RSM Poland


Change in Construction Law unfavourable to taxpayers?

A change of the provisions of the Polish Act on Construction Law is due to enter into force on 28th June this year and may influence property tax rates for civil structures.

Current regulations on property tax stipulate that civil structures subject to taxation  include, among others, buildings and structures used to run a business. However, the definition of both buildings and structures is to be understood as per provisions of Construction Law.

On 28th June 2015 a change of construction law regulations is due to enter into force, according to which a civil structure shall now be understood as a building, structure or small architecture form, together with systems allowing for operation in line with its purpose, raised using construction materials. Thus, the new definition is not going to include the term of technical device any longer. This is especially important as property tax applies also to construction facilities within the meaning of Construction Law provisions, that is technical devices related to civil structures such as system connections and components, including those used for wastewater treatment or collection, as well as driveways, fencing, parking places and designated areas for garbage collection.

So far, all kinds of systems remaining inside the building were not subject to separate taxation as structures, since they were deemed only elements of a single building. The new regulations will narrow the term of civil structure exclusively to systems that are necessary to ensure the facility is used within its purpose. This may imply that tax authorities will be making efforts to exclude the following from the new definition:

  • All devices located inside buildings,
  • Systems located inside buildings that do not serve the intended use of the civil structure (e.g. transformers, water tanks, boilers and industrial furnaces).

Will the amendment of the Construction Law bring about consequences that may prove negative to taxpayers? Once tax authorities provide an interpretation of the new regulations, we will find out.

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