The question of introducing a cadastral tax in Poland has long been one of the most pressing and controversial topics, not only in domestic fiscal policy but also in the financing of local governments and the development prospects of the country’s spatial economy. Does the recent surge in media attention on the cadastral tax signal a real chance of its introduction into Poland’s tax system?
A Long History and Recent Surge in Interest
The concept of implementing a cadastral tax in Poland—intended to replace the traditional property tax—has a rich and fairly long history. Until recently, this process was stalled, much to the relief of property owners. However, as experts at RynekPierwotny.pl note, in the recent pre-election period, the issue of taxing real estate based on value has dominated Polish media coverage like never before. This has resulted in a flood of proposals, headed by a draft law from the Left party. The question remains: how realistic and feasible are these proposals?
From the Third or Fifth Property—And the Rate? Up to 4 Percent…
The draft law from the Left party proposes taxing individuals owning more than two apartments. This aligns somewhat with the idea of the Minister of Funds and Regional Policy, Katarzyna Pełczyńska-Nałęcz, who additionally suggests exemptions based on the number of children. For example, if an owner has at least two children and declares that the apartments will be allocated to them, these would be exempted from the cadastral tax on a one-to-one basis (one apartment per child).
A more original proposal, submitted to the Sejm as a citizen petition, suggests taxing the fifth and subsequent residential and land properties. These would be properties rented out or leased but used inefficiently (vacant), or serving as a “second home” or vacation property, provided the owner already owns at least four other properties.
The proposed tax rates in this scenario are notable: 2% of cadastral value for the fifth and sixth property, 3% for the seventh and eighth, and 4% for the ninth and beyond.
From Decision to Implementation: A Long Road Ahead
The discussion should start with assessing Poland’s readiness to introduce such a tax. This aspect is rarely raised by policymakers proposing a revolution in property taxation. A cadastral system is not comparable to quickly implemented taxes like those on sugar or banking sector income, which can immediately increase state revenues.
Unfortunately, Poland lacks the administrative infrastructure and a comprehensive system for property value records. The current Land and Building Register (EGiB) does not contain accurate market valuations. Additionally, land and mortgage registers are incomplete and often outdated. There is no centralized database of property values. Thus, before introducing a cadastral system, a fundamental reform of the property records system is essential.
Furthermore, the cadastral tax would require a system of regular, precise property valuation—a universal valuation system. Administering such a tax would mean establishing a large, specialized bureaucracy, with operational costs potentially running into hundreds of millions of zlotys annually. The cost of mass valuing tens of millions of properties would be enormous, and the process complex, lengthy, and prone to disputes and manipulation.
Society may also not yet be fully ready for such a tax, potentially provoking strong public opposition.
How Would the Cadastral Tax Affect the Polish Real Estate Market?
The most probable effect would be discouraging investment in properties subject to the tax. Importantly, it would not only affect residential properties but also land and commercial real estate—something rarely mentioned in recent discussions.
Owners of multiple apartments might respond by increasing supply. At moderate rates (up to 1% of property value), this would be limited. But at higher rates, like 2% or more as proposed, it could trigger a panic sell-off of investment apartments. Considering the unknown scale of vacant investment apartments in Poland, the market impact would be hard to predict.
The number of apartments hitting the market after tax introduction would depend on the tax structure, especially the rates. Even a 1% rate could release 100,000–150,000 previously held-for-investment apartments, strongly affecting prices in both primary and secondary markets for some time.
What Would the Cadastral Tax in Poland Look Like?
Political proposals aiming to introduce the cadastral tax often raise many doubts. Applying it starting from the third property seems designed to align with EU recommendations while avoiding upsetting voters. However, Poland has a long-standing social aversion to a property value tax.
If introduced this way, the tax would affect around 300,000–400,000 mostly cheaper investment apartments out of about 16 million total properties, covering about 1% of taxpayers. Meanwhile, the first two properties, exempted from the tax, would include tens of thousands of the most expensive luxury homes owned by the wealthiest Poles. This would seriously undermine the tax’s effectiveness and social fairness since the wealthiest would largely avoid it.
Moreover, the considerable costs of introducing and maintaining the cadastral system would apply to all properties, including residential ones, while increased tax revenues would come from only roughly 3% of properties. As RynekPierwotny.pl experts note, this raises questions about the financial efficiency of such a solution. For comparison, Italy levies a cadastral tax from the second property, raising revenues equivalent to about 0.4% of GDP—roughly what Poland raises now from its surface-based property tax. Introducing a tax starting from the third property in Poland could, in extreme cases, lead to budget revenues not covering costs.
The main mission of the cadastral tax is to significantly increase local government revenues and thus relieve the state budget, not to create an ineffective simulation of EU or OECD recommendations.
On Exemptions and Progressivity
It is also difficult to justify exemptions based on having at least two children (one property per child), as this would exclude some of the wealthiest citizens from the tax base.
For the cadastral tax to produce tangible effects, it should apply progressively and without exception to all houses and apartments. Example rates could be 0.3% for the first property, 0.5% for the second, and up to 1% for the third and subsequent ones. A universal system of reliefs and exemptions should protect lower-income citizens, such as seniors, large families, and disabled persons.
Author: Jarosław Jędrzyński, expert at RynekPierwotny.pl
Source: CEO.com.pl article
