The Supreme Administrative Court (SAC) has published a written statement of ratio decidendi (“Supporting Statement”) for its resolution, adopted by a bench of 7 justices on 29 September 2021 in case no. III FPS 1/21, relating to classification of built features for the purposes of real estate tax.

SAC’s Supporting Statement refers to the following issues:

  • real estate tax regulations (“General Regulations”),
  • taxation of storage vessels that are in the nature of buildings (“Storage Vessel Taxation”).

As regards General Regulations, SAC noted that there have been plenty of interpretation issues with how the Local Taxes and Levies Act of 12 January 1991 (Journal of Laws of 2010, no. 63, item 6613, as amended, “LTLA”) refers to the Building Law Act of 7 July 1994 (Journal of Laws of 2010, no. 243, item 1623, as amended, “BLA”). SAC said that there is no visible intention of the lawmakers to amend the law so as to resolve those issues. In addition, the Supporting Statement explains in detail the following matters:

  • the independence of LTLA from BLA,
  • the relevance of BLA for LTLA,
  • the duty to apply a comprehensive construal method that includes linguistic construal, systemic construal and functional construal while taking account of the economic, business, social and fiscal context;
  • how to construe the definition of what constitutes a building;
  • the elements of a building that may constitute parts thereof.

The Supporting Statement also establishes that what matters in the case of dual-definition features that are structures while also having the characteristics of buildings under BLA (such as water purification or wastewater treatment facilities) is the architectural and technical (structural) parameter of the building. If usable space is fundamentally the main architectural and technical parameter, then the feature must be considered to be a building for the purposes of real estate tax.

The SAC writes by way of example that “from the taxation perspective, a classical warehouse building which in business realities is used as a storage vessel (e.g. for grain or other bulk/loose material) but which in technical terms is distinguished for having usable space should be treated differently (and taxed as a building) from a built feature designed and completed exclusively as a tank (storage vessel) for some bulk/loose, liquid or gaseous goods”.

If these issues pertain to your business and you are interested in our assistance, please contact us.

This blog post is provided for general information purposes to keep you up-to-date with changes in tax law, tax rulings by authorities, case law of courts and interesting commentaries. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions resulting from reliance on such information.