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.
See other articles
Poland’s draft bill UD116 could significantly change the tax treatment of certain entrepreneurs operating under B2B arrangements. The proposed rules would not abolish self-employment or Poland’s lump-sum tax regime on recorded revenue. However, they are intended to reduce the tax attractiveness of certain structures, particularly transactions with related parties, service businesses operating without employees, and the use of the Polish IP Box regime.
The Act of 29 May 2026 amending the Polish Tax Ordinance and certain other acts, signed by the President of Poland, introduces significant changes to the Polish rules on reporting tax schemes, commonly referred to as MDR, or Mandatory Disclosure Rules. The new MDR provisions are expected to enter into force on 1 October 2026 and will substantially narrow the scope of obligations which, since 2019, have been one of the more demanding elements of tax compliance in Poland.
Tax proceedings in Poland should not be a process in which only the tax authority decides which facts will be examined and which evidence will be taken into account. Under the Polish Tax Ordinance Act, taxpayers have the right to actively participate in proceedings, including the right to submit their own requests for evidence. In practice, however, not every piece of evidence proposed by a taxpayer will be admitted. When can the tax authority refuse an evidentiary request, and what options are available to taxpayers in such situations?
Determining when a VAT liability arises in relation to services remains one of the more challenging issues in practice under Polish VAT law. Although Article 19a(1) of the Polish VAT Act clearly states that VAT becomes due when a service is performed, establishing when a service is actually “performed” sometimes requires a case-by-case assessment of the contractual model and the underlying commercial reality. Recent Polish judgment by the Supreme Administrative Court of 31 March 2026 (I FSK 1353/23) provides important clarification in the context of IT services.
As the Polish National e-Invoicing System (KSeF) becomes more widely used, businesses are increasingly encountering a practical issue known as the “double document circulation.” This occurs when the structured invoice stored in KSeF (XML) differs from the PDF visualization sent to the customer, for example by email or through a customer portal.
On 11 February, the EU General Court (Case T-689/24) delivered an important judgment in a “Polish case” on the moment of input VAT deduction. The ruling may have far-reaching consequences for Polish businesses and the way VAT is settled in Poland.
Invoice Issued Outside KSeF and Tax-Deductible Costs. Key Position of the Polish tax administration.
Individual tax ruling of 9 January 2026, ref. 0111-KDIB1-3.4010.714.2025.2.JG In an individual tax ruling dated 9 January 2026, the Director of the Polish National Revenue Information (KIS) addressed an issue that has raised significant practical concerns in the context of the implementation of the National e-Invoicing System (KSeF). The key question was whether an expense documented by an invoice issued outside the KSeF-system may be treated as a tax-deductible cost for the purposes of Polish corporate income tax (CIT).
The introduction of the mandatory Polish e-invoicing system (Krajowy System e-Faktur – KSeF) as of 1 February 2026 will significantly change VAT invoicing rules, i.a. transactions involving foreign entities. One of the key factors determining whether mandatory KSeF applies is whether a foreign counterparty has a fixed establishment (FE) in Poland. If it is lacking on the seller’s side, then he may issue and send invoices outside KSeF (e.g. via e-mail, PDF). If the seller is subject to KSeF yet his buyer is not (lacking seat/FE in Poland), then the seller must issue the invoice via KSeF, yet simultaneously send it to his buyer in the old-fashioned way.
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.
Even though penalties for issuing invoices outside Poland’s National e-Invoicing System (KSeF) have been deferred until 1 January 2027, the real headache may come sooner.