Changes in property tax

June 28, 2024

The Ministry of Finance has published a draft amendment to the Act on Local Taxes and Fees, which implements last year’s ruling by the Constitutional Tribunal. In 2023, the Constitutional Tribunal ruled that the definition of a structure in the Act on Local Taxes and Fees is unconstitutional.

Change in the definition of structures and buildings

In response to the above, the Ministry of Finance has proposed a new, autonomous definition of a structure, as well as a building, which will not refer to the Construction Law. The fundamental change concerns the definition of a structure. According to the Ministry of Finance’s proposal, this will include, among other things, installations and devices, if they constitute a technical and utility whole with an object listed in the annexe to the Act, as well as the construction parts of devices that are not part of these structures.

The proposed provisions significantly expand the scope of the concept of a structure, and the starting point for classifying a given object as a structure will be the analysis of the annexe, which will contain a list of objects constituting structures. This annexe lists, among others, networks such as electrical, telecommunications, gas, heating, water supply, sewage, and other land infrastructure networks, as well as transmission pipelines.

New property tax regulations

Therefore, it should be noted that installations and devices constituting a technical and utility whole with the indicated networks will be considered structures under the Act on Local Taxes and Fees and will thus be subject to property tax. The basis for taxation for structures will remain their value. According to the draft law, property tax will include, among others, power transformers, which under the new regulations will be unequivocally classified as structures.

In turn, the proposed definition of a building will also include structures that are part of the objects listed in items 1-6 of the annexe, if they are part of the building. The referenced scope of the annexe includes, among others, water treatment plants, sewage treatment plants, hydro-technical structures, open sports facilities, and recreational facilities. If the indicated structures are part of a building, they will be taxed according to the rules provided for buildings. Therefore, a pumping station or sewage pumping station that is part of a building will be taxed according to the rules applicable to buildings, rather than structures.

Property tax — garages

The changes also affect multi-space garages in residential buildings (underground garages). The legislator proposes subjecting them to property tax rates for residential buildings, regardless of whether a common or separate land and mortgage register covers the garages.

When will the changes be implemented?

The planned changes are set to take effect starting in 2025. The draft is currently in the consultation stage.

Tags nieruchomość, property, property tax