In a judgment dated July 4, 2023, the Constitutional Tribunal (SK 14/21) ruled that Article 1a(1)(2) of the Local Taxes and Fees Act, which defines a structure, is unconstitutional.
The challenged provision stipulates that a structure is a construction object within the meaning of the construction law, which is not a building or a small architecture object, as well as a construction device within the meaning of the construction law related to a construction object, which ensures the possibility of using the object in accordance with its purpose, while a building is a construction object within the meaning of the construction law, which is permanently connected to the ground, separated from the space by means of building partitions and has foundations and a roof.
As the Tribunal pointed out, the provision refers twice to the provisions of the construction law - non-tax provisions, with the result that taxpayers may not know whether they have to tax a building as a structure or not.
The Tribunal also related that it is impossible to determine whether the tax law refers only to the Construction Law or also to the regulations issued under the Construction Law.
In a verbal justification of the judgment, the Tribunal related that it is not permissible to regulate in a non-tax law such essential elements of the legal construction of taxes as its subject matter.
At the same time, the Tribunal postponed the expiration of the definition of a structure for 18 months, which means that within 18 months the legislature must enact provisions of the Local Taxes and Fees Law and introduce new definitions of a structure and a building for property tax purposes.
At this point, it is difficult to assess how the new definition of a building that will be proposed by the legislature will affect tax liabilities. Nonetheless, it is certain that the legislature must address the issue in the coming months.
The text of the judgment and the press release are available here.