Lower tax on installations when they have usable floor space
The NSA's ruling on tax on silos and tanks is a Pyrrhic victory for business, Rzeczpospolita writes.
Piotr Kalemba, a tax adviser and senior manager with Thedy & Partners, commented on the ruling in Rzeczpospolita. He pointed out that the NSA’s unambiguous indication that an object which constitutes a structure under the provisions of the Construction Law may be deemed to be a building for the purposes of property taxation should be viewed positively. However, it is incomprehensible that at the same time the NSA stated that the characteristic parameter of such a building should be its usable area.
The position presented by the Court means introduction of a non-statutory premise to the definition of a building, which is clear – a building is an object that is permanently connected to the ground, separated from the space by means of building partitions, and has foundations and a roof – and constitutes a breach of the principle of determinacy of tax regulations.
The resolution may result in objects whose characteristic parameter is, for example, their capacity, being qualified for property tax purposes as structures, even though they have all the features of a building. This may apply not only to silos, the taxation of which gave rise to the dispute in this case, but also to a number of other facilities, the taxation of which has not raised any doubts so far, e.g. sports halls and storage facilities, the characteristic parameter of which is not the usable area, but actually the capacity.
Importantly, the reclassification of a facility from a building to a structure may involve a significant increase in the tax burden – particularly in the case of new high-value facilities. Such reclassification will mean that the object will not be subject to taxation according to its usable area (about PLN 25 per m2), but according to its value (2% of initial value).
Finally, it should be pointed out that the case of one of our clients concerning taxation of objects fulfilling the definition of a building fulfilling storage functions (analogically to the case considered by the NSA, i.e. silos) has been accepted for consideration by the Constitutional Tribunal. Therefore, the NSA’s resolution does not close the case and all hope is in the Court…
The entire article can be read in Rzeczpospolita of 30 September 2021, page A10