Would you be informed about all events in ATA Finance?
You do not have time to keep track of our site?

Sign up for the newsletter!

Real property tax charged on production line foundations situated in a production hall constituting a separate object of taxation – judgment of the Supreme Administrative Court not favourable for taxpayers


On 7 October 2016, the Supreme Administrative Court gave a judgment (ref. no. II FSK 2532/14, unpublished), not favourable for taxpayers, about separate chargeability of real property tax on a building – a production hall in this case – and on a structure situated inside that hall, namely a production line.

The case involved a Company which had carried out investment entailing a new production line together with ancillary infrastructure situated in a newly constructed production hall building. The production line consisted of over ten machines fixed to the ground on strengthened foundations, separated from building structural elements with expansion joints.

The Company had doubts whether in that case real property tax is not charged in a way twice on the same object, namely on a production line, and specifically on foundations of plant and machinery as structures located on the building usable area subject to taxation. We have to add that in the case of a structure tax is calculated by reference to its value, while in the case of a building its usable area serves as the taxable base. The Company’s position was that structures located inside a building taxed according to its usable area are not subject to separate taxation.

The complaint of the Company was dismissed. Therefore, the Supreme Administrative Court upheld the position of the Regional Administrative Court in Gliwice expressed in a judgment of 7 April 2014, ref. no.: I SA/Gl 58/14, according to which there should be no doubt that foundations of machines located in a production hall constitute a structure (enumerated specifically as an object of taxation  in the Act on Local Taxes and Charges). The fact that foundations are in the building is not decisive for a conclusion that they do not constitute an object of taxation separate of the building. Hence, such foundations are subject as structures to real property tax regardless of taxation of the building usable area.  

The position of the administrative court presented above may be of material significance for taxpayers and undoubtedly may affect their tax burdens. Moreover, in order to determine the initial value of the structure – and namely of the foundation itself – additional administrative work may be necessary.