A Warsaw-based property company receives a tax authority notice in spring 2025. The notice challenges how the company classifies its commercial premises. The problem: Poland's real estate tax framework has new statutory definitions of "building" and "structure" that took effect on 1 January 2025 – and many businesses have not yet updated their assessments.
Polish real estate tax law underwent a significant definitional overhaul on 1 January 2025. The amended ustawa o podatkach i opłatach lokalnych (Local Taxes and Fees Act, ULPOL) introduced standalone definitions of "building" (budynek) and "structure" (budowla) for tax purposes, replacing decades-old cross-references to construction law. The annual tax rate on structures remains 2% of their value, making correct classification a direct financial issue for any business holding real property in Poland.
This alert explains what changed, which taxpayers are most exposed, and what steps should be taken before the next tax declaration cycle closes. Three questions frame the analysis: what the new definitions actually say, who faces the greatest reclassification risk, and what immediate action looks like in practice.
What did the 2025 definitions actually change?
Before 2025, Polish real estate tax relied on definitions borrowed from the Prawo budowlane (Construction Law Act). Courts and the National Tax Administration (Krajowa Administracja Skarbowa, KAS) repeatedly disagreed on how those cross-references applied to tax disputes. The reform ended that dependency. ULPOL now contains its own closed list of objects qualifying as "structures" for tax purposes.
The practical effect is substantial. Objects that previously escaped the 2% annual levy – because they fell into a grey zone between construction-law categories – may now fall squarely within the new statutory list. Conversely, some installations previously taxed as structures may now qualify as equipment, attracting no real estate tax at all. The direction of reclassification depends entirely on the specific asset.
Key elements introduced by the 2025 reform include:
- A self-contained definition of "structure" in ULPOL, independent of construction legislation
- An explicit enumeration of technical installations that qualify as taxable structures
- Clarified rules on mixed-use objects combining building and structure elements
- A new threshold: objects with a value below PLN 10,000 may be excluded from the structure tax base in specific circumstances
The Supreme Administrative Court (Naczelny Sąd Administracyjny, NSA) had long signalled that the old cross-reference model created unacceptable legal uncertainty. The 2025 reform responds directly to that criticism. However, the new closed list introduces its own interpretive questions – particularly around industrial installations, renewable energy assets, and underground infrastructure.
Who is most exposed to reclassification risk?
The reclassification risk is not uniform. Businesses holding large portfolios of technical infrastructure face the highest exposure. The 2% annual rate applied to the full value of a structure – not just its book value, but the value determined under tax rules – means that a PLN 50m industrial installation carries a PLN 1m annual tax liability. Misclassification in either direction creates either underpayment penalties or overpayment that must be recovered through formal proceedings.
We secured a reversal of a real estate tax surcharge exceeding PLN 1.8m for a manufacturing client in the Mazowieckie region (autumn 2024), where the dispute centred on exactly the kind of cross-reference ambiguity the 2025 reform now resolves. A similar reclassification exercise for a logistics operator in Lower Silesia (winter 2025) identified overpaid tax of approximately PLN 900,000 recoverable through a corrective declaration.
Sectors most affected by the new definitions include:
- Energy and utilities – wind turbines, substations, and pipelines now have explicit treatment
- Manufacturing – production lines with fixed technical installations require fresh assessment
- Telecoms – masts and cable infrastructure appear on the new enumerated list
- Real estate funds – mixed-use assets combining building and structure elements need revaluation
Foreign investors holding Polish real property through subsidiaries face an additional layer of complexity. Transfer pricing considerations arise where intercompany arrangements include real estate assets whose tax classification has changed. A tax dispute triggered by a reclassification can quickly escalate into a broader KAS audit. The window to file corrective declarations without penalty interest runs only 14 days from the moment a taxpayer identifies an error.
What immediate action is required?
The 2025 tax year declarations were due by 31 January 2025 for legal entities. If your company filed on the basis of pre-2025 classifications, a corrective declaration may be necessary. Failure to correct an underpayment before KAS opens a formal audit forfeits the right to reduced penalty interest – a consequence that is irreversible once the audit notice is issued.
Three immediate steps apply to most affected businesses. First, commission a classification audit of all real property assets against the new ULPOL definitions. Second, cross-reference the audit findings with the company's fixed-asset register and insurance valuations. Third, assess whether any KSeF Poland reporting obligations interact with the revised asset base – particularly where real estate assets are embedded in broader service or lease arrangements subject to structured invoicing.
What to prepare for a classification audit:
- Technical documentation for each fixed asset (construction permits, as-built drawings)
- Current fixed-asset register with acquisition values and depreciation history
- Prior-year real estate tax declarations (at least three years)
- Any existing tax rulings or binding rate information (WIS) relating to the assets
- Intercompany agreements involving real property, for transfer pricing review
Businesses that obtained individual tax rulings (interpretacje indywidualne) from the Director of the National Tax Information (Dyrektor Krajowej Informacji Skarbowej, DKIS) under the old framework should verify whether those rulings remain valid. A ruling issued before 1 January 2025 that relied on construction-law cross-references may no longer provide protection. For companies with IP Box or family foundation structures that hold real estate, the interaction between the new definitions and those regimes warrants separate analysis. Further guidance on cross-border timing issues is available in our KSeF deadline timeline for companies in Switzerland.
Personal liability of board members for underpaid local taxes is a real risk under Polish corporate legislation. Directors who knowingly allow an incorrect declaration to stand may face personal exposure – making early correction not just a tax matter but a governance priority.
For a tailored assessment of how the 2025 real estate tax definitions affect your asset portfolio, contact info@kordeckipartners.com.
Frequently asked questions
Q: Does the 2025 reform affect residential property owners, or only businesses?
A: The definitional changes in the Local Taxes and Fees Act apply to all taxpayers, including individuals holding residential property. However, the practical impact is greatest for legal entities with technical infrastructure and commercial real estate. Residential buildings classified as such under the new definitions continue to attract the lower residential rate rather than the 2% structure levy.
Q: How long does a classification audit typically take, and what does it cost?
A: For a portfolio of up to 20 assets, a classification audit typically takes four to six weeks. Cost depends on asset complexity and the availability of technical documentation. Businesses should budget for both legal and technical advisory input – the new definitions require reading statutory text alongside engineering specifications. Early engagement before a KAS audit is always less expensive than responding to one.
Q: Is it a common misconception that existing tax rulings cover the new definitions automatically?
A: Yes. Many taxpayers assume that a ruling obtained before 2025 continues to protect them. That assumption is incorrect where the ruling relied on construction-law cross-references that the 2025 reform has removed. A ruling based on superseded statutory language does not bind the tax authority under the new framework. Taxpayers should seek updated rulings or obtain a written opinion from a qualified Polish tax advisor Warsaw-based or otherwise to confirm their position.
About KORDECKI & Partners
KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to real estate tax, transfer pricing, and Polish tax law advisory. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.