No other activities exclude the lower rate
If the only form of activity of a taxpayer, in whose possession a real estate is located, is carrying out business activities, then the sole manifestation of his activity is running an enterprise," writes Rzeczpospolita, discussing a NSA ruling (case ref. III FSK 4061/21).
Michał Nielepkowicz, tax adviser, partner in Thedy & Partners, commenting on the case in the newspaper, stresses that the intention of the Supreme Administrative Court to clarify the position of the Constitutional Tribunal in subsequent tax disputes, which it has to examine, seems to be fundamentally correct. Thanks to this, both taxpayers and tax authorities may sooner learn how to attempt to clarify the position of the Constitutional Tribunal in order to apply the said regulations in a lawful manner.
In the case at hand, the taxpayer, in addition to economic activity, was engaged in agricultural activity and therefore claimed application of lower tax rates, while, as the NSA pointed out, the appellant entered the real estate in the register of fixed assets and depreciated it for tax purposes. On this basis, the court concluded that the aforementioned circumstances prove that the real estate is connected to the business conducted, and this does not justify the application of lower rates of real estate tax.
It seems that in this particular case, it was the use of the real estate in business activity that could indeed determine the highest tax rate. Nevertheless, on that occasion, the NSA also formulated general guidelines as to when an entrepreneurial taxpayer should apply the highest tax rates.
Subsequent cases concerning other taxpayers, in particular those related to the lack of possibility to conduct business activity in the pandemic period due to the existing restrictions and prohibitions to conduct business activity formulated explicitly by the legislator, will provide an answer as to whether this position of the NSA will in fact be maintained or modified.
It seems that such a standpoint of the Supreme Administrative Court, where the justification for the highest rates is the sole fact of conducting business activity, which certainly applies to the majority of entrepreneurs in Poland, may be incompatible with the realities of running a business during a pandemic. If an entrepreneur from a specific industry was affected by the ban on conducting business in the period of the pandemic, then – in my opinion – such a situation qualifies for taxation of his or her property at lower rates, which is confirmed by the judgment of the Constitutional Tribunal. However, we will have to wait for that.
Entire article published in Rzeczpospolita of 26 January 2022, p. H7