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Changes in property tax from 2025. PKBiPB has no doubt: extremely unfavorable for farmers

Zmiany w podatku od nieruchomości od 2025 r. PKBiPB nie ma wątpliwości: skrajnie niekorzystne dla rolników
  • PKBiPB on changes in real estate tax: Facilities previously taxed as buildings according to usable area will be structures taxed on value, which will directly translate into a significant increase in the amount of real estate tax paid. This applies in particular to silos and elevators, which, in accordance with the annex to the draft act, where they are expressly indicated, should be taxed as structures.
  • PKBiPB about the project: All types of equipment used in the production process that have not been subject to real estate tax so far will be able to be considered parts of buildings and thus be subject to taxation on their value.
  • We can be practically certain about the need to pass on new tax burdens to consumers, i.e. the project assumes price increases for all goods produced in Poland, including food, which was not indicated in the Regulatory Impact Assessment.

The Polish Coalition of Biofuels and Protein Feeds is a platform of industry and agricultural organizations representing the national production chain of biocomponents and liquid biofuels, co-created, among others, by: by the National Chamber of Biofuels, the Polish Association of Oil Producers, the National Association of Producers of Rapeseed and Protein Crops, the National Council of Agricultural Chambers, the Federation of Food Economy of the Republic of Poland, the National Council of Distillery and Biofuel Production, the Polish Agricultural Federation, the Cooperative of Agricultural Producers Groups "Polski Rape and Cereals", the Cereal and Feed Chamber and the Association of Polish Distilleries. The organizations precisely listed for the Ministry of Finance the draft Act of June 14, 2024, submitted for public consultation, amending the Agricultural Tax Act, the Act on Local Taxes and Fees, the Forest Tax Act and the Stamp Duty Act. Briefly speaking, this is about planned changes in real estate tax, which are the result of citizens' complaints and the judgment of the Constitutional Tribunal from 2023. We wrote about this in the article below on farmer.pl. In an official letter to the Minister of Finance, representatives of the Polish Coalition of Biofuels and Protein Feed (PKBiPB) and the Federation of Branch Associations of Agricultural Producers (FBZPR) point out the shortcomings of this project. Details below.

There will be changes in real estate tax from the beginning of 2025

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There will be changes in real estate tax from the beginning of 2025

Real estate tax under the microscope

The Polish Coalition of Biofuels and Protein Feeds and the Federation of Branch Associations of Agricultural Producers argue their opinion very precisely in points. Below is the exact position:

  1. The project assumes a reversal of the current order of qualification of objects, i.e. it results, although it is not stated precisely and directly, that, contrary to current practice, priority will be given to qualifying a given object as a structure and not as a building. This means that structures previously taxed as buildings according to their usable area will be structures taxed on their value, which will directly translate into a significant increase in the amount of real estate tax paid. This applies in particular to silos and elevators, which, in accordance with the annex to the draft act, where they are expressly indicated, should be taxed as structures. The justification for the project indicated that under the existing regulations, it was possible to tax them as buildings if they met the current definition of a building referring to the construction law, which will no longer be possible after the proposed regulations come into force. This constitutes an unjustified change in the approach to taxation of facilities that meet the current, but in principle also the proposed, definition of a building.
  2. The project returned to the concept of the so-called technical and operational whole, which was rightly eliminated from the regulations in 2015 due to the drastic number of disputes between taxpayers and tax authorities. Meanwhile, this solution, widely criticized by entrepreneurs, tax experts, tax authorities, but also administrative courts, is to be returned, according to the assumptions of the Ministry of Finance, and in an extremely controversial and problematic way. In its essence, it boils down to the utility relationship between the facility and the installations and devices as a sufficient justification for taxing these installations and devices as part of the structure (so far they have remained outside the scope of taxation). In practice, this will mean that all types of equipment used in the production process that have not been subject to real estate tax so far will be able to be considered parts of buildings and thus be subject to taxation on their value. This may lead to taxation of all devices, including air conditioners, ventilation units, power generators, electrostatic precipitators, transformers, all types of tanks and even entire production lines/strings.
  3. In addition to the above, the project also assumes the expansion of the catalog of structures to include objects that have not been generally taxed so far, which has been repeatedly accepted by tax authorities and courts, such as containers and tent halls. Such facilities are currently directly listed in the annex to the Act, which constitutes the basic catalog of buildings. Moreover, the extension of the scope of taxable structures will also be possible by changing the definition of a permanent connection with land, according to which it is sufficient to ensure the stability of the structure, as well as changing the requirement to construct a building using construction products to making the structure using construction products. This, in turn, will directly mean that real estate tax will apply to all types of devices or tanks that arrive ready from the manufacturer and are only assembled at the production plant, absolutely not as part of the construction process. At the same time, the project lacks a definition of a construction product, hence this will lead to obvious disputes as to whether this concept should be understood linguistically or, for example, refer to the Construction Law and the Construction Products Act.
  4. Finally, the most problematic of the proposed solutions, which rightly arouses extremely negative emotions among manufacturing enterprises as to the purpose, intentions and method of operation of the Ministry of Finance in the discussed area, is the possibility of taxing structures inside buildings under the project. Previous practice and case law in the vast majority of cases excluded the possibility of considering various types of objects inside buildings, such as production lines, conveyors, conveyors, tanks or technical networks, as structures. No regulation currently in force in Poland provides a mandate for tax authorities to collect real estate tax on facilities inside buildings. This appears directly in the project in question.

Will we see a real estate tax revolution from January 2025?

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Will we see a real estate tax revolution from January 2025?

An appeal to the Ministry of Finance to change the real estate tax project

– From the perspective of the above, the media announcements made by the Ministry of Finance to maintain the status quo in terms of real estate taxation, which is also quite cynically pointed out in the justification to the project, have nothing to do with the proposed content of the amended regulations. Moreover, the proposed solutions will lead to chaos in the settlement of real estate tax, drastically increasing the number of disputes in this area. Regardless, the scale of the pro-fiscal operation of the new regulations – in our opinion, gigantic considering the value of technical and industrial installations in virtually every production area – is the most problematic element of the project, with a high probability affecting not only the profitability of processing and agricultural activities in Poland and its competitiveness towards foreign suppliers and producers, but also a general assessment of the state's friendliness towards new investments – informs the Polish Coalition of Biofuels and Protein Feeds and the Federation of Branch Associations of Agricultural Producers.

It is not the end. In their opinion, we can also be practically certain about the need to pass on the new tax burden to consumers, i.e. the project assumes price increases for all goods produced in Poland, including food, which was not indicated in the Regulatory Impact Assessment.

We read this as either the lack of awareness of the Ministry of Finance in this respect or, what is worse and, unfortunately, more likely considering the shape of the draft regulations, deliberate omission of this obvious consequence in order not to arouse greater public interest in the project and to "streamline" the further course of the legislative process – reported by the PKBiPB and FBZPR organizations.

There will be changes in real estate tax from the beginning of 2025

read more

There will be changes in real estate tax from the beginning of 2025

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