Dear Sirs,
A draft amendment to the Act on Local Taxes and Fees has been published on the website of the Government Legislation Centre, introducing significant changes that will affect the tax as early as 2025. One of the objectives of the amendment is to eliminate doubts as to whether and which objects should be classified as a building (taxed on its usable area) and which as a structure (taxed on its value).
Specifically, the planned amendment may result in a significant change in the tax burden for the taxation of structures as of from 2025 onwards.
New definition of a structure
The new definition provides that the following will be considered as a structure:
- the facilities listed in Annex 4 to the Act, as well as installations and equipment, if they constitute, together with the facility, a technical and functional whole,
- construction parts of equipment which do not form part of the structures referred to in the above section,
- the construction parts of wind power stations and nuclear power stations,
- foundations for machinery and plant, technically separate from such machinery and plant,
- connections to the construction objects
– made using construction products.
An interesting solution is the addition to the Act of a new Annex No. 4 containing a list of 28 types of objects that have been explicitly recognised as structures, including, among others:
- a tank in the form of a silo, an elevator, a bunker for the storage of fuels and gases and other chemical products, as well as any other tank intended for the accumulation of loose materials, occurring in pieces, or in liquid or gaseous form, whose basic technical parameter determining its economic functions is its capacity,
- a container facility permanently connected to the ground,
- free-standing permanently connected to the ground: aerial mast, billboard and advertising device, outdoor lighting, industrial installation and technical facility,
- electric power line and traction,
- cable line placed directly in the ground or aboveground, with the exception of telecommunication cables proved to an already existing aboveground cable line,
- cable duct and conduit, excluding cables installed therein, and other conduit whose characteristic parameter is length.
New definition of building
According to the proposed amendments, a building should be understood as an object, including installations ensuring its use in accordance with its purpose, made with the use of construction products, which is permanently connected to the ground, separated from the space by means of building partitions and has foundations and a roof, also in the event that it is part of an object listed in items 1-6 of Annex 4 to the Act.
Taxation of multi-space garages
As announced, the draft also provides for favourable changes to the taxation of multi-space garages in residential buildings, which is to be considered as a residential part of the building and this subject to the real estate tax rate applicable to residential buildings.
How to prepare for the changes?
The large number of ambiguities and areas which, at first glance, can already be seen to cause disputes between taxpayers and tax authorities, on the one hand, and the short period of time to prepare for the implementation of the regulations, on the other hand, means that it is already worth analysing how the change in the definition of a building and a structure will affect real estate tax settlements, including in particular:
- prepare a real estate tax calculation taking into account the changes proposed in the Act in order to determine the impact of the amendment on the amount of real estate tax starting from the next calendar year.
- verify the tax rulings/judgments in possession with respect to real estate tax, on the basis of which the decision was made to classify individual objects as buildings or structures.
- submit new requests for tax rulings in order to secure the planned approach to taxation of structures according to the new regulations (including in the case of already held positive tax rulings), taking into account the time needed for the local tax authorities to issue the tax ruling, we recommend preparing the requests so that they can be submitted immediately after the enactment of the regulations being prepared.
Please feel free to contact the specialists at Nexia Advicero to discuss the details and the solutions available to help you prepare for the upcoming real estate tax revolution.