- Shield 4.0 – what changes expected for taxpayers who own real estate?
- Carport – a structure or a building?
- Assignment of rights and obligations arising from preliminary contracts for the purchase of plots and VAT
- Advance payment and housing relief
- A limited partnership is a real estate taxpayer
- Garage hall taxed at the rate for other buildings
- The judgment of the Constitutional Tribunal and court rulings – taxation of structures
- Wind farm – what value should be indicated in the property tax?
1. Shield 4.0 – what changes expected for taxpayers who own real estate?
The draft law of so-called Shield 4.0 provides for the further deferral of the payment deadline for the annual perpetual usufruct fee for 2020, to 31st January 2021 (Article 58 point 8 of the draft Act on interest subsidies for bank loans granted to provide financial liquidity to entrepreneurs affected by the effects of COVID-19 and to amend certain other laws). In further provisions we can also find information on the possibility of exemption from the part of the fee for perpetual usufruct for entrepreneurs who have experienced a decline in economic turnover in connection with COVID-19. The estimated value of money that will remain with entrepreneurs is PLN 150 million. The entrepreneurs may also be granted exemption from a part of the fee from local governments. You can find information on real estate tax solutions here -> http://advicero.eu/ulgi-i-ulatwienia-w-zakresie-podatku-od-nieruchomosci-w-zwiazku-ze-stanem-zagrozenia-epidemiologicznego/
2. Carport – a structure or a building?
According to the judgment of the Supreme Administrative Court dated 18th December 2019, sign. II FSK 481/18, the carport was considered a building, but not a structure.
According to the statutory definition, a building is a construction object within the meaning of the construction law, which is permanently attached to the land, separated of the space using building partitions, and has foundations and a roof. However, a structure means a building object that is not a building nor a small architecture object. According to the Supreme Administrative Court, in order for an object to be considered a building, it must meet the following conditions: be permanently attached to the ground and be separated from the space using building partitions. At the same time, it was pointed out that the function of a building partition is to separate, not close, a building from the surrounding space. The concept of a building partition should not be narrowed down to the wall. Elements of the building structure, such as columns, poles, pillars, can perform the same function as a wall and structurally separate the building or part of a building in space. In addition, if the building with functional aspects does not have a permanent wall, but it is possible to separate it in space, then such an object should be considered a building.
In connection with the cited judgment, it should be noted that each object should be considered individually because not every carport has the same characteristics, which may result in a different way of taxing this object.
3. Assignment of rights and obligations arising from preliminary contracts for the purchase of plots and VAT
The investor (active VAT taxpayer) wanted to buy 28 plots for a warehouse and production investment. The owners or co-owners of the plots were individuals, and in one case a joint-stock company (all of them are active VAT payers). Preliminary agreements have already been signed by sellers with another entity (the original investor) – also an active VAT taxpayer. In order to purchase the plots in question, the investor planned to assign all preliminary contracts concluded with the original investor.
According to the individual interpretation of the Director of the National Tax Information of 30th January 2020, sign. 0114-KDIP1-1.4012.663.2019.3.RR, the assignment of rights and obligations arising from preliminary contracts is considered to be the provision of services within the meaning of the VAT Act, and therefore is subject to the application of the basic rate of 23% VAT. At the same time, it was pointed out that after the assignment transaction and the receipt of a correctly issued VAT invoice documenting the actual execution of this transaction, the investor would be entitled to reduce the amount of VAT due by input VAT when the conditions set out in Article 86 paragraph 1 of the VAT Act are met.
4. Advance payment and housing relief
In accordance with Article 21 paragraph 1 point 131 of the PIT Act free of income tax are income from the sale of real estate and property rights for consideration, referred to in art. 30e, in the amount that corresponds to the product of this income and the share of expenses incurred for own housing purposes in the income from the sale of real estate and property rights for a fee, if starting from the day of the sale, not later than within three years from the end of the tax year in which the sale occurred, the proceeds from the sale of this property or this property right were spent on own housing purposes; documented expenses incurred for these purposes are included in the amount of income from the sale of real estate against payment and property rights.
In connection with the above provision, there was a doubt whether the advance payment paid to the seller, who allocates this money to buy a new apartment, is an expense for housing purposes if the contract has not yet been concluded?
On 17th February 2020, after examining the application of the Prosecutor General, the Supreme Administrative Court composed of seven judges adopted a resolution (sign. II FPS 4/19) that the amount of advance payment, i.e. advance payment paid under the preliminary contract for the sale of the property, which is expended for housing purposes, may benefit from the exemption referred to in Article 21 paragraph 1 point 131 of the PIT Act, if the final property agreement is actually concluded and the amount (down payment) paid is credited towards the sale price.
5. A limited partnership is a real estate taxpayer
The basis for taxation on the real estate tax is the value of structures referred to in the income tax regulations, determined as at 1st January of the tax year, which is the basis for calculating depreciation for this year (Article 4 paragraph 1 point 3 of the Law on Local Taxes and Fees). In the case that no depreciation write-offs are made on the structures or their parts, the tax base shall be the market value determined by the taxpayer as at the date of the tax obligation (Article 4 paragraph 5 of the Law on Local Taxes and Fees).
According to the ruling of the Supreme Administrative Court of 16th October 2019, sign. II FSK 1530/19, the taxpayer of the property tax is a limited partnership as the owner of the property, but in the case of income tax the taxpayers are the partners. Despite the fact that the limited partnership is not an income taxpayer, it is obliged to keep accounting books containing records of fixed assets for tax purposes. At the same time, there is no justification for the application of Article 4 paragraph 5 of the on civil Law on Local Taxes and Fees, i.e. the use of market value to determine the value of structures.
6. Garage hall taxed at the rate for other buildings
On 6th November 2019, the Voivodship Administrative Court in Poznań issued a judgment in which it concluded that garages are part of a residential building and if they are not occupied for running a business, they should not be taxed at the highest rate of the real estate tax (i.e. residential buildings used for business activity).
The case concerned a company which has both flats for sale and garages in the garage hall of this apartment building, also for sale. The company corrected the property tax declaration and applied for an overpayment. The reason for submitting correction of the property tax declaration was to show the usable floor area of residential buildings related to conducting business activity as other buildings, which resulted in a reduction of the total tax amount. At the same time, it was clarified that the correction is related to the declared usable floor area of the garage hall, which is part of a residential building and is not used for business activity, so it should not be taxed at the highest rate, but as other buildings. The authority of the first instance decided that the correction was unjustified and refused to determine the overpayment.
The Voivodeship Administrative Court having considered the company’s complaint, found it justified. Garages, that are the property of the company, do not constitute the company’s fixed assets. It is a commercial product intended for sale and is not used in business activity, as garages are not used or rented until they are sold. The fact of legally separating these premises instead of selling them in the form of those belonging to the premises should also not be relevant since the separated garages still form part of a residential building. At the same time, it should be noted that the tax authorities have no doubt about the application of a lower rate to residential premises, which are only separated before selling and issuing them to new owners.
In connection with the above, the Voivodship Administrative Court found that garage halls, which are the subject of separate ownership of the company, and which are located in a residential building, should be taxed at the rate for other buildings.
The judgment of the Voivodship Administrative Court in Poznań of 6th November 2019, sign. I SA / Po 414/19: https://sip.lex.pl/orzeczenia-i-pisma-urzedowe/orzeczenia-sadow/i-sa-po-414-19-opodatkowanie-hali-garazowej-wyrok-522838051
7. The judgment of the Constitutional Tribunal and court rulings – taxation of structures
According to the judgment of the Constitutional Tribunal of 13th December 2017, sign. SK 48/15, if the building object has all the features of a building, i.e. it is permanently attached to the ground, it is separated from the space using building partitions, has a roof and a foundation (art. 3 paragraph 2 Building Law) it is a building. The judgment concerned taxable telecommunications containers, which according to tax authorities should be treated as structures.
The judgment issued by the Constitutional Tribunal is not confirmed by the judgments of administrative courts. Voivodeship Administrative Court in Łódź on 4th February 2020, sign. I SA / Łd 770/19, issued a judgment (not final) on the taxation of a concrete mixer inside a building. The court pointed to functional aspects, i.e. the purpose and equipment of the object, which affect the decision whether it is a building or a structure. The mixer is part of the assembly line and is seen as a set of elements and installations that are interrelated. Because the building object goes beyond the statutory features of the building (i.e. Article 1a paragraph 1 point 1 of the on civil Law on Local Taxes and Fees), and although it has the features of a building, it was considered a structure.
Właściciele elektrowni wiatrowych mają nie lada wyzwanie w przypadku określenia wartości, jaką należy wskazać w celu wyliczenia wysokości podatku od nieruchomości. Mimo iż w ustawie z dnia 20 maja 2016 r. o inwestycjach w zakresie elektrowni wiatrowych wprowadzone zostało pojęcie elektrowni wiatrowej (jest to instalacja odnawialnego źródła energii, składająca się z części budowlanej stanowiącej budowlę w rozumieniu prawa budowlanego oraz urządzeń technicznych, w tym elementów technicznych, w której energia elektryczna jest wytwarzana z energii wiatru, o mocy większej niż moc mikroinstalacji w rozumieniu art. 2 pkt 19 ustawy o odnawialnych źródłach energii), nadal istnieje wiele wątpliwości w tym zakresie. Czy wartość elektrowni należy wskazać jako wartość początkową środka trwałego? A może zgodnie z art. 4 ust. 5 ustawy o podatkach i opłatach lokalnych do podatku od nieruchomości zastosować wartość rynkową? A co w przypadku, jeśli w ewidencji środków trwałych nie można jednoznacznie ustalić wartości początkowej, bo nie ma takiej pozycji w środkach trwałych jak elektrownia wiatrowa? Jakie elementy należy ująć, aby właściwie określić wartość elektrowni dla celów podatku od nieruchomości? Tak wiele pytań i wątpliwości powoduje, że często firmy korzystają z możliwości wystąpienia z wnioskiem o wydanie indywidualnej interpretacji podatkowej w zakresie podatku od nieruchomości od elektrowni wiatrowych.
W ostatnim czasie zostały wydany bardzo ciekawy wyrok NSA (z dnia 31 stycznia 2020 r., sygn. II FSK 1545/18), w którym wskazano, „że jeżeli ujęto w ewidencji środków trwałych wartości początkowe, które obejmują zarówno części budowlane elektrowni wiatrowych oraz urządzenia służące do wytwarzania energii elektrycznej, a ponadto inne elementy i infrastrukturę towarzyszącą, które – nie będąc budowlą – nie mogą być opodatkowane podatkiem od nieruchomości i które nie zostały wartościowo wyodrębnione, to istnieją przesłanki do zastosowania art. 4 ust. 5 u.p.o.l. i określenia podstawy opodatkowania według wartości rynkowej budowli”. Jest to bardzo korzystny wyrok dla przedsiębiorców, jednak czy to stanowisko zostanie podtrzymane okaże się w kolejnych orzeczeniach.
8. Wind farm – what value should be indicated in the property tax?
Wind farm owners have a real challenge when determining the value to be indicated to calculate the amount of real estate tax. Although in the Act of 20th May 2016 on investments in wind farms, the definition of a wind farm was introduced (it is a renewable energy source installation, consisting of a construction part constituting a building within the meaning of the construction law and technical devices, including elements technical, in which electricity is generated from wind energy, with a capacity greater than the capacity of micro-installations within the meaning of Article 2 point 19 of the Act on renewable energy sources), there are still many doubts in this respect. Should the power plant value be indicated as the initial value of the fixed asset? Or maybe according to Article 4 paragraph 5 of the Act on local taxes and fees, apply market value to real estate tax? And what if the initial value cannot be determined in the fixed assets register because there is no such item in the fixed assets as a wind farm? What elements should be included to correctly determine the value of power plants for real estate tax purposes? So many questions and doubts mean that companies often use the opportunity to apply for an individual tax interpretation in the field of the real estate tax on wind farms.
Recently, a very interesting judgment of the Supreme Administrative Court of 31st January 2020 has been issued, sign. II FSK 1545/18, which stated that ‘if initial values were included in the register of fixed assets, which include both building parts of wind farms and technical devices for generating electricity, and also other elements and accompanying infrastructure, which – not being a structure – cannot be taxed with the real estate tax and which have not been separated in terms of value, there are premises to apply Article 4 paragraph 5 Act on Local Taxes and Fees and determining the tax base based on the market value of the structure.’ This is a very favorable judgment for entrepreneurs, but whether this opinion will be upheld will be seen in subsequent judgments.