From January 1, 2025, the real estate market will face changes in property tax. The law is still in the draft stage, but the work schedule indicates that it will start to apply as announced. For owners and managers of commercial properties, a lot is changing due to new definitions of buildings and structures. Experts from Cushman & Wakefield recommend starting audits as soon as possible to understand which tax changes will apply to specific properties. This will allow to consider the appropriate costs in the budget, and unfortunately, due to the new regulations, many entrepreneurs can expect higher tax rates. In some cases, costs may increase by several hundred thousand zlotys a year.
What does the change result from?
The amendment to the property tax law is a result of the ruling of the Constitutional Tribunal and is to be adopted at the end of November this year, and enter into force from January 1, 2025. The Ministry of Finance announces that the presented project 3.0 is the final version, which will be submitted to the Sejm in October this year. As a result, the market may assume that the regulations proposed in it will apply from the beginning of 2025.
The planned changes mean a big challenge for the commercial real estate sector in Poland. Currently, it covers over 60 million sqm. only as part of office, warehouse and commercial investments, and every property on the market will need a meticulous audit of the installations or devices operating in it, among other things. The results of such audits must then be reflected in planned budgets. The changes in the law will also affect tenants and they will need additional information in this regard. The entire market now has a lot of work ahead, and unfortunately there is little time to adapt budget strategies,” comments Zuzanna Paciorkiewicz, Head of Asset Services CEE, Cushman & Wakefield.
New definition of building and structure
The new law project assumes a redefinition of the concept of a building. After the changes, the building will no longer be an object in which loose materials, chunky materials, or materials in liquid or gaseous form can be stored, whose basic technical parameter determining its function is capacity.
“The new definition of a building may cause that many warehouse facilities, which have so far been classified as buildings, will become structures. This can lead to a significant increase in taxation – in such cases, the tax will be paid on the value of the object, not on the usable area,” says Wojciech Pławiak, Legal Counsel and Tax Advisor from the Litigato legal office.
The key change in the new project is, however, the change in the definition of a structure and construction devices. The project provides up to 5 different categories of objects constituting structures.
In subsequent versions of the draft law, an annex to the Act no. 4 containing the list of structures underwent a significant metamorphosis. It expanded, among others, the range of meanings of some positions, and also added new ones, such as: supporting structures, freestanding permanently attached to the ground industrial installations, car scales, or kiosks and pavilions. In some cases, taxation will only apply to some parts of these structures.
A big challenge will be classifying container and prefabricated objects. One thing is certain – they will be taxed, the question is only how. The broad definition of land connection, which was included in the draft law, indicates that if an object has foundations, even those based on concrete blocks, it meets the definition of a building. Even though it may be in the catalog of buildings, its qualification may cause difficulties and create problems with determining the correct tax category,” emphasizes Wojciech Pławiak.
Installations and technical devices – what’s changing?
For the commercial real estate industry, the most important issue will be the taxation of devices and installations in buildings. The new regulations determine that installations necessary for the functioning of the building will not be subject to separate taxation. However, all additional technical devices like switch cabinets, transformers, air conditioning and so on, which so far have not been taxed, can be considered as taxed under the new regulations.
“It is worth emphasizing that technical devices will now be taxed in whole or in the structure part. The key element will be the reevaluation to what extent we taxed technical devices under the old law, and to what extent after this change we need to change this approach or justify keeping the current approach, taking into consideration the current definition of this building device. New regulations can significantly broaden the category of technical devices, including those inside buildings, which until now were not subject to property tax,” notes Wojciech Pławiak.
Warehouses, car parks, advertising systems – new challenges for owners
The changes will also affect the owners of large warehouse facilities. Those of high storage can be recognized as structures, and their taxation will depend on capacity and main purpose. A parking lot, which so far was treated as part of the building or not taken into account in taxation at all, can now be classified as a building, if it is located outside the building. A similar situation occurs in the case of supporting structures, such as roofs, walls or advertising systems, often set up in front of commercial facilities.
Is audit the only way?
Certainly, rewriting the tax declaration from the current year to 2025 is out of the question – the differences will probably be significant, and most owners of commercial properties must prepare for higher costs.
“We are currently in the budgeting period, and tax issues are an exceptionally hot and difficult to estimate topic. Property audits are necessary to get the correct amount. For example, in one property, the conducted audit allowed to identify areas to correct the PON declaration, which we are currently processing. The difference in the amount of tax in this particular case can exceed 200,000 PLN. The good news is that audits can also reveal previously overestimated tax calculations – and corrections can be submitted even up to five years back, which may lead to cost optimization,” explains Paulina Bauer, Head of Retail Asset Services, Cushman & Wakefield.
The necessity to conduct thorough property analyzes and audits prompted the Ministry of Finance to include in the new project the possibility of submitting a property tax declaration exceptionally by the end of March 2025, instead of by the end of January 2025.
“However, it is not worth waiting until the last moment and the moment when the cost of the audit begins to increase due to increased demand. In addition, owners and managers should inform tenants about the amount of the service charge for 2025 before the end of the current year or at the beginning of next year. Changes in property tax mean increased costs also for tenants of commercial properties and they should have time to prepare for these increases,” summarizes Pauline Bauer.
Source: https://managerplus.pl/zmiany-w-podatku-od-nieruchomosci-od-2025-roku-co-czeka-wlascicieli-i-zarzadcow-nieruchomosci-komercyjnych-93678
