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Significant changes in Property Tax – Draft Bill

On June 17th, the Government Legislation Center published a draft bill amending the Agricultural Tax Act, the Local Taxes and Fees Act, the Forest Tax Act, and the Stamp Duty Act.
Łukasz Kaza
TAX Assistant
Tomasz Śliwiński
Senior TAX Specialist

The planned amendments signify a minor revolution in the area of property tax. Below, we present the most significant changes concerning property tax, which include, among other things:

1. Introducing into the Local Taxes and Fees Act an independent definition of a "building" as a structure, including installations enabling its utilization for an intended purpose, made with construction products, which is permanently connected to the ground, separated from its surroundings through building partitions and containing both foundations and a roof, also in the case where it is part of a structure listed in items 1-6 of Annex 4 to the Act, i.e.: outdoor: sports and recreation facilities, water treatment plants, sewage treatment plants, defense facilities (fortifications), protective facilities, hydrotechnical facilities as well as pedestrian crossings (above and below ground and pedestrian walkways).

    Similarly to the current legal framework, the subject of property tax will be any building along with installations ensuring its usability in accord with its intended purpose. However, these installations (such as electrical, water, sewage, heating, telecommunication, and gas installations located inside the building and forming an integral part of it) will not be subject to taxation. The tax base for the building will be its usable area.

    2. Introducing the Concept of a "Building" into the Act

    According to the draft bill, a "building" is to be understood as:

    1. objects listed in Appendix No. 4 to the Act, as well as installations and devices, if they constitute a technical and functional integrality with the object;
    2. structural parts of devices that do not constitute parts of structures mentioned in point (a);
    3. structural parts of wind power plants and nuclear power plants;
    4. foundations for machines and devices, technically separated from those machines and devices;
    5. connections to the building object.

    The proposed definition of "building" does not refer to the provisions of the construction law.

    3. The unification of taxation of multi-stand garages located in residential buildings, considering  garages as a residential part of such a building. As a result of this change, the property tax rate provided for residential buildings will apply to the taxation of a separate multi-stand garages in a residential building.

    4. Addition of a provision exempting land, buildings, and structures that are part of service infrastructure facilities, i.e., freight terminals, from the Property Tax.

    5. Changes in Property Tax exemptions for land, buildings, and structures in aviation areas within public airports, and as for land, only for parts occupied by these buildings and structures.

    6. Changes in Property Tax exemptions for research institutes which aim to limit the scope of subjective exemption for research institutes from the Property Tax.

    7. Obligation for co-owners of multi-stand garages in residential buildings to submit information on real estate and structures (IN-1) in 2025.

    The planned date for the adoption of the draft by the Council of Ministers is the third quarter of 2024. The draft law is available at https://legislacja.gov.pl/projekt/12386262/katalog/13064854#13064854

    We will keep you informed of all changes on an ongoing basis. Should you need any support in this regard, we encourage you to contact our experts.

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