7 June The Sejm passed an amendment to the Act amending the Renewable Energy Resources Act and some other laws. one of the changes made is the modification of the provisions of the Construction Law as regards the definition of structures and the Wind Electricity Investment Act as regards the definition of wind power plants.
Let us remind you that the bill of 20 May 2016 on investments in wind power plants (Journal of Laws, item 961), applicable from 16 July 2016, the definition of structures has changed. This gave rise to considerable doubts as to the taxation of wind turbines by property tax.
Before 16 July The construction law defined the building as, inter alia, part of the construction of technical equipment (coils, industrial furnaces, wind turbines, nuclear power plants and other equipment) and the foundations for machinery and equipment, as separate technically parts of the objects consisting of the usable whole.
There was therefore no doubt that only part of the construction of the power plant was subject to taxation. The introduced amendment removed wind turbines from the technical equipment catalogue for which the construction was only part of their construction.
Simultaneously Article 2 The laws defined the wind power plant as a building within the meaning of the building law, consisting at least of the foundation, tower and technical elements. The legislation introduced has reached an unintended objective.
It turned out that the tax authorities were starting to demand a higher real estate tax from wind turbine owners, indicating that the building was a whole wind power plant, i.e. a building part and technical elements.
As the tax base for the building is the value determined in accordance with the provisions of the Income Tax Act, the tax has also started to be charged on the most expensive components of the wind power plant – rotor with a shovel assembly, drive transfer unit, generator generator, control system and gondola assembly, along with mounting and trading mechanism.
As a result, the property tax even increased several times.
The Wind Investments Act introduces a change in the definition of wind power plants, which aims to introduce uniform and transparent rules for property tax taxation.
Unfortunately, the Minister of State at the Ministry of Finance Wiesław Janczyk confirmed this interpretation of the rules. In response to Question No 7740 Tadeusz Cymański said on the change in the way wind power plants are taxed on real estate:
From 16 July 2016 wind power plant therefore entirely constitutes a building (building) within the meaning of the Act Building law, as indicated above, results from the current definition of ‘buildings’ contained in that Act as well as from the Annex thereto, where wind power plants have been explicitly listed as a building (category XXIX of the Annex).
This is also confirmed by the justification for the draft wind energy investment bill, which states that ‘The draft law proposes to delete the provision introducing the division of wind power plants into a construction and non-construction part. In the proposed legal state, the whole wind power plant will be a construction site ...’.
However, until 31 December 2016 property tax on wind power plants is established and collected in accordance with the provisions in force before the date of entry into force of that law (Article 17 Windhouse Investment Act). Consequently, from the date of 1 January 2017 property tax will be payable to the entire wind turbine.
The bill adopted by the Sejm in its intention restores the wording of the definition of construction in the Act – Construction Law, which was in force before the entry into force of the Investment Act.
At the same time, the Wind Investments Act introduces a change in the definition of wind power plants, which will result in uniform and transparent rules for property tax taxation.
According to the new sound Article 2(1) The law by wind power plant shall be understood as an installation of a renewable energy source, consisting of a building part within the meaning of building law and technical equipment, including technical elements in which electricity is produced from wind energy.
Thus, the legislator clearly indicates that the building is only a building part of the wind power plant, excluding its technical elements. Therefore, on the basis of its value, the property tax base will be established. The amendments will apply retroactively to 1 January 2018
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.