Field roads are important for any agricultural activity
Land serving internal communication between those on which agricultural activity is carried out cannot be subject to real estate tax, writes Rzeczpospolita, discussing the NSA's ruling (case no. III FSK 1422/21).
The editors asked Michał Nielepkowicz, tax adviser and partner at Thedy & Partners, to comment. In his opinion, the ruling of the NSA deserves approval. The court rightly stated that the authorities, as well as courts of first instance, cannot limit themselves to establishing that a given object of real estate taxation – in this case land – is in the possession of an entrepreneur in order to subject it to the highest real estate tax rate. What was important in this case, as the Supreme Administrative Court correctly noted, was that the land in question was connected with the conduct of agricultural activities, and agricultural activities are not considered to be economic activities within the meaning of the real estate tax regulations. Therefore, any land associated with agricultural activities cannot be taxed at the highest rates as being associated with economic activities.
It should also be noted that there is currently much dispute as to whether, in the case of entrepreneurial businesses, the mere possession of an object of property taxation, e.g. land or a building, is sufficient to conclude that they should be subject to the highest tax rate. Despite the verdict of the Constitutional Tribunal, which rejected such an interpretation of the legislation, in the jurisprudence of the administrative courts, this issue is still unresolved. In practice, in a very large number of cases, real estate cannot be used by entrepreneurs in the course of their business and should then not be subject to the highest tax rate even if it remains in the possession of entrepreneurs conducting business.
An example of such a situation is the lack of use of the property during the pandemic period, where top-down business bans resulted in the inability to use the property for business activities, and this qualifies for the property to be taxed at lower rates for this period. Taxpayers therefore hope that the judges will recognise this problem and confirm their entitlement to lower property tax rates during the pandemic period. A different ruling would not only be contrary to the provisions whose binding interpretation was formulated by the CT, but also to the sense of social justice.
The entire article can be read in Rzeczpospolita of 14 December 2022, page F1