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On 1 January 2025 an important amendment came into effect to the Act on Local Taxes and Fees of 12 January 1991 (henceforth “the Act”). It introduced the Act’s own definitions of building and structure for property tax purposes, separate and independent of those in the Construction Law.

The change implements a ruling of the Constitutional Court of 4 July 2023 (case  reference no. SK 14/21), in which the Court declared as unconstitutional the definition of structure in the Act’s Article 1a (1) (2), and ordered Parliament to rectify this defect within 18 months of the ruling’s publication in the Journal of Laws.

In a statement issued after the hearing, the Constitutional Court stated that it ”agreed with the plaintiff company’s assertion that, if taxpayers are to fulfil their tax obligations properly, the ability to appropriately determine the object and basis of taxation is of fundamental importance.” Continuing, the Court said: “The Act, in Article 1a (1) (2), uses a broad reference to “provisions of the Construction Law” to define structure. Such a formulation makes it impossible for taxpayers to determine, based solely on tax law, whether the structures they own are subject to the property tax or not.”

The Court stated further that, as it writes a proper definition of structure into the Act that does not make a reference to other regulations of a non-tax nature, Parliament should also change the definition of building in Article 1a (1) (1) of the Act.

Looking at the Construction Law’s definition of structure that the Act used to refer to, we see that it is merely a list of examples of construction objects, such as e.g. linear facilities, overpasses, tunnels, culverts, technical networks, stand-alone aerial masts, etc. In practice, this led to frequent interpretive disputes between taxpayers and tax authorities. The latter usually called upon expert witnesses with specialist construction knowledge. And although expert opinions have an auxiliary role, the eventual tax rulings tended to follow these opinions.   

As noted, the amendment to the Act that changed the definitions in fulfillment of the Constitutional Court’s ruling (henceforth “the Amendment”) came into effect on 1 January 2025 (Journal of Laws 2024, item 1757). It defines building as “an object erected as a result of construction works, together with installations necessary for its intended use, permanently connected to the ground, spatially isolated by means of constructed partitions, and which has foundations and a roof – with the exception of objects in which bulk materials, materials in pieces, or liquid or gaseous materials are stored or can be stored – whose main technical parameter determining its function is capacity.”

Structure is defined as follows:

a) an object other than a building, listed in Annex No. 4 to the Act, together with installations necessary for its intended use,

b) a wind farm, a nuclear power plant, a photovoltaic power plant, a biogas plant, an agricultural biogas plant, an energy storage system, a boiler, an industrial furnace, a cable car and a ski lift, in the part that is not a building – only the construction parts,

c) a constructed device – a connection and installation device (including one used for the treatment or collection of sewage), and other type of technical device that is directly related to a building or to an object of the kind referred to in letter (a) above and is necessary for its intended use,

d) a technical device other than those referred to in letters (a)-(c) above – only the construction parts,

e) foundations for machines and technical devices, as technically separate parts of objects constituting a usable whole

– erected as a result of construction works, even if they constitute part of an object not mentioned in the Act.

Annex 4 to the Act contains a close-ended list of 28 structures, including e.g. a container permanently connected to the ground, a road, an entryway, a road approach/exit, a parking bay, a fence, a parking lot outside a building, a lay-by, a storage yard, a dump yard, a driveway, a roofed area, etc.  

It should be noted that, under Article 2 (1) (3) of the Act, the property tax is levied on structures or parts thereof “related to the conduct of business activities.” So it does not apply to residential properties owned by individuals for private use.

The new law has not been without criticism or controversy. Legal analysts have raised concerns about imprecise language in certain parts of the Amendment, potentially creating a risk that the scope of the property tax might be freely broadened. One example of such language is “other type of technical device that is directly related to a building or structure and is necessary for its intended use.”  

Also, false reports began to circulate – gaining widespread traction in the media and among the public – that the Amendment introduced a new type of tax, a “fence tax.” This prompted an official denial from the Ministry of Finance, which explained in a statement on 19 January 2025: “Prior to 1 January 2025, fences were treated as structures as understood by the Act on Local Taxes and Fees of 12 January 1991 and, as such, were subject to the property tax calculated based on their initial cost. Effective from 1 January 2025, fences remain subject to the property tax as one of the structures listed in Annex 4 to the said Act. The property tax was levied, and continues to be levied, only on fences that can be demonstrated to be related to the conduct of business activities.”  

Importantly, due to the significance of the legal change, the deadline for submitting annual property tax declarations in 2025 was extended by two months, subject to certain conditions. Thus, legal persons, organisational units and companies without legal personality, and organisational units of the National Support Centre for Agriculture (KOWR) and of State Forests (LP) are entitled to submit their property tax declarations for 2025 until 31 March 2025, provided that they fulfill the following requirements:

1) submit a written notice to the applicable tax authority by 31 January 2025 about the exercise of the right to file the property tax declaration for 2025 until the deadline of 31 March 2025. The notice should contain:

a) name of the tax authority,

b) name of the taxpayer, their address and tax identification number,

c) statement about the exercise of the right,

2) make monthly property tax payments for the first three months of 2025 by the following dates, without a past-due notice from the tax authority:

a) for January – until 31 January 2025,

b) for February – until 15 February 2025,

c) for March – until 15 March 2025.

The above payments should be made into the bank account of the relevant local council in amounts equal to the average monthly property tax amount in 2024.

The Amendment does not provide for any form of tax authority response to the notice. It should be concluded, therefore, that taxpayers gain the right to use the extended deadline automatically upon fulfillment of the formal requirements.

Unfortunately, despite earlier assurances from the Ministry of Finance that the change of definitions will be neutral to taxpayers, analysis suggests that the new definitions may have the effect of broadening the scope of the property tax in Poland. Therefore, we advise a thorough review of your real estate assets to make sure that they are appropriately classed. Tax authorities’ interpretations of the new law should be monitored, too.