Prawo.pl: Hotels want property tax refund for lockdown period
Hotels want property tax refunds for the lockdown period. They cite one of the judgments of the Constitutional Tribunal. According to tax advisors, they have a chance to win in court. And this may cause a snowball effect. Shops, restaurants, gyms, hairdressers, which are closed during the pandemic, may follow in their footsteps. And then the local governments will have a problem - writes the Prawo.pl portal.
Michał Nielepkowicz, tax adviser, partner in Thedy & Partners, commenting on the matter in the Portal, points out that in fact, the judgment of the Constitutional Tribunal issued a few months ago broadens the earlier standpoint and, despite the fact that it was issued on the grounds of facts concerning natural persons, both its operative part and the remarks formulated by the Tribunal in the justification concern all entities conducting business activity – not only natural persons. In this sense it is a breakthrough position and entitles to correct one’s settlements in real estate tax, both the corrections of past closed periods and current settlements.
The standpoint of the Constitutional Tribunal comes down to the fact that imposing the highest rate of real estate tax on buildings and land, as well as taxation of structures with real estate tax in general, cannot depend only on the fact that the entrepreneur owns a real estate or a structure, but it is necessary to examine the possibility of using the given real estate or structure in the current activity of the entrepreneur.
Thus, if the entrepreneur does not and cannot use the real property or facilities in his current business activity, he cannot be charged the highest rate of real estate tax in the case of land and buildings, and in the case of structures, they are not taxed at all – for the entire period of their non-use in the conducted business activity.
Significantly, already after the ECJ judgment, the administrative courts have repeatedly confirmed that this position applies not only to natural persons, but to all entities engaged in business activity.
Referring to lockdowns in the pandemic period and related bans on certain economic activities, this type of situation seems to perfectly fit in with the Court’s remarks concerning the impossibility to fully use real estate and facilities in the conducted economic activity.
If, as a result of the prohibition on carrying out a given economic activity, the entrepreneur did not and could not obtain income to the full, normal extent, then the tax burden on this activity – including real estate tax – should be reduced accordingly. This is all the more justifiable in view of the fact that, with respect to real estate tax, many types of activity could practically not benefit at all or only to a very limited extent from the so-called anti-crisis shields.
Therefore, if bans on certain types of business activities, e.g. by hotels or restaurants, have been introduced top-down, it is justified to reflect this in the property tax settlement. Only in the case of hotels or restaurants it is crucial to precisely determine the factual situation because in individual lockdown periods the conditions for conducting business activity by these facilities varied. In particular, restaurants may have been engaged in the business of supplying takeaway meals, while hotels may have provided their services to medical personnel or persons who stayed there on business trips. And in such cases, the tax authorities may argue that since a limited scope of activity was carried out, this lower property tax liability must be precisely determined in practice taking into account such situations.