Property Tax Changes – No Revolution, But as Usual

Property tax has always been a tricky area for taxpayers. Ambiguous regulations and imprecise definitions, such as those for buildings and structures, often make it difficult for taxpayers to accurately determine what exactly is subject to taxation. This can result in costly penalties, and disputes with tax authorities often end up in court.

Draft Changes to Property Tax

Following the Constitutional Court ruling (case no. SK 14/21), a draft of changes to property tax was published on June 17, 2024. Initially, the changes were meant to eliminate the need to refer to construction law when defining a building or structure and to resolve existing interpretative issues related to property tax.

Although some provisions from the current law (regarding the definition of a building) were preserved, many changes have been introduced. The definition of a building now includes the phrase “constructed using construction products,” and the definition of a structure includes a list of objects considered as structures under property tax regulations. Furthermore, the term “technical-operational whole” (which has historically caused issues between authorities and taxpayers) was reintroduced, along with a definition of “permanently connected to the land.”

Possible Consequences for Taxpayers

Unfortunately, as it turns out, the new provisions could increase fiscal burdens on taxpayers. Moreover, the changes might create confusion, requiring taxpayers to quickly audit previously taxed properties. It may turn out that certain objects, previously exempt from property tax, now need to be included in taxable property.

It is no surprise that this draft has generated significant concern among tax advisors. However, it is important to note that this is a version of the draft that will undergo further legislative processes, so its final form may still change. Nevertheless, there is no doubt that taxpayers will face a substantial challenge in adapting to the new regulations.

Support for Taxpayers

If you are concerned about these changes and want to ensure your business remains compliant, ATA Tax tax advisors are here to help. We offer guidance on adapting to the new property tax rules and can help you avoid potential negative consequences in the future. Don’t hesitate to reach out for assistance.