How will the new regulations affect real estate taxes? Changes as early as January 2025!

How is real estate tax calculated in Poland?

Real estate tax in Poland is one of the local taxes. It taxes land, buildings, and structures. Both residential and commercial real estate are subject to taxation.

The amount of the tax depends on the area of the property and the rate set by the local authorities. It is worth noting that the real estate tax rate in Poland is much higher for facilities used for business activities.

The amount of property tax varies depending on the type of property owned. For land and buildings, the tax is based on their area. Structures, on the other hand, are taxed according to their initial value as fixed assets. As a result, the tax on structures usually represents a greater financial burden than the tax on land or buildings.

Constitutional Court initiates changes in real estate tax

The changes in Real Estate tax, which have been expected for a year, will come into effect on January 1, 2025. The Constitutional Court, in a judgment of July 4, 2023 (SK 14/21), ruled that the definition of structures in the current legislation is unconstitutional. This forced the need to update the real estate tax regulations.

The draft amendments were published on June 17, 2024 in the list of legislative works of the Government Legislation Center. The new regulations change the definition of a building and a structure, as well as the taxation rules for certain objects and installations.

New definition of structure and building. What does this mean for taxpayers?

The new regulations introduce significant changes to the definitions of buildings and structures. From now on, a building will not be defined by reference to the construction law.

Instead, the definition of a building will include all installations (water, sewage, telecommunications). This means that they will be taxed together with the building, based on its area, instead of separately as before.

The definition of a structure has also been clarified to reduce interpretation disputes and make the regulations easier to apply. References to the construction law have been dropped, and instead specific prerequisites that must be met for an object to be considered a structure have been introduced.

The law includes an appendix that lists objects considered to be structures, including:

• tanks (silos, elevators, fuel, and gas storage bunkers),
• parking lots,
• parking yards,
• sheds,
• hangars,
• water treatment stations,
• hydrotechnical facilities.

Multi-car garages as a residential part. New taxation rules

The draft amendments also provide for changes in the taxation of multi-car garages. Such facilities will be considered a residential part of the building. This means that they will be subject to the real estate tax rate applicable to residential buildings.

The planned changes are aimed at unifying the taxation rules for garages, both those for which a land register has been established and those without one.

The changes will also affect railroad infrastructure and wind power plants

The tax exemption for rail infrastructure will no longer include facilities that are part of freight terminals. In the case of wind power plants, only building parts that are considered structures will be taxed. In practice, this means that wind turbines will not be taxed (which, given the value of the turbines, will significantly affect the amount of tax paid).

Although the bill does not explicitly mention photovoltaic farms, it cannot be ruled out that the provisions regarding their taxation will be clarified in the future.

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