Comprehensive accounting services for an international group of real estate companies in Poland

Customer: a group of real estate companies with foreign capital, investing in commercial buildings intended for lease. Currently, MDDP Outsourcing provides services to 8 out of approx. 30 companies of that group in the world. It started with services for one entity in 2018. The customer searched for a reliable provider of accounting services in Poland, as part of the one-stop-shop model, that was able to communicate in English and had experience in the real estate sector. Companies in the customer’s group are at various stages of development – from purchase of land parcels to management of leased real properties.

For an international group investing in the sector of commercial real estate, Poland has become an important market in the development strategy. The group’s investments include office, service and commercial buildings in attractive locations in Warsaw. The group is growing at a dynamic pace, with an increasing number of companies in Poland. No centralized accounting services and process coordination posed an operational challenge. In face of the said needs, the group was in the need for a partner that would offer comprehensive accounting, tax and legal services in the one-stop-shop model that would also be familiar with the real estate sector.

The initial position and the needs of a customer from the real estate sector

The dynamic growth in the Polish real estate market involved several crucial challenges;

• no in-house accounting department – companies did not employ workers or employed only individual people, which required full outsourcing of accounting services in order to provide the group with professional and centralized bookkeeping;
• one-stop-shop model – the customer searched for a partner that would offer comprehensive services in one place (being one contact point), that would guarantee smooth cooperation and coordination of the tasks of the accounting team with providers of legal and tax consultancy services and, moreover, help reduce the number of errors and allow saving time, among others, through direct, ongoing communication with the real property administrator;
• experience in the industry – the customer needed an accounting firm with the know-how in handling books of real estate companies, ensuring a synergy of the accounting knowledge with the knowledge of tax advisors and the team of the law firm;
• knowledge of local accounting and tax regulations, communication in English – the managing persons from abroad were unfamiliar with the characteristics of Polish regulations, which required communication in English as well as proper skills to explain the complex accounting and fiscal matters;
• standardization and automation – the group needed a uniform plan of bookkeeping accounts and processes for all comapnies, with a timely delivery of required reports in English.

Accounting solutions of MDDP Outsourcing adjusted to the needs of the real estate sector

1. Complete take-over of the documentation and organizational processes

MDDP Outsourcing was entrusted with the documentation from previous accounting firms, identifying shortcomings and irregularities that required action. The experts at MDDP Outsourcing prepared a uniform chart of accounts for all real estate companies, which allowed for a coherent handling of accounts and reporting in English, in line with the group’s expectations.

2. Accounting services in line with the characteristics of the real estate sector

By taking into consideration the specific nature of the customer’s operations, the accounting team supported the customer in the scope of:

• proper recognition of economic transactions, such as e.g., distinction between renovations and investments aimed at increasing the value of the building;
• classification of investments in tangible assets under construction and determining the rules for depreciation;
• recognition of various operating costs related to real properties;
• proper classification of revenue and costs in the CIT settlement, real property tax and commercial real property tax, settlement of reliefs, subsidies and financial instruments such as interest rate swaps (IRS) on credit contracts for the purchase of real estate.

3. Standardization and automation of group reports

The IT team of MDDP Outsourcing prepared a dedicated tool that automated financial reports in English. The reports were adjusted to the requirements of the central office (e.g. within the scope of costs directly related to the building that are calculated and transferred onto the tenants). It allowed for fast response to the changing needs of the customer and streamlined data analysis and consolidation.

4. Cooperation as part of the one-stop-shop model

Thanks to the cooperation with affiliated entities i.e., MDDP Podatki (tax consulting) and Osborne Clarke (legal services), the customer was provided with comprehensive support in one place. This allowed for a more efficient handling of tax and accounting matters (including services in English), better action coordination, lower risk of errors, and time saved on the customer’s side. The MDDP Outsourcing team explained to the foreign customer the complex Polish regulations, drawing attention to the important elements from the perspective of accounting and taxes – both for the performed as well as planned operations in the real estate sector.

The advantages of outsourcing of bookkeeping to MDDP Outsourcing for a customer from the real estate sector

• One highly specialized contact point – thanks to the cooperation with MDDP Outsourcing, the customer obtained a central contact point for all operations regarding accounting, taxes and legal matters, simultaneously in strict cooperation with the real property administrator that also communicated in English.
• Coherence and standardization – the unification of the plan of bookkeeping accounts and processes streamlined the analyses, supervision and group consolidation.
• Scalable services – flexible adjustments of resources with the possibility of handling a growing number of companies at no loss in quality.
• Expert industry knowledge – access to specialists that are familiar with the specific nature of the real estate sector and continuously update their knowledge in accounting and taxes as well as share it with the customer, providing them with the highest-quality services and comfort.
• Cost and risk reduction – no need to employ own accountants, which greatly reduced the costs of personnel (recruitment, personnel turnover, upskilling) and provided access to data regardless of the absence of individual employees (continuity of work).
• Flexibility and additional support – in case of a need for non-standard tasks e.g., contact with authorities or analyses of documents regarding the current or potential companies in the group, MDDP Outsourcing provides the customer with comprehensive support.

Thanks to the support of MDDP Outsourcing, the group of real estate companies was able to focus on the dynamic growth of their investments in Poland. With the comprehensive services as part of the one-stop-shop model and the professional consulting, the customer could effectively manage their business and minimize various risks (such as taxes, legal matters or problems related to personnel).

The Polish real estate market – with its dynamic growth and increasing potential – requires specialist support. MDDP Outsourcing ensures not only a reliable handling of accounting matters but also provides an added value that can be used by the customers to effectively implement their vision of development in Poland.

Author: Piotr Jaguś, Team Leader, MDDP Outsourcing, Katowice

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