Taxed out of house and home

Habitat for Humanity (HfH) Gdańsk is facing a VAT payment of some zł.80,000 on income it won't receive for 20 years, due to complex tax rules.

The tax, which applies to income it will gain on 12 low-income housing apartments it has recently built, could force the charity to cancel future developments.

"I have no idea where we will get the money from," said the director of HfH Gdańsk, Monika Żelazkiewicz.

The organization mobilizes volunteers to build homes, which it then sells to low-income families at cost. The program is directed at families whose income amounts to 70 percent of the average of a particular region, and payments are spread over a 20-year period. The group charges no interest on the installments.

The Ministry of Finance told the WBJ that according to Polish law, when selling flats or buildings, the tax must be paid after receiving all or part of the payment, not later than 30 days after the property changes hands.

HfH's executive director in Poland, Piotr Konczewski, said that the organization has appealed to the Ministry to prolong the time frame for the payment, but they were told that the VAT rules can't be bent, since the tax constitutes the main source of income for the state.

"Regardnig postponing the payment, or dividing it into installments, the head of the tax office is competent, and one can appeal to the director of the Treasury Chamber," explained Marek Hajbos from the Bureau of the Finance Minister.

Żelazkiewicz hopes that the tax office will show more understanding this time, as previous attempts to divide the payment into installments were unsuccessful. If there is no agreement with the tax office, HfH says families in need will suffer.

"We will probably have to use the funds for a construction we wanted to start in Q3 of this year in order to pay the tax," Żelazkiewicz says.