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Thursday 13 December 2018

Lack of clarification around the real estate taxation rules for wind power plants in Poland means continued uncertainty for investors.

Turbulent times for Polish wind farm sectorReal Estate Tax (RET) is payable on construction structures (or their parts) and is a significant cost factor that affects the profitability of wind farm investments in Poland. As a rule, the tax rate is 2%. However, complexities arise in the case of a wind farm as to whether RET applies to the whole wind farm or just part of it.

In the past, taxpayers and the tax authorities applied RET solely to the building parts of a wind farm, i.e. the foundation and tower. It did not apply to the wind turbine generator (WTG), which constituted around 60-70% of a wind farm’s investment value.

In 2017, on the basis of an unclear amendment to the Building Law Act, the tax authorities started to demand RET on the whole investment value (including WTG, which was agreed by Poland’s Voivodship Administrative Courts. It was planned that in September 2018 the Supreme Administrative Court would decide on the matter, but due to procedural issues it did not make a decision and said that no general resolution would be made for similar cases. Instead, only judgments in individual court cases would be made.

Moreover, unexpected further changes have been adopted over the course of 2018. As of January 2018, on the basis of a recent retrospective amendment of RET regulations, the ‘old’, more favourable rules became binding (taxation without consideration of WTG). Investors have already initiated refund proceedings aimed at the collection of unduly paid RET for the year 2018. Some tax authorities do not agree with the reduced tax burden as it favours investors. A challenge to these amendments in the Constitutional Tribunal may happen on the basis that they are potentially non-constitutional.

For more information, contact:

Sławomir Patejuk
Advicero Tax Nexia, Poland
T: +48 22 378 17 10
E: spatejuk@advicero.eu
W: www.advicero.eu

Lack of clarification around the real estate taxation rules for wind power plants in Poland means continued uncertainty for investors.
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