Real estate tax turning from small to big

In the media, only the state part of the tax had long been discussed, omitting the technical parts of the amendment to the Real Estate Tax Act. While the state part of the tax was eventually excluded from the amendment, the technical changes passed the approval process, but the first comprehensive information on them was not published by the financial administration until December 2023. The document entitled "Brief description of significant changes for 2024” is 47 pages long.

It will not be easy for taxpayers to quickly assess whether an obligation to file a tax return for 2024 arises for them or whether it will be sufficient to wait until the tax administrator informs them of the new tax liability before the May tax payment deadline. Please note that a penalty for late tax assertion is set based on the full tax liability amount, except for when the taxpayer files a tax return after the deadline but without having received a call from the tax authority - in this case, no penalty arises. However, if the tax liability is higher, the tax authority will always charge interest on late payment.

For those engaged in business activities, the change in the definition of a paved area is important, as it is also an example of a change giving rise to the obligation to file a tax return. The existence of a paved area is no longer limited to land registered in the real estate register as "other area" or "built-up area and courtyard". As of 1 January 2024, a paved area is understood to be a plot of land or part thereof used for business activities or included in business assets in an entrepreneur’s books, whose surface is covered by a construction under the Construction Act without a vertical supporting structure, including sidings, pools or tank areas unless these are taxable constructions.

Business and non-business persons that have been granted a final permit for a future taxable construction should pay attention to the new definition of building land, which arises in the area covered by the future taxable construction, even on a plot of land with another existing taxable construction. In the wording of the law until 31 December 2023, the existence of another taxable construction on a given plot of land ruled out the formation of a building plot. This change will entail the obligation to file a tax return.

The amendment also increases the number of cases in which the taxpayer is a user, lessee, or usufructuary lessee of real estate that is, e.g., managed by the State Land Office or the Office for State Representation in Property Matters. If the user, lessee, or usufructuary lessee becomes a new taxpayer, they will be obliged to file a tax return.

Non-business natural persons in particular should familiarise themselves with the changes to the taxation of family recreation buildings and garages. These constructions are now strictly linked to the type of use registered in the real estate register regardless of their actual use. If these had been taxed differently until now, it will be necessary to file a tax return.

Waste management entrepreneurs will have to cope with the abolition of most of the tax exemptions they have enjoyed so far. If the tax administrator has up-to-date information from the last real estate tax return (in particular on the existence of paved areas and building land), any changes will be taken into account automatically. Otherwise, taxpayers must file a tax return and declare the necessary information for correct taxation.

Taxpayers will not have to file real estate tax returns simply because of a change in the local coefficient. The recalculation of their tax liability will be carried out by the tax administrators.

In 2025, it will be necessary to become acquainted with the other 16 approved changes with postponed effectiveness. 2025 will also be the first taxable period when the amount of tax may be affected by the inflation coefficient (for 2024, it has been explicitly set at 1).