For some time now, electricity has been a major topic in public debate. We hear about high prices (which we unfortunately have to contend with), price freezes for specific customer groups, and other ideas to reduce electricity costs on both a micro and macro scale. One way to reduce electricity bills is to invest in renewable energy sources.
Due to the investment cost, the currently most popular form of generating "green" energy is a photovoltaic power plant. Electricity is generated by converting solar energy. Photovoltaic systems can be mounted on the roof of a building or on so-called tables mounted in the ground. The first option is usually low-power plants due to the limited installation space. Photovoltaic power plants built on the ground, also known as photovoltaic farms, can reach dozens or even hundreds of megawatts of power. Such installations can fully or partially meet the self-consumption needs of connected households and businesses. The electricity generated in a photovoltaic power plant can also be sold to power plants or other end users.
If we decide to invest in a photovoltaic farm, we must obtain a number of decisions and permits, purchase all the necessary equipment, build the farm, and connect it to the electricity grid. Since photovoltaic farms are located on land (usually agricultural land with a low valuation class), another issue arises: property tax. This issue arises only in the case of photovoltaic farms. Panels mounted on building roofs do not constitute a structure or a structural element constituting a technical and operational whole. Therefore, they are not subject to additional property tax.
In the case of photovoltaic farms, disputes with the tax authorities regarding the subject of taxation are ongoing. A photovoltaic farm, in addition to the photovoltaic panels themselves, also consists of the structure on which the panels are mounted, inverters, grid connections, etc. Tax authorities consider the entire installation (including the panels) to be a structure within the meaning of local tax and fee regulations, charging tax at a rate of 2% of the structure's value. However, in disputes with tax authorities, taxpayers argue that only the elements driven into the ground (poles, anchors) should be subject to taxation.
In considering disputes, administrative courts have reached the position that the support structure for photovoltaic panels, not the panels themselves, is subject to taxation. Inverters are also exempt from taxation. However, a problem may arise in the case of transformers. If they meet the definition of a building (a structure that is permanently attached to the ground, separated from the space by building partitions, and has foundations and a roof), the tax base will be its area. According to the Supreme Administrative Court's ruling, due to the different definitions of a structure in construction law and tax law, a transformer station cannot be subject to taxation on its value as a structure (judgment of December 6, 2022, file reference III FSK 740/22). A structure (for the purposes of tax regulations) will be the fencing of a photovoltaic farm.
Land tax, however, is a separate category. Disputes regarding the subject of taxation also persist in this area. Agricultural land, often covering many hectares, is typically used for photovoltaic farms. Because this land will be used for business purposes, it will be subject to property tax at a higher rate than land unrelated to such activities or agricultural land. In 2023, the maximum property tax per hectare of land used for business purposes is PLN 11,600 (the amount resulting from the maximum rate announced by the Minister of Finance – the municipality may adopt a lower rate).
However, in the case of a photovoltaic farm, is the entire area used for business purposes? Taxpayers have been convincing tax authorities for years that the area enclosed by the mounting structure is used for business purposes. Underneath the panels and between the rows of panels, vegetation, beekeeping, or sheep grazing (agrophotovoltaics) are possible. However, administrative courts have ruled that the possibility of conducting agricultural activities within a photovoltaic farm does not necessarily mean that the area is unrelated to business activities. Therefore, the entire area of a photovoltaic farm, within the fence, is subject to property tax. However, if the farm is located on part of the plot, that part (the photovoltaic farm) will be subject to property tax, while the remaining portion will be subject to agricultural tax.
Importantly, if the land is leased for a photovoltaic farm, the tax obligation falls on the property owner, not the lessee.
We wish both those who use solar energy to reduce their electricity bills and those who use it solely for recreational purposes, sunny days… and low taxes.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of July 21, 2023
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