The public information newsletter of the Chancellery of the President of the Council of Ministers published information about planned changes to the laws on agricultural, forestry and local taxes and charges.
The subject of the amendment will be to clarify the provisions of the above-mentioned Laws on the taxation of agricultural and forestry land situated under, or over or under, the electricity infrastructure.
The problem is particularly important from the point of view of landowners, who are often charged by municipalities with a higher rate of property tax.
The essence of the proposed changes is not so much to modify the rules on the taxpayer's person, but to clearly indicate that the placement of the electricity infrastructure for the transmission and distribution of electricity does not change the way the land is taxed, but that the very placement of the overhead electricity line – over land and cable – does not, in fact, take up the land for the business.
Current legal status
For the moment, land may be subject to agricultural tax, property tax or forest tax under regulations one of laws: laws of the day 15 November 1984 on agricultural tax (Journal of Laws of 2017, item 1892, as amended), Act of 12 January 1991 on local taxes and charges (Journal of Laws of 2017, item 1785, as amended) and laws of 30 October 2002 on forest tax (Journal of Laws of 2017, item 1821).
All depends on the qualification of the land as agricultural, forestry or business land. According to Article 1 The Agricultural Tax Act is subject to land classified in the land and buildings register as agricultural land, with the exception of land occupied for business activities other than agricultural activities.
Forests are subject to taxation in so far as they are not engaged in other economic activities than forestry activities (Article 1(1) Forest tax laws).
The Act on Local Taxes and Fees in Article 2(1) provides that the following immovable property or construction works are subject to taxation: land, buildings or parts thereof, structures or parts thereof relating to the pursuit of business activities.
On the other hand, land tax is not taxed on agricultural land or forests, except for those engaged in business activities.
All three The laws define the taxpayer in a very similar way. It shall be considered as natural persons, legal persons, organisational units, including companies without legal personality, which are:
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- owners (land, forest or real estate or construction),
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- self-employed holders (land, forest or property or construction),
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- perpetual users (land, forest or real estate or construction),
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- holders (land, forest or real estate or construction works) owned by the State Treasury or local government,
In view of the above, the recognition of land as being occupied for business purposes results in their tax on real estate tax at the rate applicable to land related to economic activity.
Farmers who own land sometimes receive dimensional decisions from the municipal tax authorities, which indicate that they are required to pay property tax on the land on which the energy poles owned by electricity transmission companies are located, at rates as for economic operators. However, this seems to be excessive fiscalism.
While the levy on real estate of power plants which own land on which electricity installations are planted is most justified, the levying of higher tax on farmers whose land or forests are subject to the payment of transport services to these undertakings seems to be excessive fiscalism.
Position of the Ministry of Finance and administrative courts
However, such an interpretation of tax rules is confirmed not only by the Ministry of Finance but also by administrative courts.
In response to the parliamentary hearing, Secretary of State at the Ministry of Finance Wiesław Janczyk on 12 March 2018 pointed out that the establishment of transmission services does not involve the acquisition of tax entity under the provisions of the Local Taxes and Charges Act. He referred to the provisions of the Civil Code, pointing out that:
Content of the transmission service right Article 3051 Act of 23 April 1964 Civil Code (Journal of Laws of 2017, item 459, as amended). Under that provision, the property may be charged to an entrepreneur who intends to build or own the equipment referred to in Article 49(1) Kc, i.e. devices for the supply or discharge of liquids, steam, gas, electricity and other similar devices, by law that an entrepreneur may use in the marked range of a loaded property, in accordance with the purpose of these devices.
According to Article 352(1) The Civil Code, who actually uses someone else's real estate to the extent corresponding to the content of service, is the holder of service.
The ownership of service is distinct from the possession of a thing, including the possession of a self-contained and dependent, type of possession of a right ("Use of real estate by transmission companies - owners of transmission equipment", Małgorzata Balwicka-Szrzyrba).
A servant, in principle, does not own the property, but only actually uses it. Only exceptionally transmission operators may be eligible as subsidiary holders if they hold the property as a user, tenant, tenant or person having another right to which specific power over a thing is linked.
The transmission undertaking may also be a self-employed holder (ibid.).
This position is also confirmed by administrative courts. For example, in the judgment of 9 June 2016 reference no. II FSK 1156/14 The Chief Administrative Court stated that:
(…)The disputed land made available to the power plant for the planting of transmission poles and the extension of power grids between them, as well as for maintaining and enabling the proper operation, maintenance, renovation and modernisation of power lines and equipment, in such a way as to ensure the reliability of the distribution system, has been engaged in an economic activity consisting of the transmission of electricity, i.e. activities other than forest activities.(...)
Correct reading of the legal standard contained in Article 2(2) The Local Tax and Charges Act states that the land under the technical lanes, located under overhead power lines, is the land occupied for the business of electricity transmission by the electricity company and thus the land according to content Article 5(1)(1) point (a) of the Local Tax and Charges Act is subject to the highest rates of property tax.
It is therefore consistently recognised that the property tax taxpayer is the farmer in charge one from land ownership rights, regardless of the fact that land is charged with the service of transmission to energy companies.
Proposal for amendments
The Ministry of Finance notes this problem. The explanations published on the website of the Chancellery of the Prime Minister show that it will be the subject of legislative work.
At the moment, the draft amending act has not yet been published, but the information provided by the ministry shows that the amendment will aim to eliminate the discretion of tax authorities and the divergences in the case law on taxation in both the relevant and the subject matter of the land on which the electricity infrastructure equipment is placed.
The essence of the proposed changes is not so much to modify the rules on the taxpayer's person, but to clearly indicate that the placement of the electricity infrastructure for the transmission and distribution of electricity does not change the way the land is taxed, but that the very placement of the overhead electricity line – over land and cable – does not, in fact, take up the land for the business.
Author:
Marcin Kołkowicz
Tax advisor, tax consultant at Russell Bedford Poland Sp. z o.o., graduate of the Administration, Management and Marketing of the Catholic University of Lublin named after John Paul II. The subject of tax law deals with from 2012. He gained experience in Lublin and in Warsaw tax advisory offices. Author and co-author of many tax publications, in particular for Tax and Tax Portal TaxFin.pl. In his career, he dealt with both direct and indirect taxation issues, with particular emphasis on VAT.