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Unjustified prohibition on building septic tanks on plots of land covered by the zoning plan

Reasons cited for granting planning authority to the municipalities include the need to ensure consistency in spatial order and to provide the municipality with the possibility to effectively perform their own tasks as assigned by the Act on Municipal Self-Government. For example, when designating areas for housing development in their plans, municipalities take into account the need to provide roads, health care or education for future residents who will occupy the new land designated for development. This is one of the reasons why development restrictions must exist and the owner cannot always develop the property as he/she wishes.

The Act on spatial planning and development, however, requires the municipal council to balance both the public interest and the interest of the property owner.

This provision is indicated right at the beginning of the Act in Article 1. It lists a number of elements that are taken into account in spatial planning and development. These include:

– requirements of spatial order, including urban planning and architecture,

– architectural and landscape values,

– environmental protection requirements, including water management and agricultural and forestry land protection,

– ownership rights,

– public interest needs,

– the need to ensure appropriate quantity and quality of water for the purposes of supplying the population,

and it was indicated that it is necessary precisely to weigh public interest and private interests – without favouring any of those interests.

The legislator also distinguished elements that should be taken into account when locating new development in the plan, these are, in particular

– locating new residential development in a manner that allows residents to make maximum use of public mass transit as their primary means of transportation,

– providing spatial solutions, facilitating the movement of pedestrians and cyclists.

The provision was thus constructed in such a way as to give the municipal council the possibility to influence, among others, the increase or decrease in the number of residents. As it has already been pointed out, it is important for the municipality to provide infrastructure according to the population that resides there.

Often both commercial investors and small owners do not want to accept the designation of their property in the plan and feel hurt because they cannot dispose of their property in any way they want.

In the following articles I will analyze the jurisprudence of administrative courts concerning the limits of planning authority. I will show how differently the courts approach some issues in order to be almost completely unanimous in others. I will also explain when an investor has a chance to obtain a planning provision in line with his wishes, and when such chance is slim.

We will start with the Supreme Administrative Court ruling of 25 November 2020

(ref. II OSK 791/190).  The case concerned a complaint against a local law zoning which changed the existing zoning plan in such a way that for a part of the geodesic area specified in the local law, it was stated that in the absence of a sanitary sewer system, until such a system is built, sewage may be disposed of only to the existing septic tanks. After the complaint was dismissed by the Voivodship Administrative Court, the case was referred to the Supreme Administrative Court. The  SAC, in contrast to the Voivodship Administrative Court, stated that taking into account the justification of the local law, the plan should be interpreted in such a way that it prohibits the construction of septic tanks and “since no suitable facilities exist in this area and at the same time there is no possibility of building new facilities, the applicant was deprived of the possibility to discharge sewage. The applicant’s right to property, under which he has the right to construct the necessary sewage disposal facilities on his property, was thereby restricted.”

It was further pointed out that:

– ‘the municipal council violated the principles for drawing up the local plan by abusing its planning authority, resulting in a restriction of the applicant’s property right,

the council failed to indicate the circumstances justifying the imposition of a ban on the construction of new sealed septic tanks in the entire area belonging to the applicant in a situation where this area is deprived both of access to the collective sanitary sewage system and of access to the existing sealed septic tanks.

It was also pointed out that “the essence of the operation of the principle of balancing the opposing interests is based on the correct implementation of two elements of this principle: the balancing of interests and the result of the balancing. If the balancing of interests has not taken place or the rule of domination of any of the interests has been unjustifiably adopted – this principle is violated. Therefore, when interfering in the sphere of private interests of the owners, the municipal council should unconditionally follow the principle of proportionality understood as the prohibition of excessive, in relation to the protected values, interference in the sphere of rights and freedoms of individuals”.

The SAC judgment allows us to state that the municipal council, when determining the content of the plan when resolving the conflict of public and private interests, should each time analyze in detail the effect of the violation of each of these interests and justify its position. It should be concluded that in this case the prohibition of construction of new septic tanks was found to be unjustified as it infringed unjustifiably on private interest, moreover, the local law did not indicate justification of such decision and its advisability in terms of public interest.

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Remuneration for establishing a transmission easement and for non-contractual use of real estate vs. tax consequences

In most cases, the rules for a transmission companies’ use of land on which devices for the transmission of electricity, water and gas are located, are regulated through establishing transmission easements. According to Art. 305 (2) of the Civil Code, transmission easements are established for an appropriate fee.

Establishment of an easement involves the obligation of the owner to tolerate the existence of electricity, water or gas transmission facilities on his land, but also to receive a benefit in the form of one-off payment (usually) or periodic compensation. Should tax be paid on the remunaration received? Before October 4, 2014, the tax authorities took the position that the remuneration received by the taxpayer for establishing a transmission easement was taxable. This position was confirmed by issued general interpretations (interpretation of the Minister of Finance of July 10, 2013, DD3 / 033/101 / CRS / 13 / RWPD-48186 / RD-70022/1).

In 2014, an amendment to the Personal Income Tax Act entered into force, which determined that  income from remuneration received for the establishment of a transmission easement within the meaning of civil law became free from income tax. Therefore, at present, there should be no doubt, that in accordnace with the aforementioned amendedment, no tax is to be collected on the remuneration received for the establishment of the transmission easement.

When regulating the issue of transmission easement, the property owner and transmission company (in the absence of a consensus of the parties, this is done through the courts) often make mutual settlements with respect to the prior use of the property by the entrepreneur without legal title. On this basis, the owner is entitled to remuneration, for so-called non-contractual use of the property. Importantly, the remuneration due under Articles 224 § 2 and 225 of the Civil Code cannot be regarded as compensation for damage caused to the owner.  Therefore, renumeration is to be regarded exclusivley as payment for the use of owner’s property by the utility holder.  It should go without saying, but does not hurt to mention, that the full legal basis of the ownership for the property subject to the easement needs to be demonstrated prior the negotiation of the easement.

The amount received for non-contractual use of real property constitutes revenue from other sources, as referred to in Art. 10 sec. 1 point 9 in connection with with Art. 20 paragraph 1 on the Personal Income Tax Act, subject to taxation according to the tax scale referred to in Article 27 sec. 1 on the Personal Income Tax Act and should be disclosed in the tax return to be submitted to the competent tax office by 30 April of the fiscal year following the year in which the above-mentioned remuneration was received (e.g. the judgment of the Provincial Administrative Court in Łódź of 07-07-2016, case no. I SA / Łd 487/16; the judgment of the Provincial Administrative Court in Warsaw of 23-10-2014, case no. III SA / Wa 1666/14).

Therefore, revenue obtained as remuneration for non-contractual use of land does not benefit from the tax exemption enjoyed by the payment for the establishment of a transmission easement. The amount received as remuneration for the use of the real property must be subject to taxation according to the general rules, i.e.  the 17% or 32% scale.

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Is the obligation to pay the zoning fee inheritable?

According to Art. 60.7 of the Act on Public Finance of August 27, 2009 , public funds constituting non-tax budgetary receivables of a public law nature are included in the income collected by state and local government budgetary units on the basis of separate acts. The zoning fee is such a budgetary receivable.

Let us remind you what a zoning fee is. According to Art. 36.4 of the Act on  Planning and Spacial Development of 27 March 2003 , if in connection with the adoption of the local zoning plan or its amendment, the value of the real property increases and the owner or perpetual usufructuary sells the real property, the head of the commune, mayor or president of the city collects a one-off fee established in this plan, determined as a percentage of the increase in the value of the real property. This fee is the municipality’s own revenue. The  fee may not exceed 30% of the increase in the value of the subject property.

What then happens in the course of the proceedings on imposition of the zoning fee if the party to the proceedings dies?  This issue has in the past been quite a challenge for the authorities. However, it can be concluded that recently the position of administrative courts on this issue has become more uniform.

Therefore, below I indicate three judgments that consistently represent the latest jurisprudence position. Interestingly, this issue has appeared relatively few times  in the jurisprudence of administrative courts.

Thus: in the Judgment of the  Voivodship Administrative Court in Łódź of November 8, 2017 (file reference: II SA / Łd 689/17),  it was indicated (following the resolution of seven judges of the Supreme Administrative Court of December 10, 2009, file ref. II OPS 3/09), that: The complainant did, admittedly, indicate that he had acquired the real estate on the basis of an inheritance division agreement and an agreement of annulment regarding  joint ownership, and that he had acquired the plot in question when the current zoning plan was already in force. In his opinion, in such a situation, the imposition of the zoning fee was unjustified, because the purchase and sale of the plot took place when the same local zoning plan was in force – but as indicated above, the Voivodship l Administrative Court pointed out that the mere fact of acquiring real estate by inheritance does not exempt from the obligation to pay the fee. Only here the party purchased the property before the proceedings for calculation of the fee were initiated.

Unlike in the second case, which we are considering, where the death of the party took place in the course of the fee determination procedure. The judgment indicated that the zoning fee, which was not charged before the testator’s death (despite the fact that the proceedings were pending), cannot be charged (judgment of October 7, 2016 of the Voivodship  Administrative Court in Glwice, file ref. II SA / Gl 272/15).

The third case involves the situation when the zoning fee has already been calculated and the administrative decision conerning this issue becomes final. This is where the  Voivodship Administrative Court in Poznań comes to our aid, which in its judgment of March 14, 2013, file ref.  II SA / Po 60/13, unequivocally ruled that “only the zoning fee concretisedin the final administrative decision may be considered an equivalent to a tax liability, and thus only in the case  when such a decision is issued with respect to the seller of the real property and becomes final during the seller’s lifetime, that the provisions of the Tax Ordinance may apply accordingly to the obligation to pay zoning fee in a certain amount resulting from this decision”.

To sum up:

we calculate the planning fee when: the seller acquired the property by inheritance and then sold it within 5 years from the date of entry into force of the development plan, and also if the death of the party occured after the decision on the zoning fee became final and legally binding – then we charge the heirs with the fee.

However, we cannot charge the fee if the death of the party occurred in the course of the proceedings regarding the determination of the zoning fee but before its completion.