OECD recommends Poland link property tax to its value
The Organisation for Economic Co-operation and Development OECD is recommending Poland introduce a progressive property tax linked to its value, an OECD report on Poland said. The organisation also calls for the introduction of a tax on internal combustion vehicles and a reduction in the use of preferential VAT rates.
"Poland should move towards a system of value-based property taxation, used in most OECD countries, that reflects more accurately land value and would be more progressive and efficient. The current system is a poor proxy for taxpayers’ housing wealth and ability to pay, as it does not account for other property characteristics and its location, which is a key determinant of its value," the report said.
"Lifting the tax rate limits or setting only a country-wide minimum rate and allowing municipalities to go above it, would give municipalities larger revenue raising autonomy. Differentiating rates for secondary properties increases
progressivity of the taxation. Such taxation could be phased in gradually and with deferral mechanisms," it added.
In the OECD's view, a flat amount of tax relief or a cap on the tax for less wealthy households could mitigate the introduction of the new levy. On the other hand, allowing the tax to be paid in instalments or deferring it could help address liquidity issues.
"Such measures have been used for instance in Canada or Denmark. Switching to value-based taxation would necessitate a regular update of property values, which has been facilitated with the development of digital technologies," the report stated.
The OECD also calls for the introduction of a motor vehicle tax based on emissions.
"Poland does not apply any annual tax on vehicle ownership at the national
level, although its introduction for company cars has been scheduled for 2026, and should reflect the emissions content of vehicles," it added.
Another OECD demand is to limit the use of preferential VAT rates, or higher inheritance taxation.
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