Polish Constitutional Court (“Court”) ruled on 4 July 2023 that the definition of structure (budowla) in the Local Taxes and Levies Act is unconstitutional.
The current definition refers to building law, saying a structure is a built feature as defined in building law, except for a building and a landscape feature, or a building service facility, as defined in building law, which is associated with the built feature and makes it possible for the feature to be used as intended.
The Court held that, with the impugned provision constructed as it is, it is impossible to resort only to tax law to determine, in the case of a built future, what is to be subject to real estate tax. That is because the definition of structure makes reference to a non-tax law (building law); what is more, it does so without making clear if this includes, in addition to the Building Law Act itself, also any secondary legislation related to it. In giving verbal reasons for the judgment, the justice said that it is unacceptable to have such important areas as subject-matter of taxation regulated in a non-tax law.
In accordance with the judgment, the provision of Article 1a(1)(2) of the Local Taxes and Levies Act of 12 January 1991, which contains the definition of structure, will lose force 18 months after publication of the judgment in the Journal of Laws. During this time the lawmakers must introduce a new definition of structure.
In addition, the Court held that the lawmakers should change the definition of building accordingly, as it, too, refers to building law.
In some cases these changes may affect the classification of certain structures or features, and thus the amount of tax on buildings and structures. The ultimate outcome of the changes will become known after publication of the new regulations.
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