pattern for a future decision that goes against the company.

What an advance tax ruling does not settle

Three matters that are easy to forget in the euphoria of reading a favourable outcome. First: the protection flowing from an advance tax ruling extends solely to its addressee and solely within the facts as described (Article 14k et seq. of the Tax Ordinance). Someone else’s ruling, however twin-like the facts, protects no one but its applicant, which the Director in the May case noted expressly with respect to the rulings the taxpayer itself invoked. Whoever wants protection files an application of their own. And the protection has one more boundary: it will not operate where the decision is issued under the general anti-avoidance rule, Poland’s GAAR (Article 14na § 1(1) of the Tax Ordinance).

Second: the authority does not verify the numbers; it takes the applicant’s description as given. In the May case the taxpayer’s argument cites a rate of PLN 15 per meter, a figure that cannot be reconciled either with the rent alone (PLN 11.84) or with rent plus utilities (PLN 18.16). The discrepancy passed through the proceedings without comment, and no fault attaches to the authority, because a ruling by its nature rests on the applicant’s declarations. It does, however, carry a practical consequence: a ruling is a shield exactly as strong as the description underneath it is true and precise. An audit examines reality, not the application.

Third, and this is thinking two steps ahead: the shareholder’s private rental activity has limits of its own. In the June case two of the shareholders also let other, private properties. The seven-judge resolution of the Supreme Administrative Court of 24 May 2021 (II FPS 1/21) settled that rental income falls, without any ceiling, into the private source of income unless the asset has been introduced into the assets tied to a business, so the choice belongs to the taxpayer and scale alone decides nothing. The boundary is real nonetheless, and it runs where objective circumstances begin to evidence a business link, for instance the entry of the property into the fixed-asset register. It is worth keeping in view ahead of time, especially as properties accumulate within a family, because a reclassification of the source changes the entire arithmetic set out above.

Conclusion

Renting property from a shareholder is a safe construction under Estonian CIT, but it moves through a narrow corridor, one wall of which is made of tax and the other of arithmetic. Crossing the tax wall, that is, pushing the rent above market value, triggers the hidden-profit charge, payable during the year. Leaning against the arithmetic wall, that is, setting the rent below market, is entirely safe as far as the tax office is concerned, and at the same time more expensive for the family than the market solution. The middle of the corridor is wide and well lit by two fresh rulings and a clearly prevailing line of the first-instance courts. One only has to walk it carrying documents, not the conviction that since everyone does it this way, nobody will ever ask.

There is no room here for aggressive optimization, and no point looking for any. The tax office does not punish renting from a shareholder. It punishes rent that has stopped being rent and become a dividend under another name.

Legal status as of 8 September 2026. The advance tax rulings of the Director of National Tax Information discussed above bind solely their addressees, within the facts those addressees described. The calculation presented in the text is a model: it assumes a limited-liability company with small-taxpayer status, disregards individual circumstances as well as the specifics of a limited joint-stock partnership, and serves solely to illustrate the direction of the relationship, not as a recommendation on the level of rent.

Robert Nogacki, Polish attorney-at-law, Managing Partner of Kancelaria Prawna Skarbiec, a law firm specializing in tax advisory and the protection of business owners’ rights.

Robert Nogacki

Robert Nogacki is a Polish attorney at law (radca prawny), the founder and managing partner of Kancelaria Prawna Skarbiec (Skarbiec Law Firm), which has operated continuously since 2006.

The law is equal for everyone, but the parties rarely are: on one side stands an organization with time, money, and lawyers, on the other a person with one business, one nest egg, and one life.

Clients rarely come to him with a legal problem. They come with a problem that also has a legal side: an audit that began with a single invoice, money entrusted to someone who has disappeared, a company that has to be passed on before it is too late. Most such matters are decided long before the first letter is written, in decisions made without asking and in deadlines nobody remembered. So he begins by asking how the client got here, not what the client should have done.

He advises entrepreneurs and families from more than a dozen countries, including those whose accounts the tax office has just seized and who do not know what to do tomorrow morning. He defends them in tax audits, customs and fiscal inspections, disputes with the tax authorities, and criminal tax proceedings. He represents victims of investment fraud and Ponzi schemes. He helps families set up family foundations and plan succession, so that a life’s work outlasts a single generation.

Not every case can be won. Every case can be run so that the client knows where they stand. Since 2006 he has represented the victims in the WGI case (Warszawska Grupa Inwestycyjna, the Warsaw Investment Group), one of the longest criminal cases in the history of the Polish financial market, because some things must not be left half finished, even when they take two decades. In the case of the collapsed cryptocurrency exchange Zonda (Zondacrypto, operated by BB Trade Estonia OÜ), he represents several hundred victims in the criminal investigation conducted by Poland’s National Prosecutor’s Office and in the Estonian bankruptcy proceedings.

Kancelaria Prawna Skarbiec is listed in the rankings of Poland’s largest tax advisory firms published by Dziennik Gazeta Prawna and Rzeczpospolita, and it is a four-time recipient (2015 to 2018) of the European Medal awarded by the Business Centre Club and the European Economic and Social Committee. Robert Nogacki publishes regularly, in the press and on the firm’s website, for people who have a problem rather than a law degree, because a legal opinion the client cannot understand protects only the lawyer.

He believes that the best legal advice is the kind that means the client never has to appear in court.