Property tax – when am I a taxpayer?

The list of entities with the status of property tax payers is set out in Article 3(1) of the aforementioned Act, which provides that the following are liable for property tax:

• natural persons,
• legal persons, and
• organisational units, including companies without legal personality.

This provision also sets out the substantive condition for the attribution of taxpayer status, namely that the aforementioned entities must be:

• owners of real estate or buildings, subject to paragraph 3 (ownership in their own right, as in such cases the tax liability rests with that owner),
• independent possessors of immovable property or structures,
• perpetual usufructuaries of land,
• holders of real estate or parts thereof, or buildings or parts thereof, owned by the State Treasury or a local government entity, provided that such holding:
  1. arises from a contract concluded with the owner, the National Centre for Agricultural Support or on another legal basis, with the exception of possession by natural persons of residential premises not constituting separate properties,
  2. is without legal title, subject to paragraph 2 (applies to taxable items forming part of the State Treasury’s Agricultural Property Fund or managed by the State Forest Enterprise).

In the case of the owner, this naturally refers to the entity which holds the right of ownership in respect of the property.

An independent possessor, on the other hand, is an entity which is not the owner of the property but actually (physically) controls it in the same way as the owner would. The case law of the Supreme Court indicates that, in addition to physical control, an independent possessor should demonstrate their intention to dispose of the property in such a way that this is visible to third parties, e.g. by making investments, carrying out repairs, cultivating fields, etc.

A perpetual usufructuary is an entity that is a party to a contract for the transfer of property into perpetual usufruct.

In the case of possessors (other than independent possessors) of taxable items, two situations may arise, namely where possession:

• arises from an agreement concluded with the owner, the National Land Fund (KOWR) or on some other basis,
• is without legal title.

The first case, possession arising from a contract, may sometimes give rise to interpretative difficulties, particularly where the party to the contract transfers the property into further possession (e.g. subletting, sub-lease). Such a situation was the subject of an assessment by the Supreme Court (judgment of 19 November 1993, file ref. II CRN 130/93), which concluded that a party to the principal contract (e.g. a lease or tenancy agreement) does not lose possession merely by transferring the property to a subsequent possessor (e.g. a subtenant or sub-lessee). Thus, even in a situation where the latter party bears the economic burden of the tax due to the provisions of the agreement with the principal tenant or lessee, they do not have the status of a property tax payer, as this status is held exclusively by the party to the main agreement (e.g. a lease or tenancy agreement).

In the second case, i.e. possession without legal title, we are referring to a situation where a given entity has taken possession of the taxable object without a basis such as a contract from which the right to do so would arise (e.g. a tenancy, lease, usufruct, etc.).

Author

Piotr Magda

Radca prawny, Senior Associate

The practice includes ongoing advice on administrative and tax law. He has extensive experience in handling judicial, administrative, tax and judicial-administrative proceedings concerning both individual clients and business entities, including that gained through many years of providing services to local government units and other units of the public finance sector.

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