Property tax regulations are set to change starting 1 January 2025. Although the relevant legislation is still in draft form, the progress of legislative work suggests that it will take effect as planned. Legislative amendments will bring significant changes for commercial property owners and managers due to the introduction of new definitions of buildings and structures. Cushman & Wakefield experts recommend starting audits promptly to fully understand which tax changes will apply to each property. This will allow for adequate cost budgeting as the new regulations are likely to raise tax rates for many businesses – some may see annual costs increase by several hundred thousand zlotys.
Why are the changes happening?
The planned changes will present a significant challenge for the Polish commercial property market, which comprises over 60 million sqm in office, warehouse and retail buildings. Each property will require a detailed audit of its installations and facilities and the results of such audits will need to be taken into account in future budgets. The amendments to property tax regulations will also impact tenants who will need additional information to navigate these changes. The entire market now faces a considerable workload, with unfortunately little time remaining to adjust budget strategies,”
comments Zuzanna Paciorkiewicz, Head of Asset Services CEE, Cushman & Wakefield.
The new definitions of a building and a structure
As a result of the redefinition of what constitutes a building, many warehouse facilities previously classified as buildings will be categorised as structures. This change is likely to result in a substantial increase in taxation, as taxes will be paid on the value of a facility rather than its usable area,”
says Wojciech Pławiak, Attorney at Law, Tax Adviser, Litigato.
Classifying containerised and prefabricated facilities will pose a significant challenge. One thing is certain: they will be subject to taxation; the only question is how they will be taxed. The broad definition of the affixation to the ground included in the bill suggests that if a facility has foundations, even those resting on concrete blocks, it meets the definition of a building. While a facility may be included in the list of structures, its classification may present difficulties and lead to challenges in determining the right tax category,”
says Wojciech Pławiak.
Technical installations and facilities: What is changing?
It should be emphasised that technical facilities will now be taxed either fully or based on structural components. A key consideration will be reassessing how a technical facility was taxed under the previous legal framework and determining how this taxation needs to change or continue as a result of the new regulations in light of the current definition of a building facility. The new regulations are likely to significantly expand the definition of technical facilities, including those within buildings that were previously exempt from property tax,”
notes Wojciech Pławiak.
New challenges for property owners: warehouses, car parks and advertising systems
Is an audit the only option?
We are now in the budgeting phase, where taxation is an exceptionally hot and challenging topic. Property audits are, therefore, essential for determining accurate tax amounts. For instance, an audit of one property has revealed areas in a property tax return requiring corrections which we are now processing. The tax difference in this specific case may exceed PLN 200,000. The good news is that an audit may also uncover inflated tax payments and tax corrections may be filed retroactively for up to five years, potentially leading to cost optimisation,”
explains Paulina Bauer, Head of Retail Asset Services, Cushman & Wakefield.
However, it is inadvisable to wait until the last minute, as audit costs are likely to begin to rise due to heightened demand. In addition, property owners and managers should inform tenants about the service charge amounts for 2025 before the end of this year or at the beginning of next year. Property tax changes will also result in higher costs for commercial tenants who should have enough time to prepare for these increases,”
concludes Paulina Bauer.