During the SARS-Cov-2 pandemic, the issue of real estate tax in economic activity has gained particular importance for entrepreneurs running a business. So far, the discontinuation of economic activity did not exempt from the obligation to pay tax at a higher rate if the property was suitable for such activity. This also applied in general to the issue of real estate tax in the event of discontinuation of economic activity for reasons other than those caused by the pandemic. In the practice of our accounting company, PRWT, we encounter questions regarding the possibility of paying tax at a lower rate or exemption from paying such tax on a daily basis. This applies to both regular PRWT clients and one-time consulting services.
On February 24, 2021, Polish Constitutional Tribunal issued a crucial judgement that changed the established tax practice.

In the judgment of February 24, 2021 in the case with reference number Act. SK 39/19, the Tribunal ruled that “Art. 1a paragraph 1 point 3 of the Act of 12 January 1991 on Local Taxes and Fees (Journal of Laws of 2019, item 1170), which stated that only the possession of the land, building or structure by an entrepreneur or other entity conducting business activity decides about the connection of land, building or structure with conducting business activity, is inconsistent with art. 64 paragraph 1 in connection with Art. 31 paragraph 3 and art. 84 of the Constitution of the Republic of Poland. “

In the opinion of the Tribunal, entrepreneurs cannot be charged with a higher tax rate only because they own a real estate which is in fact not used for their business activities. Taxation of a land or a building with higher rate of real estate tax – unused and that cannot potentially be used for business activities – only due to the simple fact of possession by an entrepreneur or other entity conducting economic activity, the Tribunal found inconsistent with Art. 64 paragraph 1 of the Polish Constitution.
As stated by the Tribunal, art. 1a paragraph 1 point 3 of the Act of January 12, 1991 on Local Taxes and Fees, is an instrument that in fact serves other purposes than fiscal and constitutes a disproportionate tax burden which doesn’t distinguish the situation of taxpayers who own a real estate, but do not use it and cannot use it for business activity, and taxpayers who use their real estates to conduct business activity. In the opinion of the Constitutional Tribunal, the applied criterion of “possession of the land by an entrepreneur”, does not exclusively serve a fiscal purpose but also other purposes and thus leads to a constitutionally unjustified infringement of the ownership. Application of a higher tax rate for a real estate involved in running a business (Article 5 paragraph 1 point 1 letter a) and Article 5 paragraph 1 point 2 letter b)) only on the basis of the criterion of possession of a property by an entrepreneur or other entity conducting economic activity constitutes, according to the Constitutional Tribunal, a disproportionate interference with the right of ownership of these entities.