By its judgment of 4 July 2023, the Constitutional Tribunal (ref. SK 14/21) ruled that Article 1a, section 1, point 2 of the Act on Local Taxes and Fees, defining a structure, is inconsistent with the Constitution.
The challenged provision states that a structure is a construction object within the meaning of the provisions of construction law that is not a building or a small-scale architectural object, as well as a construction device within the meaning of the provisions of construction law connected with a construction object that ensures the possibility of using the object in accordance with its intended purpose, while a building is a construction object within the meaning of the provisions of construction law that is permanently attached to the ground, separated from space by means of building partitions and has foundations and a roof.
As the Tribunal pointed out, this provision refers twice to the provisions of construction law – non-tax provisions, which means that taxpayers may not know whether they have to tax a given construction object as a structure or not.
The Tribunal also emphasised that it cannot be determined whether the tax act refers only to the Building Law or also to regulations issued on the basis of the Building Law.
In the oral justification of the judgment, the Constitutional Tribunal emphasized that it is not permissible to regulate in a non-tax act such important elements of the legal structure of taxes as their subject matter.
At the same time, the Tribunal postponed the expiry of the binding force of the definition of a building by 18 months, which means that Within 18 months, the legislator must adopt the provisions of the Act on Local Taxes and Fees and introduce new definitions of structures and buildings for the purposes of real estate tax.
At this point, it's difficult to assess how the new definition of a building proposed by lawmakers will impact tax liabilities. However, it's certain that lawmakers will need to address this issue within the next few months.
The text of the judgment and the press release are available here.