Real estate tax changes in 2025 - what do you need to know?

This is a result of the Constitutional Tribunal's July 4, 2023, ref. SK 14/21 judgment, which imposed changes in the taxation of buildings and structures. The Constitutional Tribunal, in that judgment, ruled that an issue as important as the subject of taxation cannot be identified by taxpayers on the basis of non-tax regulations (the previous regulations referred to building law provisions).

Thus, the subject of taxation must arise from the law and should be defined precisely. The Tribunal thereby obliged the Legislature to amend the law.

Please find below key information on the changes introduced and their potential effects.

New definitions in real estate tax

The most important changes concern the definitions of the terms “building” and “structure.” Reference to non-tax regulations has been discontinued in this regard. Outside the scope of real estate taxation will remain objects of so-called small architecture.

Building

In view of the introduced changes, a building will be defined as an object:

• raised as a result of construction works, together with installations ensuring that it can be used for its intended purpose,
• permanently connected to the ground^[1],
• separated from space by building partition,
• having foundations and a roof^[2].

Structure

In view of the introduced changes, a structure will be defined as an object raised as a result of construction works:

1. not being a building, listed in Annex No. 4 to the Act, together with installations ensuring that it can be used for its intended purpose,
2. wind power plant, nuclear power plant and photovoltaic power plant, biogas plant, agricultural biogas plant, energy storage, boiler, industrial furnace, cable car, ski lift and ski jump, in the part that is not a building - only to the extent of their construction parts,
3. building device - connection and installation device, including for the treatment or collection of sewage, and other technical device, directly related to the building or object mentioned in letter a), necessary for their use in accordance with their intended purpose,
4. other technical device than those listed in letters a-c - only to the extent of its building parts,
5. foundations for machinery and for technical equipment, as technically separate parts of the objects that make up the functional whole.

However, the principle of priority of qualification of objects will be maintained. In order to correctly determine the subject of taxation, it will first be necessary to determine whether a given object meets the prerequisites for classification as a building. If it is determined that an object is not a building, the next step is to consider whether it meets the statutory definition of a structure.

Doubts and possible increase in liabilities

It appears that the changes introduced will not remove most of the doubts about the classification of objects that taxpayers previously faced. Moreover, they are likely to lead to new interpretation disputes, as well as may result in an increased real estate tax liability.

In particular, this applies to such issues as:

• possible taxation of “structures in buildings” - due to the failure to include in the definition of a building “devices” in it,
• the reference in the definition of “building device” constituting a structure to the vague concept of “other technical device necessary for use in accordance with its intended purpose,” which opens the field for interpretation,
• introduction of an expanding catalogue of structures, including, among others, container facilities permanently attached to the ground, tent covers permanently attached to the ground, the totality of certain cubic technological facilities.

Extension of the deadline for filing real estate tax declarations for 2025

In 2025, entrepreneurs (legal entities) will be allowed to file a real estate tax return by March 31, 2025, provided they meet the following conditions:

1. they will submit to the competent tax authority by January 31, 2025 a written notice of their intention to file a declaration by the end of March 2025,
2. without being summoned by the tax authority, will pay real estate tax in the amount of the average monthly amount of tax due for 2024 (for January - by January 31, 2025, for February - by February 15, 2025, for March - by March 15, 2025).

What do these changes mean for entrepreneurs?

The changes may significantly affect the amount of real estate tax paid, which is especially important for businesses with extensive real estate and technical infrastructure. To avoid potential irregularities and optimize settlements, it is worthwhile to conduct an analysis of the correctness of the classification of buildings and structures in the records and make sure that the changes are reflected in the records kept.

How can we help?

In order to avoid potential arrears, it will be necessary to adapt the current taxation rules to the new definitions of buildings and structures.

In this regard, we recommend conducting a tax audit that will allow identification of risks associated with the new regulations. Our experts are ready to assist in analyzing the correctness of settlements and preparing records in accordance with the new laws.

We kindly invite you to contact us to discuss the details and support you in the process of adapting to the changes.

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^{[1] Such connection of a construction object with the ground, which provides the object with stability and the ability to counteract external factors independent of human action, which can destroy, cause displacement or movement of the object to another place.}

^{[2] Excluding an object in which bulk materials, materials occurring in pieces, or materials in liquid or gaseous form are or can be stored, the basic technical parameter of which determining its purpose is its capacity}