Advertising fees – a new local charge
Tax Alert 12/2015
02 October 2015
In line with the amendments to the Act on Local Taxes and Charges implemented in connection with strengthening landscape protection tools, a new local charge – the so-called advertising fee - has taken effect as from 11 September 2015 .
The said fee is levied on advertising panels and advertising equipment, such as billboards, banners, advertising stickers and other advertisements put up on fences.
The list of applicable taxpayers is analogous to the list of taxpayers paying the real property tax , and it includes owners/ perpetual usufructuaries of real properties on which specific advertising panels and equipment is located.
Advertising fees – who will collect them?
The foregoing fee will be levied by municipalities (urban or local communes) only in the regions concerning which the rules and conditions of locating elements of small architecture, advertising panels, advertising equipment and fences have been determined by way of a formal resolution. In particular, municipality authorities are allowed to lay down the rules in the scope of the permitted sizes, quality standards and the types of materials that can be used in advertising panels and advertising equipment.
At present the authorities of Polish municipalities are working on the wording of the relevant resolutions that will form the grounds for implementation of the advertising fee. It is highly probable that the duty to pay the fee will be in place in the majority of municipalities as from 2016.
What makes up the advertising fee?
The advertising fee is composed of a fixed element (not more than PLN 2.5 PLN per unit) and a variable element (not more than PLN 0.20 for each square meter of the surface used for exhibiting the advertisement per day). Hence, in practical terms, the annual advertising fee for a banner that is 15 m2 large may amount to approx. PLN 2000. The municipalities are allowed to establish the advertising fee up to the maximum threshold predetermined in the statute; they also determine the template declaration (and the deadlines for the declaration filing and fee payments).
Advertising fees – potential exemptions
The exemptions from paying advertising fees are defined broadly and rather imprecisely. For instance, the advertising equipment and billboards that are not visible from publicly available locations will not be liable to the fee.
It needs to be pointed out that - considering lack of any practice in this respect - not only establishing which entity is obliged to pay the advertising fee but also determining the amounts and dates of the payment may prove quite problematic.
This is so because even if the company placing the advertisement does not pay the advertising fee (for instance, in case the advertising panel or the advertising equipment is located on a plot of land belonging to a third party), it is fairly likely that this company will cover the attendant costs (as a rule, contracts provide that costs associated with taxes and charges are borne by the lessee).
Fines and sanctions
As with other taxes and charges for non-submission of declarations or for inappropriate establishment of the taxable basis, the taxpayer may be subject to penal fiscal sanctions.
In addition, the Act on Special Planning and Land Development also provides for certain penalties, namely an entity that places an advertising billboard or advertising equipment in contravention of the provisions of the resolution that is binding within the given municipality may be subject to a fine in the amount of up to forty times the standard advertising fee.
Apart from triggering certain financial implications, this new local charge will considerably increase the administrative burden on taxpayers. To mitigate it, we recommend introducing procedures that will allow the taxpayer to manage advertising fee settlements effectively.