Railway infrastructure exempted from real property tax until 2022

Agata Asenhajmer and Jakub Wajs​

28 April 2022

An amendment to the Local Taxes and Fees Act effective since 1 January 2022 dispels taxpayers' doubts as to the applicability of the exemption of land developed with railway buildings and structures from real property tax. According to the amendment, the exemption is available only to entities operating on the railway market.

Since 1 January 2022, the exemption has only covered the parts of land, buildings and structures which are used for the performance of tasks of an infrastructure manager or for the provision of services by an operator of a service facility.

Amendment to the Local Taxes and Fees Act of 1 January 2017.

An amendment to the Local Taxes and Fees Act of 1 January 2017 has extended the exemption under Article 7(1)(1). By deleting the provision that only the part of the land actually developed with railway infrastructure is exempt, taxpayers have been allowed to enjoy the exemption in respect of the entire plot of land on which the railway infrastructure is situated – regardless of whether the taxpayer carries out railway-related operations on the entire area of the plot of land or only on its part.

Taxpayer-friendly court judgments

In its ruling of 18 January 2022 (file no. I SA/Rz 730/21), the Provincial Administrative Court (PAC) confirmed that pursuant to Article 7(1)(1) of the Local Taxes and Fees Act, the entire plot of land is subject to exemption, regardless of whether railway infrastructure occupies the whole or a part of it.

As a consequence of deleting from Article 7(1)(1) the wording that only the part of the land occupied by the railway infrastructure components is exempt from taxation, the railway infrastructure should be understood as the entire plot of land, regardless of how it is classified in the register. Therefore, the court ruled that the exemption in question also applied to private infrastructure.

Furthermore, the judgment stipulated that the court did not take into account the amendment introduced on 1 January 2022, as the court assessed the case based on the laws in force on the day of issuing the advance tax ruling.

A similar view was presented in other decisions of administrative courts.

In its judgment of 31 January 2019 (file no. II FSK 3032/18) the Supreme Administrative Court (SAC) held that the exemption applies to the entire plot of land on which railway buildings and structures made available to railway carriers are located, and not only to the parts on which railway structures are actually situated.

In the judgment of the PAC of 27 October 2021 (file no. I SA/Wr 62/21), the court agreed with the taxpayer and overruled the appealed advance tax ruling in the part referring to the question about the scope of the exemption of plots of land developed with railway infrastructure components.

In the contested ruling the tax authority held that Article 7(1)(1) should also be interpreted by referring to the purpose of that provision. The authority interpreting the provision was of the opinion that only the part of the plot developed with the railway infrastructure should be exempt and that the remaining part of the plot, used for other economic activities, should not be covered by the exemption.

The taxpayer appealed against that ruling and the PAC shared his position in its judgment.

Impact of the amendment of 1 January 2022 on the application of the exemption

The amendment to Article 7(1)(1) of the Local Taxes and Fees Act limits the exemption. The provision in its new wording restricts the real property tax exemption compared to the period between 1 January 2017 and 31 December 2021. The lawmakers have limited the applicability of the exemption by adding a wording that land, buildings and structures may be covered by the exemption only insofar as they are used for the performance of railway activities.

Given the view presented by courts, railway infrastructure that:

• is made available to railway carriers or
• is used for the carriage of passengers, or
• forms railways with a track gauge greater than 1435 mm,

should be exempt from taxation between 2017 and 2021 in relation to the entire plot of land on which it is situated, even if the railway infrastructure is situated only on a part of it. The taxpayer could also enjoy the exemption in respect of the part of the land used for non-railway business activity and on which private infrastructure was located.

If there is railway infrastructure on your land and you have doubts as to the rules of taxing it, you are welcome to contact Rödl & Partner experts.