Tax Highlights for Real Estate – June 2023

Constitutional Court verdict on inclusion of properties in the municipal register of monuments

On 11 May 2023, the Constitutional Court issued a judgment in a case with the file number P 12/18, in which it recognized Article 22 item 5 point 3 of the Act of 23 July 2003 on the protection and care of historical monuments (the “Monuments Act”), to the extent that it restricts the ownership of properties by allowing the inclusion of a property as an immovable monument in the municipal register of monuments without providing the owner with a guarantee of legal protection against such restriction, as inconsistent with Article 64 item 1 and 2 in conjunction with Article 31 item 3 of the Constitution of the Republic of Poland. The verdict follows the filing of a legal question by the Supreme Administrative Court. Article 22item 5 point 3 of the Monuments Act has been controversial for several years, as pointed out by, among others, the Ombudsman.

The aforementioned provision of the Monuments Act, which is the subject of the Constitutional Court’s decision, concerns the inclusion in the municipal records of other immovable monuments designated by the commune mayor (mayor, city president) in consultation with the provincial conservator of monuments. Pursuant to Article 22 item 5 point 3 of the Monuments Act, as in effect on the day the legal question was asked, the commune’s executive body was not even required to notify the property owner of its intention to include the monument in the communal register of monuments. The provisions of the Monuments Act were amended in 2019 (already after the legal question under discussion was brought before the Constitutional Court), and due to the amendment, it became mandatory to notify the property owner of the intention to include the property in the municipal register of monuments. Still, property owners, learning that a property is to be included in the register, do not have the opportunity to take a position in administrative proceedings or to challenge the actions taken by the administrative body in consultation with the conservator.

Implementation of the verdict will require legislative work to develop regulations that take into account both the protection of all categories of monuments included in the municipal register of monuments and the rights of owners and keepers of historic buildings and areas.

At the moment, the justification of the judgment, which will be of fundamental importance for determining its effects and taking appropriate legislative action, has not yet been drawn up. The Ministry of Culture and National Heritage indicates that various options for amending the legislation are being analyzed.

Entry into force of “Lex Grain” (pl: “Lex Zboże”) – amendment of the Construction Law and other acts

On 3 June 2023, the Act of 9 May 2023, amending the Act on the Management of Agricultural Property of the State Treasury, the Act – Construction Law and the Act on Railway Transport came into force (hereinafter referred to as the “Act”, “Lex Grain”). The Act intends to act as a response to the destabilization of the agricultural market caused by the intensified transportation of Ukrainian grain and other agricultural products across the Polish border. The main purpose of the amendment is to facilitate and speed up the investment and construction process on farms and reduce the cost of their implementation by simplifying paperwork.

One of the investments that, as of 3 June this year, do not require a building permit, but only a notification to an architectural and construction administration body, are single-storey outbuildings and sheds of simple construction, related to agricultural production, with a construction area of up to 300 m2, with a construction span of no more than 7 m and a height of no more than 7 m, the area of influence of which is entirely within the plot or plots on which they are designed. Outbuildings meeting the same conditions, but with an area of up to 150 m2 and a construction span of no more than 6 m, were in turn added to the catalogue of investments exempt from a building permit and notification.

The change raises a number of interpretative questions. The notion of agricultural production is not defined in Polish law (instead, the notion of agricultural activity is defined), so its use in the amendment may allow a wide interpretation of what may be included in the scope of agricultural production. There are also doubts about meeting the requirement of the agricultural function of a building. Newspaper articles for the definition refer to the decree of the Minister of Infrastructure on the technical conditions to be met by buildings and their location, dated 12 April 2002, which defines an agricultural building as a building intended for “non-professional performance of workshop work and storage of materials, tools, equipment and agricultural crops (…).” However, the Supreme Administrative Court, in its judgment of 29 August 2022, emphasizes that “in a normative act lower in rank than a statute without statutory authorization, definitions that establish the meaning of statutory terms are not to be formulated” (II OSK 2679/19), hence such references do not seem correct.

The regulation is accused of containing loopholes related mainly to the above-described interpretative doubts. The law does not introduce criteria for deciding whether a building is related to agricultural production or not, as well as how to meet the criterion of the agricultural function of the building, hence how to carry out such an assessment is not clear. Concern can also be expressed about an overly optimistic approach to the new regulations and seeing them as a way to carry out investments of a residential nature in reality, which, however, may bring upon intervention by the building supervisory authority, which may even end in an order to demolish the building.