On July 4, 2023, a judgment of the Constitutional Court in the field of real estate tax was issued, ref. SK 14/21
The Court found that the definition of a structure contained in the Local Taxes and Fees Act is inconsistent with the Constitution, i.e. Article 1a (1) (2) of the Local Taxes and Fees Act with Article 84 and Article 217 of the Constitution of the Republic of Poland.
Why is the definition of a structure unconstitutional ?
The legislator in the Tax Act does not properly define the key issue of the act – the subject of taxation. The definition of a structure has for years raised a number of interpretative doubts, taxpayers have considerable problems with clearly determining whether the object is taxable at all. The Constitutional Court pointed out that defining the tax base by reference to the “construction law” does not meet the constitutional requirements for the determination of tax law. The definition of the subject of taxation should be in the tax law, and not in even the unspecified “construction law.”
The Constitutional Court noted the need to modify the definition of a building as well – since the Law on Local Taxes and Fees also refers to the construction law in this regard.
Postponement of the expiration of an unconstitutional provision.
The Constitutional Court has postponed the expiration of an unconstitutional provision for 18 months. During this period, the provision (unless earlier repealed or amended by the legislature), although the presumption of constitutionality does not apply to it, should be observed and applied by all addressees.
Necessary draft amendments.
Undoubtedly, it is necessary to present the assumptions of the draft law in this regard as soon as possible, so that entrepreneurs, for whom property tax is often a significant financial burden, know at what level these costs will be.
Resumption of tax proceedings.
According to the provisions of the Tax Ordinance, a taxpayer has the right to request the resumption of tax proceedings terminated by a final decision in the event that the decision was issued on the basis of a provision whose inconsistency with the Constitution was ruled by the Constitutional Court.
The Constitutional Court has postponed the entry into force of the ruling and the loss of force of the provision of the Law on Local Taxes and Fees, which, however, does not prevent one from requesting the resumption of proceedings. A request for resumption of proceedings must be filed within one month from the date the Constitutional Court’s ruling enters into force.