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Can a set of functionally linked things be subject to real property tax?


by Jakub Wajs and Piotr Gajewski

21 March 2022 

In its ruling of 26 January 2022 (file no. III FSK 2135/21), the Supreme Administrative Court (SAC) expressed its opinion on real property tax on a process line comprised of a complex of many constructions.

What was the case about?

The case was about real property tax on a concrete batching plant, which is a set of constructions that make up a single whole in technical and utility terms and that could not meet their intended purpose without being functionally linked to one another. The Provincial Administrative Court (PAC) in Łódź supported the view of tax authorities. In the PAC's opinion, the entire concrete batching plant was a single item since all its components were functionally linked to one another. The court referred to the fact that all the constructions were interlinked in technical and utility terms so as to make up a concrete batching plant. Therefore, for real property tax purposes the plant was considered a single structure which should be taxed at the tax rate applicable to structures.

SAC's ruling

However, the SAC did not share the arguments raised by tax authorities or the PAC in Łódź in this dispute. It held that it was inadmissible to apply the concept of technical and utility link among constructions for tax law purposes in order to classify a complex of constructions as one structure which must be taxed as a whole at the tax rate applicable to structures.


The SAC believes that, for the purpose of tax law, complex structures should be considered in reference to the civil law understanding of a thing as a physically separate tangible object. According to the SAC's ruling, all tangible constructions which are sufficiently specific and separate must be identified for real property tax purposes so as to determine the taxable base for each of those constructions. Once the constructions are identified, it must be established whether the individual constructions are buildings or structures and then the appropriate real property tax rate must be applied to each of them.


Moreover, the SAC pointed out that the functional link established among a number of constructions to achieve a business purpose does not trigger the existence of a single item subject to tax under the Local Taxes and Fees Act. There is simply no justification for this view in the Local Taxes and Fees Act. The statute does not specify the functional link among constructions as the criterion identifying the item subject to real property tax.


Ultimately, the SAC explained that for real property tax purposes it was first necessary to identify process line components that are separate tangible objects and then to assess whether each of those components can be considered a construction. The next step is to establish whether a given construction is a structure or a building and then to apply an appropriate real property tax rate.


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Jakub Wajs

Attorney at law (Poland), Tax adviser (Poland)

Senior Associate

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