Advertising boards and the need to pay real estate tax

There are many interpretation problems in the field of real estate tax on billboards, so the tax authorities and the taxpayers themselves do not know how to proceed in such a situation. The main doubts concern the definition of a structure and the concept of "permanent connection to soil".

Statutory definitions - building

In accordance with the provisions of the Act on Local Taxes and Fees, 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
• 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.

On the other hand, the provisions of the Building Law Act contain a definition of a building object. It is:

• building with installations and technical devices,
• a building constituting a technical and utility whole and
• small architecture object.

This Act also defined the concept of a building as any construction object that is not a building or a small architecture object, such as: linear structures, airports, bridges, viaducts, flyovers or free-standing advertising devices permanently attached to the ground.

Advertising board as a building

Problems are caused by the issue of recognizing advertising boards as buildings, and thus the need to pay real estate tax in the amount of 2% of their value. Pursuant to the Act on Local Taxes and Fees, buildings or their parts related to running a business are, apart from buildings and structures, one of the objects of real estate tax.

The construction law defines structures as, inter alia, “Free-standing, permanently attached to the ground advertising equipment”. According to the above definition, advertising boards are taxable when they are permanently attached to the land. However, the question arises: what is meant by the phrase "permanently bound"?

Clarifications from the Ministry of Finance

The issue of "durability" was the subject of a parliamentary question. In response to it, the Ministry of Finance found in its explanations that if, in order to locate an advertising device, it is required to adjust its destination with the use of specialized equipment, then the device will be considered as permanently attached to the ground. So it will be subject to real estate tax.

If the advertising device can be moved to another place with the help of physical force, and the location does not require installation or adaptation of the substrate in any place (so that the device would not lose its functional value), then there is no reason to consider it permanently connected with ground.

On the other hand, the Supreme Administrative Court, in its judgment of 20 January 2012, file ref. IIFSK 1405/10 stated: “(...) contained in Art. 3 point 3 of the Construction Law Act, the definition of a building, which mentions, inter alia, as a structure advertising boards permanently attached to the ground, cannot be decisive for the result of the legal assessment. (...) advertising boards, regardless of the way in which they are bound to the ground, are classified as objects

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construction - buildings. If so, by "permanent attachment to land", in the context of Art. 3 point 3 of the Construction Law Act, it should be understood as such a connection of a given building with land of a technical and utility nature that takes into account, on the one hand, a specific type of advertising boards (due to the substrate to which they are attached), and on the other hand, it takes take into account the fact that advertising boards, as a spatial structure, must withstand the pressure of winds and other atmospheric factors. "

In the light of the Supreme Administrative Court's judgment, advertising devices do not have to be permanently attached to the land for an obligation to pay the tax to arise.

Real estate tax payer

Another important issue is determining who is obliged to pay the property tax on the billboard. The decisive factor in this case is the criterion of a permanent relationship between billboards and the ground. For this purpose, use the regulations contained in the Civil Code.

Important! Pursuant to Art. 48 of the Civil Code Subject to the exceptions provided for in the Act, the constituent parts of the land include, in particular, buildings and other devices permanently attached to the ground (...). On the other hand, Art. 47 regulates: § 1. A component part of a thing may not be a separate subject of property and other rights in rem. § 2. A component of a thing is everything that cannot be disconnected from it without damaging or substantially changing the whole, or without damaging or substantially changing the disconnected object. § 3. Items connected with a thing only for temporary use do not constitute its component parts.

Determining the taxpayer - who will pay the tax?

If the plate is not permanently attached to the land, then the entity obliged to pay the property tax will be the owner of the plate. Otherwise, i.e. when the sign is a part of the property (within the meaning of Article 48 of the Civil Code), its owner will be the owner of the land, i.e. he will have to pay the tax.