On 1 January 2025, amended provisions of the Local Taxes and Fees Act (UPOL) came into force, introducing, among other things, autonomous definitions of buildings and structures for property tax purposes. The legislator has allowed certain taxpayers to defer the deadline for filing property tax returns until 31 March 2025. Did the additional two months allow taxpayers operating in the commercial real estate sector to clarify all doubts related to the classification of buildings for property tax purposes (PON)?
Compared to some taxpayers (e.g. owners of production plants), it might seem that owners of commercial real estate (e.g. office buildings or shopping centres) can relatively easily classify their properties for property tax purposes. However, in practice, it turns out that the classification of facilities located on the above-mentioned properties for PON purposes raises more doubts than one might think. In particular, doubts arise regarding the definition of construction works, permanent attachment to the land (e.g. in the case of container facilities and tent halls) and the definition of a construction device as other technical equipment directly related to a building or structure.
Definition of a structure in PON regulations
The amended regulations introduced a new definition of a structure. From 2025, a structure – within the meaning of Article 1a(1)(2) of the UPOL – for the purposes of the PON is:
- a non-building structure listed in Annex 4 to the Act, together with installations ensuring its use in accordance with its intended purpose,
- wind power plants, nuclear power plants and photovoltaic power plants, biogas plants, agricultural biogas plants, energy storage facilities, boilers, industrial furnaces, cableways, ski lifts and ski jumps, in the part not constituting a building – exclusively in the scope of their structural parts,
- building equipment – connection and installation equipment, including equipment for the treatment or collection of sewage, and other technical equipment directly related to the building or structure referred to in point (a), necessary for their use in accordance with their intended purpose,
- technical equipment other than that listed in points a) to c) – only in relation to its structural parts,
- foundations for machinery and technical equipment, as technically separate parts of items constituting a functional whole,
– erected as a result of construction works, also in cases where they form part of a structure not listed in the Act.
Examples of doubts
Below are a few examples of objects that may be controversial from the perspective of their eligibility for PON purposes.
Shelters – carports, smoking shelters, etc.
Shelters are explicitly listed in Appendix 4 to the UPOL, therefore, as a rule, they are structures subject to PON. However, the very definition of a shelter raises doubts. According to existing case law, a shelter ‘consists of a roof structure supported by posts and may have light walls, provided that it is not enclosed on all sides’. (see the Verdicts of the Supreme Administrative Court of 21 January 2020, ref. no. II FSK 1583/18). The classification of a structure as a shelter is not so simple, e.g. in a situation where it is a steel structure with an openwork roof or has glass walls on three sides and is adjacent to a building wall on one side. In addition, only shelters erected as a result of construction works are considered structures. However, given the lack of a definition of a shelter and the broad definition of construction works, it should be assumed that the above-mentioned structures constitute structures within the meaning of the UPOL.
The scope of the exclusion of shelters constituting utility structures from the definition of structures is unclear. Annex 4, containing a catalogue of structures within the meaning of Article 1a(1)(2)(a) of the UPOL, indicates shelters in item 11, ‘with the exception of the shelter referred to in Article 1a(1)(2a)(c)’. Thus, it excludes from the scope of structures the shelters listed in the indicated provision, which are small structures that are not buildings, but are utility structures used for everyday recreation and maintaining order, in particular rubbish bins, shelters for prams and bicycles, and structures that are part of children’s playground equipment. Taking into account the content of Annex 4, it should be assumed that shelters other than those explicitly listed in Article 1a(1)(2a)(c) of the UPOL, such as shelters for prams and bicycles, e.g. recreational shelters (e.g. smoking shelters), are not exempt from the scope of the structures in question.
Logos
Logos are objects inextricably linked to commercial real estate.
Logos may be considered structures in accordance with Appendix 4 to UPOL if they meet the criteria set out in point 25 of that appendix for a free-standing advertising board or advertising device permanently attached to the ground.
But what if the logo is mounted on a building? In such a case, it is probably difficult to say that the condition of a free-standing object permanently attached to the ground is met. Such a logo could, however, be considered a technical device subject to PON tax on the construction parts, including the fastening systems to the building. However, in the practice known to us so far, logos other than free-standing ones are not, as a rule, recognised as separate objects of PON taxation.
Gatehouses
The provisions of the UPOL require that all conditions for recognising a structure as a building must be cumulatively met. Therefore, failure to meet even one of the conditions provided for in the Act will mean that the structure cannot be recognised as a building (and, due to the primacy of the definition of a building over the definition of a structure, it cannot be recognised as a structure). The definition of a building includes, among other things, the presence of foundations. Depending on the structure of commercial real estate, such as office buildings, gatehouses may therefore constitute buildings or structures or may not constitute a separate subject of PON taxation.
Based on our experience, gatehouses generally meet the criteria for being considered buildings, but it is recommended that each case be analysed individually.
Electric vehicle charging systems
Electric vehicle charging stations are not listed as structures in Annex 4 and may therefore be considered structures if they meet the criteria for classification as a building structure or technical device. Zg
As a rule, electric car charging systems are considered technical equipment. However, the tax base should not include the device itself, but its structural parts (e.g. foundations).
Acoustic screens (sound-absorbing)
Acoustic screens are installed on buildings to reduce noise emissions from equipment installed on building roofs.
Depending on whether they can be classified as technical equipment related to the building, necessary for its functioning, or as technical equipment other than the above, the PON burden borne by the taxpayer may vary significantly (in the latter case, only the construction parts of the acoustic screens, if any, will be taxed as PON as a structure). In our opinion, there are arguments in favour of accepting that noise barriers do not meet the criteria for construction equipment and, therefore, their value (except for construction elements) should not increase the tax base of the PON construction.
The above doubts may be clarified by the tax authorities and administrative courts when interpreting the concept of: ‘technical equipment directly related to a building, necessary for its use in accordance with its intended purpose’.
Practical problems related to the correct declaration of property tax (in 2025 and in previous years)
For some taxpayers, the increase in the level of PON taxation in 2025 was less due to a change in the classification of assets for PON purposes and more due to the inclusion of assets that had not previously been reported for PON purposes.
Most often, errors in PON declarations for previous years result from the fact that the register of fixed assets and intangible assets, which in principle forms the basis for accepting the value of structures for PON purposes, does not include certain objects that constitute structures for PON taxation purposes. Thus, without a detailed analysis, such an object may be overlooked when preparing the PON return.
In view of the above, we recommend taking inventory of objects for PON purposes and performing cost segregation also for PON purposes.
First questions from tax authorities after submitting the PON return for 2025
Within the first two weeks after the deadline for submitting PON declarations, the tax authorities began verifying the submitted PON declarations. Our practice shows that the authorities request clarifications in particular in the following cases:
- reduction of the tax base for PONs in relation to last year,
- failure by taxpayers to report buildings, in particular where the nature of the building indicates that it should probably be reported.
- failure to disclose objects disclosed as structures in previous tax years
In view of the above, it can be expected that tax authorities will take a keen interest in properties declared as structures for PON purposes for 2025, including verification and tax audits (also concerning previous years).
