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Planned changes to the real property tax legislation – non-building structures and garages

by Jakub Wajs

15 March 2024

On 6 March 2024, the Ministry of Finance replied to the Ombudsman’s enquiry about the work on the definition of a non-building structure and clarifying the taxation rules of garages.

The Ministry is working to define the term “non-building structure” for the purposes of real property tax. The objective is to add an autonomous definition to the Local Taxes and Fees Act (LTF Act) that would not refer to non-tax laws. On the table is a closed list of non-building structures subject to tax in a new annex to the statute. The goal is to maintain fiscal status quo, clear doubts about taxation of certain non-building structures, and take account of the existing administrative court judgments concerning the application of current laws.
In the LTF Act, multi-station garages in multifamily residentials, recognised as separate real property units, are treated differently from not legally separated garages which belong to shared real properties. (…) As a consequence, the tax on a garage hall, which is subject to tax at the rate applicable to residential buildings, will be taxed at a higher rate that is applicable to other buildings if it is separated as a stand-alone property. Aware of this inconsistency, the Ministry has started to work on clarifying the rules of taxation of garages to harmonise the taxation of multi-station garages in multi-family residentials.

In both cases, the Ministry plans extensive public consultations of the proposed solutions. Due to the annual assessment of the real property tax and the need to ensure the minimum vacatio legis, the new legislation should be published by the end of November 2024 at the latest. The Ministry has stated that they are not planning any overhaul of the real property tax system.

The reply is quite enigmatic because in no place does it deal with 2023 judgments of the Constitutional Tribunal (CT) issued in both above-mentioned matters which, it seems, underlie the legislative changes. Furthermore, citing the CT’s judgment of 2011, the Ministry’s answer suggests that the Tribunal did not find the definition of a “non-building structure” unconstitutional. In this context, it is unclear how the Ministry wants to account for the CT’s 2023 judgments and, therefore, whether they will consider during the legislative work all the guidelines set in those judgments . The doubts are well-grounded because the Ministry has proclaimed that it wants to ensure fiscal status quo. The fact that 9 months before the anticipated go-live of the revised legislation, even the general direction (concept) of the amendment is still being deliberated adds to the worry.

On the other hand, the declaration of broad public consultations involving businesses and local government authorities gives some hope for good.

The changes, especially to the definition of a “non-building structure” may be profound for many enterprises. However, there is likely to be little time to implement them (given the expected publication of the revised law until the end of November 2024). In this context, it makes sense to be on a stand-by and start the legislation review as soon as the bill is published, and to participate in the public consultations.

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Jakub Wajs

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

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