Constitutional Court, SK 14/21
Ruling: Article 1a (1)(2) of the Act of 12 January 1991 on Local Taxes and Fees is inconsistent with Article 84 and Article 217 of the Constitution of the Republic of Poland. The said provision shall cease to have effect 18 months after the date of publication of the judgment in the Journal of Laws of the Republic of Poland.
Explanation: The company appealing to the Constitutional Court was objecting to the decision on the amount of real estate tax to pay for silos and storages. They claimed, that it fulfills every requirement to be treated as a “building”, whose tax is based in the utile surface, rather than a “construction”, whose tax is based on its current value. The administration and courts persistently treated said objects as “constructions” – the definition of both these terms made reference to “provisions of construction law”, what has been found as to ambiguous by the Court. The Court stated, that tax law requires a special level of clarity, so that a reference to a separate branch of law, especially if some of its provisions may be regulated in secondary legislation, is unacceptable.
Article 217 of the Constitution mentioned in the ruling states, that “the imposition of taxes, as well as other public imposts, the specification of those subject to the tax and the rates of taxation, as well as the principles for granting tax reliefs and remissions, along with categories of taxpayers exempt from taxation, shall be by means of statute”. This provision is called the “principle of exclusivity of statutory law” in taxation. The ruling only strengthens the importance of this principle as a cornerstone of tax law, a branch so closely connected to the interest of individuals.
The Constitutional Court may delay the entrance of its rulings into force for no longer than 18 months in the case of primary legislation and 12 months in other cases. This measure is usually taken whenever a complete removal of a provision would be more harmful than leaving an unconstitutional provision temporarily in force.
Impact: The ruling will inevitably cause changes in the legal definitions of buildings and constructions for tax purposes. Parliament will have now eighteen months for adopting an amendment to the questioned provision. The changes should lead to a clearer distinction between those two terms, in order to avoid further disputes between taxpayers and the administration. For the time being though, the current wording of the Act on Local Taxes is still in force and for now the ruling may not be a simple basis for revising the classification of certain objects.
