Katowice tax ruling impacts family foundations

The President of Katowice has issued an individual tax interpretation that could significantly affect family foundations in Poland. According to the ruling, a family foundation must pay the highest real estate tax rate for an entire residential building if it is used as a registered office, even if no one resides there permanently.

The foundation in this case purchased a residential building to serve as a registered address and a place for the management board to conduct business and receive correspondence. The foundation sought to apply the lower residential tax rate, or at least a split rate that would tax only the office space at the higher rate. However, the Katowice authorities rejected these proposals.

Citing a October 2024 resolution by seven judges of the Supreme Administrative Court, the ruling establishes that a residential building owned by a company may only benefit from lower tax rates for the specific parts of the property that are actually used to satisfy residential needs. The presence of a management board headquarters indicates the property is being used for business activities.