Changes in real estate tax. Who will get the pocket?
The Ministry of Finance has listened to the voice of legal doctrine and case law (in particular the judgment of the Constitutional Tribunal of 4 July 2023, file reference SK 1421) and decided to introduce legal definitions of the terms “building” and “structure” into the Real Estate Tax Act. So far, the Act has referred directly to the definition contained in the Construction Law, which has been widely criticized. This change is intended to end disputes regarding the tax qualification of facilities such as silos, elevators, gas stations, or stadiums.
What is the tax for a parking space?
The second change is also a result of the Constitutional Tribunal’s judgment (judgment of October 18, 2023, file reference SK 23/19). As a result, multi-space garages located in residential buildings will be considered a residential part and will be taxed at the same tax rate as residential buildings. The tax authorities’ previous practice distinguishes between garages constituting separate residential properties and those that were not separated. Owners of separated premises paid a higher tax than owners of a garage that was a common part, due to the fact that the tax rate for other buildings was applied to them. The planned change is to ensure uniform taxation at a lower tax rate.
The unfavourable change will affect taxpayers who own rail freight terminals. They will not be able to benefit from the exemption from property tax for rail infrastructure in terms of land, buildings and structures that are part of the freight terminal.
Limited exemption for airports
The changes will also affect airport owners. Land on the premises of public utility airports that is not occupied by buildings and structures will not be exempt from tax. However, developed land will still be exempt. The change restores the legal status from before January 1, 2022.
The change regarding tax exemption also applies to research institutes. They will lose the exemption from real estate tax and the part thereof that is not intended for basic business activities. The changes resulting from the judgments of the Constitutional Tribunal will certainly please those who will benefit from them. However, the same cannot be said about taxpayers who will lose their tax exemption.
Let us remember, however, that property tax constitutes municipal income, and therefore should serve our local community.
Author: Rafał Knap, attorney-at-law, Graś and Partners Law Firm
