The definition of a structure in the Local Taxes and Fees Act is unconstitutional, the Constitutional Tribunal ruled in its judgment of July 4, 2023. However, Article 1a, Section 1, Item 2 of the Local Taxes and Fees Act will cease to apply 18 months after the judgment's publication in the Journal of Laws. Therefore, we can expect revolutionary changes to property tax no later than early 2025.
The fundamental difference between a building and a structure under tax law is the method of taxation. While the building tax is based on its area and can reach a maximum of PLN 28.78 per square meter , the structure tax is based on its value and is levied at a rate of 2%.
The case that led to the ruling concerned the taxation of silo warehouses. The taxpayer filed a motion with the mayor to determine an overpayment of property tax, arguing that the submitted declaration incorrectly classified the buildings as structures. The mayor refused to determine the overpayment, and the administrative courts confirmed the correctness of the decision by dismissing the appeal.
The current definition of a structure states that a structure is a construction object within the meaning of construction law that is not a building or small-scale infrastructure object, as well as a construction device within the meaning of construction law associated with a construction object that ensures the use of the object in accordance with its intended purpose. This definition is negative (a structure is defined as all construction objects that are not buildings or small-scale infrastructure objects).
The Constitutional Tribunal noted that the act not only lacks a self-contained definition, but also refers twice to construction law, i.e., non-tax regulations. It stated that the reference to the general concept of "construction law provisions" as a field of administrative law, rather than to the Construction Law itself, means that the subject of taxation can be defined not only in the act but potentially also in regulations related to construction law. The Tribunal emphasized that it is not permissible to regulate in a non-tax act such crucial elements of the legal structure of taxes as their subject.
The legislator also criticized the definition of a building, which also refers to the provisions of the Building Code. This definition also needs to be amended.
Despite the finding that Article 1a, Section 1, Item 2 of the Local Taxes and Fees Act is inconsistent with constitutional provisions in its entirety, it may continue to be applied until a new definition of a structure is adopted. All decisions issued to date based on it remain in force. At the same time, the Tribunal set an 18-month deadline for amending the regulations.
This article is for informational purposes only and does not constitute legal advice.
