The government adopted a draft amendment to the Local Taxes and Fees Act on 14 October, which introduces significant changes to property taxation. The draft will still be processed in the Sejm, but it is already worth reviewing the key assumptions, which are expected to take effect from 1 January 2025. The reform aims to clarify the definitions of structures and buildings, which will affect property owners and entrepreneurs. Here are the key changes to bear in mind.
New definition of building and structure
Definition of a building: According to the amendment, a building is an object created as a result of construction works, permanently connected to the ground, having foundations, a roof and separated from the space by building partitions. This precise definition eliminates the inaccuracies that appeared in the previous regulations, especially with regard to objects such as kiosks or containers.
Definition of a structure: A structure will be an object not listed as a building, as indicated in the Annex to the Act, including wind power plants, photovoltaic power plants, energy storage facilities and various types of technical equipment. The amendment emphasises that only the construction parts of these facilities will be taxed.
Taxation of garages
The changes also apply to garages in residential buildings. From 2025, premises for the storage of vehicles that are not used for business purposes will be taxed at the lower property tax rate applicable to the residential parts of buildings.
Permanent connection to the ground
The amendment also introduces a definition of permanent connection to the ground, which eliminates the controversy surrounding the qualification of certain objects for taxation. An object that is permanently connected to the ground is one that is firmly fixed and resistant to external factors that may cause its displacement.
Reclassification of assets
These changes will force taxpayers to reclassify their real estate holdings. Companies with large holdings must prepare for a time-consuming review process to adequately comply with the new regulations.
Summary
The amendment to the Real Estate Tax Act introduces a number of changes that aim to unify taxation rules. Although the new regulations clarify the definitions of buildings and structures, which should reduce tax disputes, the introduction of additional requirements may increase the scope of taxation for some taxpayers. Entrepreneurs and property owners should prepare in advance for the upcoming changes in order to avoid potential settlement problems.
