In December 2017, the Constitutional Tribunal issued two important rulings concerning real estate tax.
The first judgement of the 13th of December was related to the tax on specific structures. For years now, tax authorities have been qualifying structures such as telecom containers, silos, treatment plants and even some sports stadiums, that fit the description of a building according to the Local Taxes and Charges Act, as non-building structures. Authorities and administrative courts have been ruling that the deciding factor is not fitting the legal definition of the building, but rather the function of a structure – for example having purpose of being filled with certain devices and technological equipment and not accommodating people. The direct result of that method of qualification was calculating the real estate act based on the initial value of the non-building structures and not floor space of buildings. In some cases that meant paying the tax in as much as 40 times higher amount.
The second judgement (12th of December 2017) applied to taxes on real estate owned jointly by an entrepreneur and non-entrepreneurs. The Constitutional Tribunal stated that neither a natural person (i.e. a spouse of an entrepreneur) nor even an entrepreneur who does not use the real estate for business purposes cannot bear the tax rate specific to business activity.
Both judgments embody the rule in dubio pro tributario (“in case of doubt, favour the taxpayer”). They are not only relevant to future tax liabilities, but also to taxes already paid. Our law firm has been helping its Clients for years in reclaiming overpaid taxes not only in relation to real estate tax, but also civil law transactions tax as well as income tax.
When it comes to aforementioned rulings, it is crucial to remember that the possibility to claim the refund of overpaid tax is limited to a very short time period. The deadlines are respectively on 29th and 22nd of January 2018. The time limit is a bit longer for the cases that were proceeded in administrative courts.