Introduction: amendment of the regulations and new ground rules
As of 1 January 2025, new rules apply to the classification of buildings and non-building structures for property tax purposes, resulting from the amendment to the Act on Local Taxes and Fees (RET Law). The changes were introduced following the ruling of the Constitutional Tribunal (SK 14/21), replacing in most cases the references to the Construction Law with autonomous tax definitions. The new provisions regulate, among other things, the classification of power infrastructure, including structures with transformers. Early interpretations show, however, that in practice similar cases may still be assessed differently.
For clarity, the rules for taxing structures that contain a transformer and the rules for taxing the transformer itself are set out separately below.
Taxation of a structure containing a transformer – when do we have a building?
When the substation is a building
If a transformer is located in a structure that meets the definition of a building under the new RET Law – that is, it has a foundation, walls, a roof, permanent connection with the ground, and an enclosed space – the taxable base is the usable area of that structure. Typical examples include container stations placed on a foundation (container transformer stations) or masonry structures (e.g., tower-type transformer stations). In such cases, the tax is calculated based on the area, using the rates applicable to buildings connected with business activity (in 2025, up to PLN 34/m²). This interpretation was confirmed in the ruling of the Head of the Izbicko Commune of 5 May 2025 [document in polish].
“Thus, the permanent connection of the containers with concrete foundations, which simultaneously serve as drip trays, and the placement of the prepared containers below ground level, constitutes a permanent connection with the ground. This means that the container facilities described in the facts of the case meet the definition of a building and are subject to taxation based on usable floor area.”
When the structure does not meet the definition of a building
Where the structure does not satisfy the RET Law criteria – e.g., lack of a foundation or walls – the station may be classified as a non-building structure subject to taxation on its initial value (2% rate). This could apply, for example, to container stations not placed on a foundation or pole-mounted transformers. In such cases, the taxable base is the value of the container or pole, respectively. It may also be necessary to verify whether the given structure was erected as a result of construction works and whether it is permanently connected with the ground. In particular, the last condition leaves room for dispute (a “permanent connection to the ground” is a connection that ensures the facility’s stability and the ability to resist external, non‑human factors that could destroy it or cause it to move or shift to another place). We are already seeing divergent positions from taxpayers and tax authorities, which will likely only be settled by the administrative courts.
Taxation of the transformer itself – can it be considered a non-building structure?
Transformer as a technical device (without an enclosure)
A standalone transformer, placed directly on a foundation or platform, does not meet the definition of a building. It is also not expressly listed in Annex No. 4 to the RET Law, which contains the catalogue of items considered non-building structures (e.g., a power line, a cable line together with a pole substructure or foundation).
Nevertheless, a transformer may be taxed as part of a non-building structure if it meets the definition of building equipment – i.e., a technical device directly connected to a building or to an object listed in Annex No. 4 and necessary for its intended use.
Otherwise, only the foundation beneath the transformer (if there is one) may be taxable.
In practice, this means the transformer itself is not a taxable object unless it is classified as a non-building structure (for example, as part of a power line listed in Annex No. 4 to the u.p.o.l.).
Transformer as part of network infrastructure
A transformer installed on a pole or as an integral part of the power grid is not taxed separately. One may encounter the view that the value of the entire network (including poles, lines, insulators) forms the taxable base as a non-building structure, with the value of electrical apparatus (including the transformer) included indirectly but not shown separately.
Such a position appears, for instance, in the interpretation by the Mayor of Gogolin dated 6 May 2025 [document in polish], who classified transformers installed in industrial buildings as building equipment subject to value-based taxation, because they serve the plant’s internal network and are directly connected to the power line and necessary for its intended use.
In my view, this approach is highly debatable. The legislator deliberately defined the taxable scope for networks, limiting it exclusively to power lines and their components (e.g., pole substructures). Extending this scope to transformers would amount to an expansive interpretation, which is inadmissible in the field of taxation. Moreover, considering that a transformer performs a subordinate function essential to the use of a power line is unjustified. The transformer has a different purpose than the line: the line serves to “transport” energy, while the transformer modifies the parameters of energy. They can therefore function independently of each other.
A similar position was taken in the already cited interpretation by the Head of the Izbicko Commune, stating:
“As follows from the facts presented, the listed devices serve the entire business activity of the Company. Therefore, in the absence of a link between the devices and a single, specific construction object, they cannot be considered building equipment within the meaning of Article 1a(1)(2)(c) of the UPiOL.”
Summary: transformer – sometimes a non-building structure, sometimes not taxable
The 2024 amendment to the u.p.o.l. brought greater definitional clarity while revealing the complexity of taxing transformers, which still lacks a definitive resolution. In practice:
- transformer itself – generally not taxable; treating it as building equipment is contentious;
- structural elements may be taxable – e.g., the foundation or supporting structure;
- substation or enclosure – may be a building (taxed on floor area) or a non-building structure (taxed on value);
- determinants may include method of installation, the device’s function, and technical documentation.
Given the lack of uniform interpretive practice, taxpayers should analyze each installation individually and, in case of doubt, apply individual rulings, supporting their position with relevant arguments. Otherwise, they risk under‑ or over‑assessing their tax liabilities. Unfortunately, due to the large number of tax authorities (over 2,500 municipalities in Poland) and the long time it currently takes administrative courts to hear complaints (now well over five years), it will take time for a consistent practice to emerge.
