The ban on continuing depreciation of residential buildings and premises is inconsistent with the Constitution. Warsaw, 19 August 2026
Unfortunately, the case law concerning the prohibition on the depreciation of residential buildings and premises is not uniform. The prevailing line of case law is unfavourable to taxpayers. However, one of this year’s judgments of the Supreme Administrative Court (NSA) takes a different view, offering hope that this trend may be reversed and that taxpayers’ legitimate interests will be taken into account. The NSA derived its taxpayer-friendly position directly from the Constitution.
The Supreme Administrative Court recalled that the view that ordinary courts are not authorised to examine the compatibility of statutes with the Constitution, and consequently to determine whether they are compatible or incompatible with it, is clearly contrary to Article 8(2) of the Constitution. That provision states that the provisions of the Constitution shall apply directly unless the Constitution provides otherwise.
In practice, what is known as decentralised constitutional review takes place in the context of a specific factual situation and a specific case.
The legislature cited the need to eliminate inequalities in taxation as the reason for introducing the prohibition on the depreciation of residential premises. The Supreme Administrative Court questioned both the amendment itself and the reasons for it set out in the explanatory memorandum to the draft legislation.
The legislature’s presentation of the matter would imply that the inequalities requiring elimination had been created by the legislature itself, despite the fact that it had acted within the powers conferred on it by Article 217 of the Constitution. Subsequently, after some time, the same legislature realised that it had made a mistake.
The Supreme Administrative Court recalled that in Poland it is the legislature alone that determines who pays taxes, in what amount and under what conditions. Taxpayers therefore pay taxes in the amounts “imposed” on them by the legislature. Accordingly, taxpayers are not the “cause” of inequalities in taxation. Furthermore, inequalities in taxation cannot justify the introduction of new, imprecise and unconstitutional provisions. This means that the legislature is not entitled to disregard or breach the rules governing the enactment of laws consistent with the Constitution and the principles of proper legislation. The legislature is bound by those rules because it, too, is subject to the Constitution. If the legislature has enacted laws that have created “inequalities” and wishes to correct its mistakes, it should do so in a manner that leaves no room for doubt.
According to the Supreme Administrative Court, the absence of transitional provisions, the disregard of the taxpayer’s right to continue depreciation under the existing rules, and the undermining of the taxpayer’s trust in the state and the law enacted by it meant that the legislature had carried out a superficial and careless “repair”.
The fact that the legislature is subject to the Constitution also entails an obligation to give proper effect to Article 84. Under that provision, everyone is obliged to bear public burdens and charges, including taxes, as prescribed by statute.
It follows that the Constitution does not require everyone to pay the highest possible amount of tax, but rather the tax arising under tax legislation.
Even if there were a potential conflict between an individual’s legal certainty and other constitutional values, that conflict would have to be clearly identified and the risk properly justified. According to the Supreme Administrative Court, no such conflict exists in this case. The taxpayer is therefore required to apply the amended provision, but it must be applied in a manner consistent with the Constitution. What is problematic is the legislature’s infringement of the “principle of legal certainty for the individual” in a manner contrary to the principles of proper legislation and the provisions of the Constitution. Administrative courts, when deciding specific cases, cannot allow taxpayers to bear the consequences of the legislature’s mistakes.
The Supreme Administrative Court emphasised that Article 2 of the Constitution embodies three constitutional principles: the principle of a democratic state, the principle of the rule of law and the principle of social justice. These principles are not functionally interdependent. They are also the source of other constitutional principles.
Referring to the case law of the Constitutional Tribunal, the Supreme Administrative Court explained that the principle of a democratic state governed by the rule of law requires laws to be enacted and applied in such a way that they do not become a trap for citizens. Individuals must be able to arrange their affairs in the confidence that they will not be exposed to legal consequences that they could not have foreseen when making decisions and taking action, and in the belief that actions taken in accordance with the law in force will continue to be recognised by the legal system in the future. The legal certainty of the individual therefore makes it possible to predict the actions of public authorities and to plan one’s own actions accordingly.
The principle of the protection of acquired rights protects both public-law and private-law rights. This principle is not absolute, as acquired rights may be restricted or abolished where the values underlying them conflict with other constitutional values which, in the circumstances of a particular case, should be afforded priority.
In determining whether a restriction of acquired rights is permissible, consideration should be given to whether:
- the restrictions are based on other constitutional norms, principles or values;
- the relevant constitutional norm, principle or value cannot be realised without infringing acquired rights;
- the constitutional values which the legislature seeks to realise by restricting acquired rights may, in the particular circumstances, be given priority over the values underlying the principle of the protection of acquired rights; and
- the legislature has taken the necessary measures to provide individuals with adequate conditions in which to adapt to the new legislation.
The principle of the protection of legitimate expectations in the state and the law also gives rise to the principle of the protection of pending interests. The principle of lex retro non agit also has its source in Article 2 of the Constitution. Derogations from this principle are possible only where all the principles, values and rules of the Constitution of the Republic of Poland are respected. A derogation from the lex retro non agit principle is permissible, in particular, where it is necessary to realise a constitutional value considered more important than the value protected by the prohibition on retroactivity.
Depreciation is, after all, a process that extends over time. Through rules governing depreciation methods, depreciation rates and the manner in which depreciation is calculated, the legislature determines the duration of that process, which in every case exceeds one year. Furthermore, depreciation entails a particular set of taxpayer rights which should also be considered in the context of the common good. The benefits arising from this institution of tax law extend not only to the taxpayer making depreciation deductions under the applicable tax legislation, but also to other entities participating in legal and commercial transactions.
Accordingly, where the legislature deprives a taxpayer of the ability to continue depreciation, it should take into account not only the taxpayer’s legal and economic position but also, to the greatest extent possible, the position of other entities that indirectly benefit from the rights enjoyed by that taxpayer.
The use of decentralised constitutional review serves to prevent judgments from being issued on the basis of statutory provisions that are incompatible with the Constitution and could lead to an unjust outcome, thereby protecting the rights of parties to court proceedings. A court’s ability to refuse to apply a legal norm that is manifestly incompatible with the Constitution reflects not only the constitutionalisation of law and the effective protection of individual rights and freedoms, but also respect for the principle of the direct application of the Constitution.
This means that, when interpreting legislation in conformity with the Constitution, courts do not repeal particular legal provisions or substitute themselves for the legislature in the exercise of its powers. Rather, they assess whether provisions of lower-ranking legal acts infringe rights granted by the Constitution in the circumstances of the specific case before the court.
Bernard Łukomski
Attorney-at-law
Tax Advisor