A structure in a Complex Fixed Asset to be Taxed According to its Market Value

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On October 12, the Supreme Administrative Court issued a final resolution on determining the tax base for real estate tax on buildings, the value of which was included in the so-called overall fixed assets.

It deals with complex fixed assets when they cover more than one building object. Settlement of this type of fixed assets for PoN is particularly problematic because the initial value of this fixed asset (which is, in fact, the tax base) includes, apart from the value of the structure, also the values of other objects that should not be in the tax base.

According to the already established law, in the case of a fixed asset covering several objects (e.g. buildings and small architecture objects that are not subject to taxation), the basis for PoN taxation is the market value of the structure. The situation is less clear when it comes to indirect costs improperly capitalized to the initial value of the overall fixed asset.

Today’s series of judgments of the Supreme Administrative Court concerned precisely the situation when the taxpayer improperly included in the initial value of a fixed asset (including buildings for PoN purposes) indirect costs of a real estate investment. According to the authorities and the Provincial Administrative Court in Rzeszów: “since the value of the structure was included in the initial value of the overall fixed asset, there can be no doubt that the taxpayer made discount write-offs on the initial value of the disputed structure.” Consequently, the tax base should be the value of a comprehensive fixed asset.

The Supreme Administrative Court had a different opinion, which indicated that in the situation when indirect investment costs were unduly obtained to a complex fixed asset, expenses not obtained in the initial value of the fixed asset should be excluded from the tax base. On the other hand, the Act on Local Taxes and Fees does not provide for the reconstruction of the value of buildings through accounting operations modifying the initial value of fixed assets, therefore, in such a situation, Art. 4 sec. 5 ordering the determination of the tax base of PoN, taking into account the market value of the building.


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