Non-use of property and real estate tax

Real Estate Attorneys of our Law Firm in Poland informs about the verdict issued on 10 August 2022 by the Provincial Administrative Court in Lublin (file reference I SA/Lu 311/21), in which the court held that the increased real estate tax rate should not be applied in a situation where, due to the poor technical condition of the building, the entrepreneur does not use it in his business activity.

Factual situation

In the facts presented here, the tax office summoned the company to pay the amount of real estate tax related to its business activities. The company disagreed with the decision, pointing out that the buildings are in poor technical condition and are neither used nor included in the books of account. According to the tax office, the designation of the buildings for demolition was not sufficient to conclude that the buildings do not constitute buildings within the meaning of the Local Taxes and Fees Act and thus should not be subject to real estate tax. The company challenged the decision, pointing out that in order for a facility to be subject to property tax at an increased rate, two criteria must be met: it must be in the possession of an entrepreneur and the entrepreneur must use it to conduct business activity. The company, however, did not carry out any business activity (it had been suspended) and the disputed buildings were ruins of former industrial facilities.

Increased rate vs. obstacle to carrying on business

According to the court, in fact, the mere suspension of the company’s business activity does not render the properties in its possession not to be taxed at the increased rate. However, it pointed out, citing a Constitutional Court ruling, that entrepreneurs cannot be charged a higher real estate tax rate simply because the taxable items are in their possession while they are not used for the actual performance of business activities.

You are an entrepreneur, you own real estate in Poland and you are wondering what real estate tax rate to apply?

If you have questions about your tax obligation for the business-related real estate, please contact our Real Estate Law Office in Warsaw, Poznan, Krakow and Wroclaw.