The death of a business owner does not automatically end their business activity. Polish law allows the business to continue as an enterprise in estate (przedsiębiorstwo w spadku), which can use the deceased owner's existing fixed assets. In practice, the question often arises of the tax consequences of withdrawing such fixed assets from the business for the heirs' private use.
An enterprise in estate is a special legal construct that allows business activity to continue after the owner's death. Key to this is succession management (zarząd sukcesyjny) or a notification that the heirs are continuing the business. Such a business uses fixed assets that previously served the deceased owner in running their business.
The issue of withdrawing fixed assets from an enterprise in estate concerns both personal income tax and inheritance and gift tax. Heirs often wonder whether transferring real estate, vehicles or other fixed assets from the business to their private assets will create a tax liability. If a withdrawn vehicle is later sold, it is worth reading our article on reporting the sale of a private car in PIT.
An enterprise in estate can operate from the opening of the succession until the expiry of the succession management or of the right to appoint a succession administrator. During this time it is a separate PIT (personal income tax) taxpayer
Legal status of an enterprise in estate
An enterprise in estate has a special legal status in the Polish tax system. Under Article 1a section 2 of the PIT Act, an enterprise in estate is an organisational unit without legal personality that is a taxpayer for the income earned in a specific period.
The period in which an enterprise in estate operates runs from the opening of the succession until the expiry of the succession management, or of the right to appoint a succession administrator where succession management was not established but a notification of continuing the business was made.
Article 7a section 1 of the PIT Act is key here: it states that the revenue of an enterprise in estate is treated as revenue from the source referred to in Article 10 section 1 point 3, i.e. non-agricultural business activity. This means that an enterprise in estate is treated in the same way as a business run by a living owner.
Under Article 7a section 2 of the PIT Act, the creation of an enterprise in estate is not treated as starting a business. The activity continues on the existing terms
An enterprise in estate must draw up a list of its assets as at the date the succession opens. The list must contain detailed information on each asset, including:
- The serial number of the asset
- The description or name of the asset
- The date the deceased owner acquired it
- The amount spent on acquiring the asset
- The amount of expenses included in tax-deductible costs
- The initial value of the asset
- The depreciation method used for the asset
- The total depreciation charges made up to the date the succession opened
An enterprise in estate can also include in its tax-deductible costs the costs incurred by the deceased owner that, under the rules, would have been deductible in reporting periods falling after the owner's death.
Revenue of an enterprise in estate
The revenue of an enterprise in estate is defined in Article 7a section 4 of the PIT Act. It includes all revenue related to the activity carried on by the enterprise, including in the form of a civil partnership.
Revenue from the sale of assets forming part of the enterprise in estate is particularly important. The rules state that revenue includes revenue from the sale of assets regardless of when they were acquired by the deceased owner.
The exception from taxing revenue from the sale of assets applies to assets whose initial value does not exceed PLN 1,500 under Article 22g of the PIT Act
Under these rules, the enterprise in estate has gained separate tax status as an organisational unit without legal personality for the taxes related to its activity. The activity of an enterprise in estate is treated as non-agricultural business activity and is therefore a separate source of revenue.
The principle adopted is that personal income tax on the activity of an enterprise in estate is calculated on the same terms as for individuals running non-agricultural business activity. Under the PIT Act, an enterprise in estate has the status of an independent taxpayer running a business. The books of an enterprise in estate can continue to be kept by our accounting firm in Warsaw.
| Type of revenue | Tax base | Exceptions | Notes |
|---|---|---|---|
| Sale of goods and services | Full sales value | None | Standard rules |
| Sale of fixed assets | Sale value | Assets below PLN 1,500 | Regardless of acquisition date |
| Financial revenue | Full value | None | Interest, dividends |
| Other revenue | Under PIT rules | Various | Case-by-case assessment |
Tax neutrality of withdrawing a fixed asset
For business practice, it is crucial to establish whether withdrawing a fixed asset from an enterprise in estate for the benefit of the heirs creates revenue subject to personal income tax.
Revenue of an enterprise in estate includes revenue from the sale for consideration of assets used for the needs of that enterprise. However, withdrawing a fixed asset from an enterprise in estate for the benefit of its owners, i.e. the heirs, does not create a tax liability.
This position was confirmed by the Director of KIS (National Tax Information) in an individual tax ruling of 16 August 2022 (no. 0114-KDIP2-1.4011.438.2022.3.MR). The authority stressed that if a fixed asset is to be withdrawn from the enterprise in estate's existing business and transferred to the heirs' private assets, and this does not in substance amount to a sale for consideration, the withdrawal will not create revenue within the meaning of the PIT Act.
Withdrawing a fixed asset from an enterprise in estate is not a sale for consideration of the fixed asset within the meaning of Article 14 section 2 point 1 of the PIT Act
The withdrawal will not involve the sale for consideration of a fixed asset referred to in Article 14 section 2 point 1 of the PIT Act. As a result, the enterprise will not have revenue subject to personal income tax. This neutrality concerns income tax — for VAT, the enterprise in estate is a separate taxpayer (Article 15 section 1a of the VAT Act), and transferring goods free of charge for personal purposes, where VAT on their acquisition was deductible, is as a rule a supply of goods (Article 7 section 2 of the VAT Act). The opposite case, where no VAT was deducted on purchase, is described using the example of scrapping a fixed asset bought without VAT deduction.
Another important point is that handing over real estate recorded as a fixed asset for the private use of the owners of the enterprise in estate does not change the form of ownership, i.e. co-ownership in fractional shares. Only the management changes, from the succession administrator to a co-owner who can freely dispose of their share in the property.
No change of ownership
Of fundamental importance for assessing the tax effects of withdrawing a fixed asset is the fact that the decision to withdraw real estate from an enterprise in estate does not change the heirs' ownership rights. The heirs already became co-owners of the assets forming part of the estate when the succession opened.
Withdrawing a fixed asset from the business only means changing how the asset is used - from business to private purposes. Ownership is not transferred, because the heirs already own the asset.
Withdrawing a fixed asset from an enterprise in estate remains neutral for income tax, because the heirs' ownership rights do not change
Equally important, the heirs are separate taxpayers from the enterprise in estate. However, Article 10 section 2 point 3 of the PIT Act must be kept in mind: a sale for consideration of an asset referred to in Article 14 section 2 point 1 (e.g. a fixed asset) before 6 years have passed, counting from the first day of the month following the month in which it was withdrawn from the business, is not a private sale under Article 10 section 1 point 8 but revenue from business activity (Article 14 section 2 point 1). The exception covers, among others, residential buildings and flats together with the land, and the cooperative ownership right to a residential unit (Article 10 section 3 and Article 14 section 2c) — their sale is settled under the rules for individuals.
The law does not expressly settle how this six-year period applies to an heir who sells an asset withdrawn from an enterprise in estate, including after the succession management has expired (which is treated as the liquidation of the business — Article 7a section 3). It is therefore safer to assume that the sale of a car, machine or commercial premises before 6 years have passed since the withdrawal may be treated as revenue from business activity, and for higher-value assets to consider applying for an individual tax ruling. The Director of KIS took a position favourable to heirs in a ruling of 3 March 2026 (no. 0114-KDIP3-1.4011.1075.2025.2.EC): the sale, by an heir not running a business, of a share in real estate remaining after the succession management had expired was assessed under Article 10 section 1 point 8 and section 5 of the PIT Act, i.e. without tax once 5 years have passed from the end of the year in which the deceased acquired it. However, the ruling concerns assets remaining after the enterprise in estate has ceased to exist and does not settle the position of assets withdrawn earlier. The rules for individuals not running a business — including the exemptions, for example when selling real estate after a certain period from its acquisition — apply once 6 years have passed since the withdrawal, and for residential real estate regardless of that period.
Practical example: After a business owner's death, a succession administrator was appointed for the enterprise in estate. A fixed asset in the form of a passenger car was withdrawn for the benefit of the sole heir. The heir does not run a business. Withdrawing the fixed asset from the enterprise in estate is neutral for income tax. However, selling the car half a year later does not benefit from the half-year period in Article 10 section 1 point 8 letter d of the PIT Act: the car was a fixed asset and 6 years have not passed since the withdrawal, so the heir should expect the revenue from the sale to be treated as revenue from business activity (Article 10 section 2 point 3 in conjunction with Article 14 section 2 point 1 of the PIT Act).
Procedure for withdrawing a fixed asset
Withdrawing a fixed asset from an enterprise in estate requires appropriate documentation and accounting steps. The process should be carried out with due care to ensure correct tax settlement and avoid problems with the tax authorities.
The first step is a decision to withdraw the fixed asset by the authorised persons. Where succession management has been established, the decision is made by the succession administrator. If succession management has not been established, the heirs make the decision under the rules of co-ownership.
The further steps of the procedure are:
- Preparing documentation justifying the withdrawal of the fixed asset
- Valuing the fixed asset as at the date of withdrawal from the business
- Making the appropriate accounting entries
- Updating the fixed asset register of the enterprise in estate
- Preparing documentation for tax settlement purposes
- Transferring the fixed asset to the heirs' private assets
The withdrawal of a fixed asset should be properly documented in the accounting books of the enterprise in estate and in the fixed asset register
It is also important to keep proper documentation of the value of the fixed asset on the date of withdrawal. This value may matter for the heirs' future tax settlements, for example if the fixed asset is later sold.
In the accounting books of the enterprise in estate, the withdrawal of the fixed asset should be recorded as a reduction in fixed assets. This operation should not create taxable revenue, but it must be properly documented for tax audit purposes.
Consequences for the heirs
Withdrawing a fixed asset from an enterprise in estate has significant consequences for the heirs' legal and tax position. Above all, the heirs, who have owned the fixed asset since the succession opened, can from then on use it privately, which means they can freely dispose of the asset.
Heirs who do not run a business will settle any sale of the withdrawn fixed asset under the rules for individuals not running a business if the sale takes place after 6 years have passed since the withdrawal (Article 10 section 2 point 3) or concerns residential real estate (Article 10 section 3). In that case they can use various tax exemptions provided for in the PIT Act.
For residential real estate, the rules on the income tax exemption when selling real estate after a certain period from its acquisition are particularly important. For real estate acquired by inheritance, the five-year period runs from the end of the calendar year in which the deceased acquired or built the property (Article 10 section 5 of the PIT Act), not from the date the succession opened.
Heirs who do not run a business can use the tax exemptions provided for individuals, including the exemption on the sale of residential real estate; for other withdrawn fixed assets, as a rule only after 6 years have passed since the withdrawal
Another important point is that the heirs can bring the withdrawn fixed asset back into business use. If an heir decides to run a business and uses the previously withdrawn fixed asset, they will be able to record it in the fixed asset register of their business.
Remember also the obligations related to maintaining and insuring the withdrawn fixed assets. The heirs take full responsibility for the assets that have been withdrawn from the business.
For fixed assets that require special permits or licences, the heirs must ensure that all legal requirements related to holding such assets are met.
Inheritance and gift tax
Another important issue is whether withdrawing a fixed asset from an enterprise in estate may be subject to inheritance and gift tax. An analysis of the rules leads to the conclusion that this event does not create tax obligations in this respect.
The list of events subject to inheritance and gift tax set out in Article 1 section 1 of the Inheritance and Gift Tax Act is a closed list. Therefore only the titles to acquiring ownership of things or property rights listed there are subject to inheritance and gift tax.
The object of inheritance and gift tax as defined in the law shows that it is, as a rule, the acquisition free of charge of ownership of things and property rights, solely on the grounds listed there. The economic essence of this tax lies in the increase in the taxpayer's assets, specifically the enrichment of the taxpayer as a result of taking over assets free of charge.
Withdrawing a fixed asset from an enterprise in estate is not listed among the events subject to inheritance and gift tax
The list in question does not include withdrawing a fixed asset from an enterprise in estate. As a result, this event is also tax neutral for inheritance and gift tax.
This position was confirmed by the Director of KIS in an individual tax ruling of 22 August 2022 (no. 0111-KDIB2-3.4015.68.2022.4.MD). The authority stressed that withdrawing a fixed asset from an enterprise in estate does not fall within the list of events subject to inheritance and gift tax.
In addition, withdrawing a fixed asset from an enterprise in estate does not result in any real increase in the heirs' assets, because they became owners of the asset when the succession opened. The withdrawal only changes how the asset is used.
Practical aspects of the withdrawal
In practice, withdrawing a fixed asset from an enterprise in estate requires taking into account a number of practical and legal aspects. Proper documentation of the whole process and compliance with the applicable rules are key.
The first practical aspect is assessing whether withdrawing the fixed asset makes sense. The heirs should consider whether withdrawing a particular asset is economically justified, taking into account their further plans for the enterprise in estate and their own needs.
It is also important to estimate the value of the fixed asset correctly on the date of withdrawal. This value may matter for future tax settlements, especially if the heirs later sell the asset.
Further practical aspects include:
- Checking the legal status of the fixed asset
- Verifying encumbrances and liabilities related to the asset
- Assessing the cost of maintaining the asset outside the business
- Analysing alternative ways of using the fixed asset
- Preparing the appropriate legal and accounting documentation
Before deciding to withdraw a fixed asset, it is worth consulting a tax adviser or accountant to assess all the legal and financial consequences
For high-value fixed assets or those with a complicated legal status, professional legal and tax advice is recommended. This will help avoid potential problems in the future and ensure the best solution for the heirs' interests.
It is also important to consider the effect of the withdrawal on the further operation of the enterprise in estate. If the asset is essential for running the business, withdrawing it may have a negative effect on the enterprise's economic results.
