Registration of a company at an address does not necessarily mean that the property was being used for non-residential purposes and that the discount for conversion of perpetual usufruct into ownership must be repaid
This was the holding by the Supreme Administrative Court of Poland in the judgment of 4 November 2025 (case no. I OSK 1987/22). In that case, the administrative authorities had ordered the co-owners of real estate to repay the discount they had received on the conversion fee, on the grounds that a company had been registered at that address.
The demand for reimbursement was supposedly based on Art. 4(15) of the Conversion Act 2005 (Act on Conversion of the Right of Perpetual Usufruct into the Right of Ownership of Real Estate of 29 July 2005). It was determined first by the administrative authorities, and then by the Province Administrative Court in Warsaw, that the mere registration of a company at the address demonstrated that the property was intended for non-residential use.
The Supreme Administrative Court categorically rejected that interpretation, pointing to the need to determine whether the property was actually used for purposes other than those that were the basis for granting the discount on the fee for conversion from perpetual usufruct to ownership (i.e. residential purposes). According to the high court, the mere use of the address to register a company was not enough to prove non-residential use of the property.
The company and the discount on the conversion fee
In 2007 the Mayor of Warsaw issued a decision on conversion of the right of perpetual usufruct of land developed with a residential building, into the right of ownership of the real estate, under the procedure set forth in the Conversion Act 2005, also granting a discount on the conversion fee. The basis for the discount was a Warsaw City Council resolution from 2006, under which a condition for award of the discount was that the property was used for residential purposes.
In 2011 (nearly four years after the conversion), one of the co-owners, acting without the knowledge or consent of the other (majority) co-owner, signed an agreement with an entity founded by her son (a limited-liability company in organisation) allowing one of the spaces to be used for the purpose of entering the newly-formed company in the National Court Register (KRS). Despite being registered, the company never commenced doing any business. Moreover, none of the shares in the company belonged to the co-owners of the property. And following intervention by one of the co-owners of the property, the shareholders passed a resolution to dissolve the company and enter liquidation. The company was ultimately deleted from the register in 2022.
In an inspection, the administrative body of first instance found that according to the KRS entry, there was a limited-liability company registered at the address of the property, and for this reason, based on Art. 4(15) of the Conversion Act 2005, it ordered the owners of the real estate to reimburse the discount granted on the conversion fee, in an inflation-adjusted amount of nearly PLN 122,000. Under the provision cited by the authority, “It is possible to demand reimbursement of the discount, in an amount equal to its adjusted value, if, within five years after the date of the conversion, the person on whose behalf the right of perpetual usufruct was converted into the right of ownership of real estate disposed of the real estate or used it for purposes other than those which were the basis for granting the discount.” The decision issued at the first instance was upheld by the Warsaw Local Government Review Board (SKO) and then by the Province Administrative Court in Warsaw, which denied the co-owners’ complaint in the judgment of 8 April 2022 (case no. I SA/Wa 2097/21). In the view of the administrative authorities of both instances, and the administrative court, the mere fact of registration of a limited-liability company at the address of the property demonstrated use of the property for non-residential purposes.
Supreme Administrative Court judgment of 4 November 2025 (case no. I OSK 1987/22)
On behalf of the co-owners of the property, we filed a cassation appeal with the Supreme Administrative Court. In its judgment of 4 November 2025 (case no. I OSK 1987/22), that court set aside both the judgment of the province administrative court and the administrative decisions issued at both instances. In its ruling, the court shared the arguments consistently raised by our firm.
The court first pointed out that under a proper interpretation of Art. 4(15) of the Conversion Act 2005 (i.e. a linguistic interpretation, further illuminated by the purpose and systemic aspects of the provision), reimbursement of the discount can be sought only after it has been found that the real estate was actually used for purposes other than those that were the basis for granting the discount. Thus, even if the administrative body determined that a company had used the address of the property at the registration stage, as well as later, by indicating it in the KRS entry as the address of its registered office, this fact alone was not enough to be deemed the conduct of commercial activity. The court reasoned that with respect to companies, it is necessary to determine whether all or part of the property actually constituted an element of the company’s enterprise, or whether the company actually maintained its registered office at that address.
The court thus confirmed that the mere fact of formally providing the address of the property in the relevant register does not necessarily mean that the property was used for purposes connected with commercial operations. Although there is a presumption under Art. 17(1) of the National Court Register Act of the correctness of the data entered in the commercial register, it is a rebuttable presumption. Thus the mere fact of disclosure in the KRS entry of an address for the company as its registered office does not necessarily mean (although it should mean) that the address given is the same as the actual address where the company does business. Consequently, the authority applying Art. 4(15) of the Conversion Act 2005 cannot exclude the situation where the address given in the KRS entry as the company’s address is not the actual address of the company’s registered office, because none of the elements for conduct of the company’s business are found at that address, nor are persons found there exercising the company’s principal management, and documentation connected with the company’s operations is not stored there.
In summary, the Supreme Administrative Court held: “Because a condition for demanding reimbursement of an amount equal to the adjusted value of the discount is a finding that within five years from the date of the conversion, the person for whom the right of perpetual usufruct was converted into the right of ownership used the property for purposes other than those which were the basis for granting the discount (Art. 4(15) of the Conversion Act), this condition does not materialise until it is found that the real estate was actually used for other purposes. Thus indication in the register of the address of the company’s registered office cannot be equated in every instance with use of the property at that address for purposes connected with business operations.”
Significance of the judgment
The Supreme Administrative Court judgment of 4 November 2025 (case no. I OSK 1987/22) makes an important contribution to the debate over interpretation of the provisions of the Conversion Act 2005 on reimbursement of discounts in the event of use of the property for non-residential purposes. As the court held, a linguistic interpretation of Art. 4(15) of the act must be supplemented by purposive and systemic considerations, which in turn requires the public administration to conduct a thorough analysis of whether the real estate was actually used for non-residential purposes.
This ruling is consistent with a line of decisions already taking shape, as found for example in the Supreme Administrative Court judgments of 12 April 2023 (case no. I OSK 414/22) and 23 June 2023 (case no. I OSK 1345/22). Significantly, while those earlier rulings involved sole traders operating an individual, unincorporated business, and indicated the need for the authorities to take into account the dual legal role of sole traders (as private individuals and as business operators), the Supreme Administrative Court’s judgment of 4 November 2025 (case no. I OSK 1987/22) extends this (correct) interpretation of the Conversion Act 2005 to cover also legal persons (companies).
It follows that the mere fact of registration under the address of a property of either a sole trader or a company is not sufficient to apply such a punitive standard as forfeiting the discount under Art. 4(15) of the Conversion Act 2005. This position is particularly relevant in the current times, when the traditional forms of professional activity of Polish citizens, such as working under an employment contract, are increasingly giving way to forms related to operation of a business, whether in the form of a sole trader or (as in this case) a company.
Both the earlier judgments from 2023, and this case from 2025, facilitate uniformity in the actions of the administrative authorities, which should not seek a refund of discounts granted in such cases. But if the authorities nonetheless demand reimbursement of a discount, relying solely on the fact of formal registration of a business under the address of a property for which the form of title has been converted, without at the same time examining the actual use of the property, this opens the path to effectively challenging such decisions.
Stefan Jacyno, adwokat, Private Client practice, Reprivatisation practice, Wardyński & Partners
Marcin Sobkowicz, adwokat, Private Client practice, Reprivatisation practice, Aviation practice, Wardyński & Partners
