Object of the taxation
The subject of real estate tax is land, buildings or parts thereof and, structures or parts thereof connected with an economic activity. This tax constitutes the income of the budgets of local and regional authorities, and is the most important own source of tax revenue of the budget of municipalities.
Subject of taxation
Entities liable for payment of the property tax shall be natural persons, legal units, unincorporated entities who are:
- owner
- perpetual usufructuary,
- individual holder
- in some cases – beneficial owner of real estate or their parts owned by the State Treasury or local government bodies.
If the object of taxation is co-owned or is held by two or more entities, the tax liability shall be borne jointly and severally by all co-owners or holders.
Joint and several liability means, irrespective of the number of owners of immovable property, the tax authorities may demand payment of the tax in full amount from some of them or all. In the case of payment of the tax in an amount higher than the share of the estate, the co-owner might require the other joint owners to settle the amount paid so that each of them pays tax of an amount corresponding to the amount of contribution.
Ocurrence of tax obligation
Tax obligation shall arise from the first day of the month following the month in which ……the title to the taxable object or taking possession of it. If the circumstance which is subject of the tax obligation is the existence of a structure or of the building or part thereof, the liability to pay the tax arises on 1 January of the year following the year in which the construction was completed, or where the use of buildings or a building or parts thereof before their final finish. A tax liability shall cease on expiry of the month in which the circumstances justifying it ceased to exist.
The tax rates
Tax rates vary according to the municipality. Amount of tax is established, by resolution, the Municipal Council, taking into account the upper rate announced by the Minister of Finance by means of a notice.
The rates of this tax are of capital structure (the exception is the rate, which is a percentage (2%).
Important! In the case of object of taxation connected with economic activity, higher quota of tax ratea are applicable. This means that if the entrepreneur indicated as the seat of business an apartment, for the purposes of settling the property tax this place will be treated as a place of conducting business, while the tax rate will be significantly increased.
Tax exemptions
The Act contains a comprehensive list of exemptions from this tax (Article 7 of the law).
In addition, the municipal council may introduce other than the listed exemption from tax on immovable property.
Exemptions and reliefs from property tax granted to churches and religious communities are governed by separate provisions. The property tax exemption granted by virtue of conducting economic activity in special economic zones shall be governed by the provisions of the Act of 2 October 2003 amending Special Economic Zones Act and certain other acts.
Tax relief in real estate tax on land and buildings in the immovable property for the construction of public roads, acquired in the form of ownership or sustainable management:
- The Treasury and the Directorate-General for National Roads and motorways
- Competent authorities – shall be governed by the provisions of the Act of 10 April 2003 on special rules for preparation and implementation of public road projects.
The time limits and modalities of payment of the property tax
In the case of natural persons, tax is paid in instalments by 15 March, 15 May, 15 September and 15 November of the tax year in question. The instalments shall not apply to taxable persons where the amount of the tax shall not exceed PLN 100. In these circumstances, the tax is payable once in the date of payment of the first instalment.
In the case of other taxpayers, tax is paid on a monthly basis for individual months in instalments proportionate to the duration of the tax liability, by the 15th day of each month, and for January by 31 January.
Commercial property tax
Since 2018 the so-called minimum income tax on commercial real estate (e. g. shopping centre, department store, independent shop and boutique, office building) of 0.035% has been introduced. It refers to properties whose initial value exceeds PLN 10 mln. The tax base is the income corresponding to the initial value of an initial fixed asset determined as at the first day of each month resulting from the records, reduced by the amount of PLN 10 million. You can settle this obligation in two ways: pay the minimum tax and, when calculating CIT advance payment (PIT), deduct this PIT (CIT) or pay the full amount of CIT advance payment if it is lower than the minimum tax amount.
See the Ministry of Finance’s explanations on the interpretation of the rules.
Source: Polish Ministry of Finances web site