Newsletter Taxation and renewable energy | September 2018

Date of an article 24 September 2018 r.

Newsletter Taxation and renewable energy | September 2018

  1. The Ministry of Finance published a database of Real Estate Tax (RET) rates
  2. Harbor’s gas infrastructure is exempted from Real Estate Tax (RET)
  3. Lands used for transmission lines should be treated as an ordinary real estate
  4. Changes in the taxation of excise duties on energy products
  5. Taxation of wind farms with Real Estate Tax (RET) – the end of a dispute?

 

  1. The Ministry of Finance published a database of Real Estate Tax (RET) rates

On 18th June 2018 database of RET rates for every municipalities in Poland has been published. This is a direct response of the Ministry of Finance for the urging problem for many entrepreneurs from logistic, energy and telecommunication sectors.

The difficulty was that whenever an owner (a Company) had several properties, placed under the jurisdictions of a different municipalities the duty of determining the proper RET rates laid on its side. So far, entrepreneurs had to take into account large administrative duties, because in practice it was necessary to look for information on tax rates for each municipality individually. After publishing the database, information concerning RET rates can be found by entrepreneurs in one place.

The next change expected by the taxpayers is a unification of tax RET forms and declarations. It is worth mentioning, that this change was already promised by the Ministry of Finance back in 2017.

The database of RET rates may be found on the website of the Ministry of Finance, under address: https://www.finanse.mf.gov.pl/podatki-i-oplaty-lokalne/sprawozdanie-sp1

 

  1. Harbor’s gas infrastructure is exempted from Real Estate Tax (RET)

The judgement of the Supreme Administrative Court from March 7th 2018 (II FSK 531/16) precise that every infrastructure as long as it is placed within limits of harbor is not a subject to the RET. The judgement concerned situation of an owner of a gas port built in public harbor. The problematic part was whether a objects situated in the gas port with access limited only for particular entities – gas terminal (i.e. gas recipients / suppliers) should be subject to RET.

In the company’s opinion, such limitation in access to the gas port does not result in tax exemption for this type of real estates (objects). Gas terminal is located in the harbor, generally available for everyone, therefore benefits from tax exemption.

The authorities claimed differently, however, the Supreme Administrative Court agreed with the company, that exemption in RET applies to such objects. The Court stated also, that limits put on the accessibility of gas port are “something perfectly natural” and should not cause the RET taxation.

 

  1. Lands used for transmission lines should be treated as an ordinary real estate

On 20th July 2018 Polish Parliament adopted the amendments to the Act on Local Taxes and Fees. Main changes to the Act are implementing a provisions that concern the issue of taxation of land occupied for transmission lines, i.e. energy lines, telephone lines or pipelines.

New provisions are aimed at limiting the negative practice of some municipalities that treat land used for transmission lines as “business” and thus set higher RET rates, although such land do not belong to a power plant or gas plant, and its usage is done on a ground of easement basis.

According to the amendments to the Act areas (lands) used for transmission lines purposes should be taxed as an ordinary real estate.

The new regulations will apply from 1st January 2019.

  1. Changes in the taxation of excise duties on energy products

The energy sector should be prepared for the upcoming changes in the subject of tax concerning energy products not used for the purpose of driving or heating.

On 20th July 2018 Polish Parliament adopted the change of regulations. According to the adopted amendments to the Act on Excise law, the new regulations affect the tax rates applicable to the complete destruction or loss of energy products.

Implemented changes will not add any new tax rates to the excise system. In the explanatory memorandum to the Act the legislator stated, that new provisions will not bring any negative consequences for the taxpayers. The main purpose of amendments to the Act is to precise the uncertain parts of the current provisions.

Additionally, the Act’s goal is to unify tax rates and, by the same, clarify the whole system. For example, instead of two tax rates for specific fuel there will be one rate, differentiated by the density.

Most of the provisions enters into force after 14 days from the adoption of the Act.

 

  1. Taxation of wind farms with Real Estate Tax (RET) – the end of a dispute?

The uncertainties concerning the definition of a construction for purposes of RET taxation in the matter of a windfarm have never before been such an important subject.

The relevance may be backed up by the fact that Supreme Administrative Court has formed a special group of 7 judges whose task is to prepare an official resolution. Resolution of the Court will be taken on 24th September 2018.

Till now, more than 100 taxpayers who had already submitted cassation complaints to Supreme Administrative Court should remain patient.

The main problem of this matter, is that legislation was clear till 31st December 2016. From 1st January 2017, due to new Act precising the definition of a construction, many municipalities decided to impose higher tax, i.e. on the whole windfarm utility and not only on building elements.

The municipalities practice in this scope resulted in the growth of RET amount up to few times of its initial value. Such large differences in tax due resulted in submission of many complaints by the entrepreneurs to administrative courts due to negative tax rulings issued by the municipalities.

Thus, the Supreme Administrative Court resolution is incredibly important for entire industry, as it should provide necessary explanation.

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