Advertising boards and real estate tax

Many companies use a fairly popular form of marketing, which is advertising boards. You can meet them at every turn. They are used not only by corporations with a solid brand, but also by micro and small entrepreneurs who want to attract customers. And it is within the real estate taxation of billboards that the dispute between tax authorities and administrative courts takes place. The main problem in this case is the definition of a structure and the definition of "permanent bond to soil".

Building definition

The main source of law in this regard is the Act on local taxes and fees (u.p.o.l.) and the Construction Law Act. Pursuant to Art. 1a paragraph. 1 point 2 u.p.o.l. the structure 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 enables the use of the object in accordance with its intended purpose.

In turn, art. 2 clause 1 of this Act provides that real estate tax, apart from land and buildings or their parts, also applies to structures or their parts related to the conduct of business activity.

On the other hand, the Construction Law Act indicates that 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, permanent free-standing ground-related advertising facilities, earthworks, defense structures (fortifications), protective, hydrotechnical structures, tanks, free-standing industrial installations or technical devices, sewage treatment plants, waste landfills, water treatment plants, retaining structures, overground and underground pedestrian crossings, utilities networks grounds, sports facilities, 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.

The problem of "durability"

It follows from the above-mentioned regulations that the taxpayer will be obliged to pay real estate tax on advertising boards that are permanently attached to the land.

However, understanding the concept of durability turns out to be problematic. The Minister of Finance made an attempt to clarify in response to a parliamentary question of February 9, 2011, number 19987, in which he explains: this action is aimed at enabling the device to be used in accordance with its intended use and it is required by safety rules, this type of device has features that allow it to be considered permanently connected with the ground. It would therefore be subject to real estate tax. If, on the other hand, the advertising device could be moved to another place only with the use of physical force, and if the advertising device was placed in any place without the need to install or adjust the ground, it would not lose its functional value, there would be no reason to consider the device as permanently connected to the ground. Thus, it would not be subject to real estate tax. "

A more severe stance was adopted by the Supreme Administrative Court in its judgment of 20 January 2012, ref. No. IIFSK 1405/10, which states that: “contained in Art. 3 point 3 of the Construction Law Act, the definition of a building which mentions, inter alia, advertising boards permanently attached to the ground as a structure, may not exaggerate the result of the legal assessment. The introduction of the concept of a temporary building object by regulating this act means that advertising boards, regardless of how they are bound to the ground, are classified as building structures. If so, by >> permanent bonding with the land <<, in the context of Art. 3 point 3 of the Construction Law Act, it should be understood such a connection of a given building with land of a technical and utility nature, which 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 takes take into account the fact that advertising boards, as a spatial structure, must withstand the pressure of winds and other atmospheric factors. "

That judgment confirms that advertising devices do not have to be in fact permanently attached to the land for the obligation to pay real estate tax to arise.

Who will pay the property tax?

In a situation where the advertising board is a component part of the building pursuant to Art. 48 of the Civil Code as a device permanently attached to the land, then the owner of the land is the owner of the land and he is the taxpayer of the property tax both on the land itself and on the advertising board.

On the other hand, if the table is not permanently connected with the land, it should be assumed that the taxpayer will be the owner of the table, not the owner of the land.