On January 1, 2025, an amendment to the Law on Local Taxes and Fees will go into effect, introducing significant changes to the definitions of building and structure, key to property taxation. The purpose of these changes is to bring the legislation in line with the 2023 Constitutional Court ruling, as well as to increase transparency in the qualification of taxable objects.
New definitions of building and structure
The amended regulations introduce autonomous definitions of building and structure, independent of the Construction Law.
According to the amended regulations, a building is an object erected as a result of construction works, together with installations ensuring that it can be used for its intended purpose, permanently connected to the ground, separated from the space by building partitions, and which has a foundation and a roof, except for an object in which bulk materials, materials occurring in pieces, or materials in liquid or gaseous form are or can be accumulated, whose basic technical parameter determining its purpose is its capacity.
The new definition of structures will include:
1. A facility that is not a building, listed in Annex 4 to the Law, together with the installations that ensure that it can be used for its intended purpose,
2. Power plants (wind, nuclear, photovoltaic), biogas plants, energy storage facilities, boilers, industrial furnaces, cableways, ski lifts, ski jumps – in terms of their construction parts,
3. Building facilities – connections and technical installations (e.g., for the treatment or collection of wastewater), directly related to the building or facility and necessary for its use,
4. a technical device other than those listed in points 1-3 – only in terms of its construction parts,
5. Foundations for machinery and technical equipment as separate utility parts,
– erected as a result of construction works, including when they are part of a structure not listed in the Law.
The new definition eliminates references to the Construction Law, but introduces terms that may raise questions of interpretation. Entrepreneurs should carefully analyze their properties to avoid tax qualification errors.
Extended deadline for filing 2025 returns
The amendment includes an extended deadline for filing property tax returns for 2025.
Declarations can be submitted until March 31, 2025, instead of the previous deadline of January 31.
The condition for taking advantage of the extended deadline is the submission of a notice to the tax authority by January 31, 2025, containing the authority’s data, the taxpayer’s data and a statement of intent to take advantage of the deadline.
The taxpayer makes a monthly property tax installment payment:
a) for January – by January 31, 2025,
b) for February – by February 15, 2025,
c) for March – by March 15, 2025,
– in the amount corresponding to the average monthly amount of tax due for 2024.
The final tax settlement for this period will take place by March 31, 2025.
Impact of changes on entrepreneurs
1. More precision, but new uncertainties
The new definitions eliminate references to the Construction Law, but the use of imprecise terms such as “permanently attached to the ground” or “other technical facilities,” could lead to new interpretation disputes. Logistics and manufacturing industries, such as owners of warehouses, may be particularly affected, as they may be taxed as structures, which carry higher rates.
2. Lower rates for garages in residential buildings
The change in the classification of garages as part of residential buildings means a reduction in the tax rate for these premises, putting them on a par with residential units, provided they are not used for business activities.
3. Incentives for the port industry
The amendment introduces a tax exemption for port infrastructure structures, in a nod to maritime infrastructure development.
To comply with the new regulations:
- PConduct an inventory of properties and their qualification according to the new definitions,
- Take advantage of the extended filing deadline, which will allow you to prepare thoroughly for the changes,
- When in doubt, consider the appropriateness of applying for an individual tax interpretation to avoid interpretive errors.
Summary
While the new regulations aim to make property taxation more transparent, they also introduce the risk of interpretation disputes. Entrepreneurs should carefully analyze the changes to avoid unforeseen financial consequences and optimally adapt to the new requirements. It is worth using the extra time to prepare returns to ensure compliance with the new regulations.
