Tax on wind farms

In recent years, the interest in renewable energy sources has noticeably increased. Surely, while driving a car, everyone has observed many new wind farms. You can meet both single objects and entire farms. Wind turbine owners are required to pay real estate tax. However, it is not entirely clear in the eyes of many taxpayers the scope of the area on which the said tax on wind farms should be paid.Will it be correct to charge a tax on the entire surface of the power plant, or maybe a more correct solution is to pay tax only on some of its elements? We explain these issues below.

What is subject to property tax?

The subject of real estate taxation is indicated in art. 2 clause 1 of the Act on Local Taxes and Fees. According to its content, real estate or construction works are subject to taxation, such as:

• land,
• buildings or parts thereof,
• structures or parts thereof related to running a business.

According to the aforementioned act, a building is:

• a construction object within the meaning of the provisions of the construction law that is not a building or a small architecture object, and
• a construction device within the meaning of the provisions of the construction law related to the construction object, which ensures the possibility of using the object in accordance with its intended purpose (Article 1a (1) (2)).

The concept of a building in construction law

The definition of the building can be found in Art. 3 point 3 of the Construction Law. According to its wording, a building should be understood as any construction object that is not a building or a small architecture object, such as: linear structures, airports, bridges, viaducts, flyovers, tunnels, culverts, technical networks, free-standing antenna masts, free-standing permanently attached with ground, advertising facilities, earthworks, defensive (fortifications), protective, hydrotechnical structures, tanks, free-standing industrial installations or technical devices, sewage treatment plants, waste landfills, water treatment stations, retaining structures, overground and underground pedestrian crossings, land utilities , sports structures, cemeteries, monuments, as well as construction parts of technical devices (boilers, industrial furnaces, wind farms, nuclear power plants and other devices) and foundations for machines and devices, as technically separate parts of objects making up the usable whole.

A wind farm - is it a construction? Tax on wind farms

Right until 2016 - the windmill is not a building

Until 2016, the wind farm was not a construction.

However, without a doubt, apart from the foundations and the mast itself, it had many other components, such as, for example, a tower, rudder, rotor or even rotor blades. In addition, the definition provided in the above point clearly indicates that a building is also construction parts of technical devices, including wind farms.

It would seem logical that only the foundations and the mast should be considered as the construction part of the power plant.

The breakthrough in this matter turned out to be the judgment of the Provincial Administrative Court in Rzeszów of August 11, 2010, file reference number I SA / Rz 340/10, which clearly indicates that an appropriate distinction should be made:

“(...) The wind farm in question consists of elements set on the ground, i.e. foundations and mast, and elements >> fixed << to the mast, i.e. a rotor with blades and a gondola in which other control and safety devices are placed. (...) a wind power plant is neither a building nor a small architecture object, and therefore the decisive factor is whether it constitutes a structure or a part of it, or possibly a construction device. (...) the wind farm as a whole is a device and only building parts of these devices are a building. (...) since the legislator (...) defined a wind power plant as a technical device, then such a power plant cannot be considered a construction device referred to in Art. 1a point 2 in connection with Art. 2 section 1 point 3 u.p.o.l. as a subject of taxation. Therefore, if a structure - by the will of the legislator - does not include devices directly used to generate electricity (turbine, nacelle, other devices located in the nacelle), then it is justified to assume that they are not subject to real estate tax, while only parts are subject to this tax. construction, i.e. foundations and mast.”

Law from 2016 - the windmill is a building

From 2016, pursuant to Art. 2 of the act of 20 May 2016 on investments in wind farms (the so-called wind farm act) - a wind farm is a building.

Although there are contradictory opinions in legal practice as to whether property tax is due on the entire windmill (it is believed that the Windmill Act does not introduce changes to the taxation of power plants), the courts issue judgments in which, from 2017, property tax should be paid on the entire windmill.

I SA / Bd 866/16 - Judgment of the Provincial Administrative Court in Bydgoszcz

“(...) the content of the act of 20 May 2016 on investments in wind farms (Journal of Laws of 2016, item 961 as amended), hereinafter: "uiew", which significantly changed the concept of wind farms in the context of taxing them with real estate tax. A wind power plant, consisting of a foundation, tower and technical elements, should be understood as a structure from the date of entry into force of this Act. (...) in accordance with the construction law, for real estate taxation, the provision of art. 17 AD, in which the legislator directly indicated that from the date of entry into force of until December 31, 2016, real estate tax relating to a wind farm is determined and collected in accordance with the provisions in force before the effective date of the Act. The above clearly and without any scope for adopting a different interpretation of this provision indicates that the intention of the legislator was to change the current understanding of the concept of wind farms in the context of taxing them with real estate tax and including it from 1 January 2017, in addition to the foundation and tower also technical elements of wind farms.

The authority stated that the higher taxation results from changes in the construction law, to which the Act on Local Taxes and Fees refers. A construction object, within the meaning of the construction law, will be a wind farm structure, which will consist of both construction and technical parts.(...)”

Therefore, the property tax must be paid on the wind farm (on the entire structure, not on its parts, such as foundations, mast).

The tax on the wind farm as a whole is in force from January 1, 2017, for the previous periods the tax should be payable only on some of the wind farms (those that were structures according to the previous regulations).