2026-01-13
Property tax after the general ruling – clarifying the rules or drawing new battle lines?
The general tax ruling issued by the Polish Minister of Finance and Economy on 27th of November 2025 addresses the issue of land, buildings and structures being deemed as “related to business activity”. It is one of the most significant documents in recent years in the area of property taxation. Its importance goes well beyond a purely technical explanation of statutory provisions. At its core, it touches on a fundamental and long-running dispute between taxpayers and tax authorities: where the line should be drawn between mere ownership of real estate and its use for business purposes.
The stated aim of the ruling was to bring order to a practice that, for years, had been marked by excessive automatism. In many cases, the mere fact that a property was owned by an entrepreneur was sufficient to justify the application of the highest property tax rates, regardless of whether the property actually served any business function. The new position adopted by the Polish financial administration significantly recalibrates this approach – although it does not eliminate all problems.
From “owner status” to a genuine link with business activity
For a long time, the prevailing assumption was that if a taxpayer carried on a business, his/her entire real estate portfolio should be regarded as connected with that business. This interpretation was convenient for the authorities, but increasingly challenged by Polish administrative courts and the Constitutional Tribunal. Case law consistently stressed that local taxes, as public-law burdens, must remain in a rational relationship to the actual manner in which property is used.
The general ruling clearly aligns with this line of reasoning. Rather than relying solely on the formal criterion of who-owns-the-property, it shifts the focus towards a functional analysis: whether, and in what way, a given property serves business activity, either at present or in a reasonably foreseeable future.
Three models for classifying real estate
To structure the assessment, the Minister of Finance and Economy identified three basic scenarios in which the link between real estate and business activity should be examined.
The first model covers entities whose activity is exclusively commercial in nature, such as capital companies and other legal persons established to carry out profit-aimed operations. In their case, a presumption applies that the real estate they own is related to business activity, even if it is not currently generating income or being actively used. What matters here is the overall business profile of the entity, rather than the temporary manner in which a specific property is used.
At the same time, the ruling qualifies this presumption by using the phrase “as a rule,” suggesting that exceptions may exist. However, the absence of any detailed guidance on such exceptions means that the boundaries of this presumption remain blurred and may give rise to further disputes.
The second model concerns taxpayers operating in a so-called dual role, combining business activity with other, non-commercial, pursuits, whether private or statutory. This group includes, in particular, individuals running sole proprietorships, as well as foundations, associations and other entities for which business activity is ancillary. In these cases, the ruling clearly rejects the automatic application of the highest tax rate to the entire property portfolio. Business property taxation is limited to those assets that are actually used for business or that remain in a clear, functional relationship with it.
The third model addresses situations in which a property is used in the business activity of another entity, for example under a lease or tenancy arrangement. The interpretation emphasizes that the mere fact that a property is used by an entrepreneur does not determine its tax classification. What is decisive is the status of the owner and whether, on their side, there is a business activity with which the property can be linked.
Actual use versus preparation for future activity
One of the more practical aspects of the ruling is the distinction it draws between the actual use of a property and its maintenance or preparation for future business purposes. According to the Minister, a connection with business activity may also exist where a property is not currently in use but remains at an investment, redevelopment or safeguarding stage, provided that the taxpayer is taking evident steps aimed at its future commercial use.
At the same time, the ruling clearly distances itself from the notion of purely hypothetical usefulness. The mere abstract possibility that a property could be used in a business, unsupported by any tangible actions on the part of the taxpayer, should not justify the application of the highest property tax rates.
Practical implications for taxpayers
From the taxpayers’ perspective, the general ruling strengthens arguments against overly aggressive taxation, particularly for individuals and entities with a mixed activity profile. At the same time, it does not put an end to all disputes—especially where the analysis relies on open-ended concepts such as a “functional link” or “preparation for business activity.”
In practice, the document should prompt taxpayers to take a critical look at their real estate holdings, reassess how individual properties are used, and ensure that relevant circumstances are properly documented. For many entities, this may affect not only current tax settlements, but also the assessment of whether corrections to property tax liabilities for prior years are justified.
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