No penalties for late submission of property tax returns in 2025

Admittedly, this is only to apply to property tax returns and will require taxpayers to submit a declaration to the tax authorities, but it is worth appreciating the opportunity provided by the latest draft amendment to the Local Taxes and Fees Act.

Why such an opportunity?

The circumstance is related to the new definitions of a building and a structure to be in force from the beginning of 2025. The final shape of the new regulations is not yet known. According to the announcement of the MF, the amendment to the Tax Act should be published in the Journal of Laws by the end of November this year. This means a significant risk that entrepreneurs who own a lot of real estate and construction facilities will not manage to classify their assets in a new way before 31 January 2025, i.e. the deadline by which, according to the current regulations, they are obliged to file a tax return.

What does it take to avoid paying interest?

If the proposed legislation is enacted, in order to avoid penalties (including interest on arrears) for late filing of the 2025 property tax return, taxpayers will have to:

1. file a written notice to the competent local authority by 31 January 2025 to exercise this right;
   2. without being summoned, pay the monthly tax instalments for January, February and March 2025 to the account of the relevant municipality in the amount of the average instalment of property tax due for 2024;
2. pay any tax arrears into the account of the relevant municipality by 31 March 2025.

What about any overpayment?

However, if it turns out that the tax instalments calculated on the basis of the return submitted by 31 March of the next year are lower than the payments made by the taxpayer, then the surplus as an overpayment should be returned to the taxpayer or may be credited towards the property tax instalments due for the following months.

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The proposed possibility to postpone the deadline for filing the return by 2 months will be a certain simplification especially for those property taxpayers, whose assets include a very large number of fixed assets. In the case of the largest entrepreneurs, this can be even tens of thousands of items in the accounting records, which will have to be separately assessed against the new definitions of buildings and structures. This will require not only a lot of time, but also the appropriate competence of the tax services.

If you are wondering how the property tax changes will affect your tax returns in 2025, please contact MDDP.