Tax law constitutes a distinct branch of law. This distinctiveness is further emphasized by the planned amendment to the Real Estate Tax Act. On January 1, 2025, it may become necessary to pay tax on a structure that was not previously considered a structure. On that date, a new definition of a building and structure will come into effect.
Currently, a building or structure is considered a construction object recognized as such in accordance with the provisions of the Building Code. According to these provisions, a building is "a construction object that is permanently attached to the ground, spatially separated by building partitions, and has foundations and a roof." A structure, on the other hand, is considered "any construction object that is not a building or a small-scale architectural feature (...)." The Act also lists a number of objects that are considered structures.
The proposed regulations define a building as "a structure, together with installations ensuring its intended use, constructed using construction products, that is permanently attached to the ground, spatially separated by building partitions, and has foundations and a roof, including if it is part of a structure listed in items 1-6 of Annex 4 to the Act [on structures]." The difference between the current and planned definitions of a building is that in the proposed changes, the legislator specifies that a building is a structure if its intended use is ensured and it is constructed using construction products. Furthermore, it is expressly stated that a structure that constitutes a part of a structure is also a building.
The buildings will be:
a) "facilities listed in Annex 4 to the Act, as well as installations and devices, if they constitute a technical and operational whole together with the facility,
b) construction parts of devices that are not part of the structures referred to in letter a,
c) construction parts of wind farms and nuclear power plants,
d) foundations for machines and devices, technically separate from these machines and devices,
e) connections to the building
– made using construction products;”
To determine whether a given object is a structure or not, it will be necessary to consult the annex to the act. It contains a comprehensive list of objects that will be considered structures. This list is broader than that currently included in the Building Code. It explicitly states that structures include silos, elevators, container structures permanently attached to the ground, tent covers, pneumatic enclosures, parking lots, and parking lots (which are not buildings). Interestingly, cemeteries will no longer be considered structures.
Before January 1, 2025, when the amended regulations are scheduled to come into force, it's a good idea to verify whether any properties for which you haven't paid property tax so far will become structures. This will help avoid unpleasant surprises next year. We also remind you that companies must submit property tax returns by January 31.
The draft amending act also introduces beneficial changes for owners of parking spaces in residential buildings. Currently, if a garage is a separate unit, it is subject to a higher tax rate. Therefore, apartment owners in buildings where parking spaces are not a separate unit are privileged. As a result of the amendment, all underground garages will be taxed at a uniform, lower rate – the same as apartments. However, taking advantage of the lower rate will require active participation from parking space owners. According to the amended regulations, individuals who co-own a commercial unit – a multi-car garage in a residential building – will be required to submit relevant information to the municipal (city) office by January 31, 2025.
The amendments to the law will require verification of real estate assets, which may be particularly burdensome for businesses with extensive infrastructure. Public consultations on the proposed bill are ongoing until July 8th. We will keep you updated on its developments.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of June 24, 2024
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