Property Tax Exemptions for Non-Profits: The Critical “Actual Use” Requirement

Public benefit organizations are not automatically exempt from property taxes, as recent Supreme Administrative Court rulings confirm that tax relief depends strictly on the actual, exclusive use of property for statutory non-profit activities.

The Scope of Tax Exemptions

Public benefit activities are granted various tax preferences due to their social significance. However, this does not grant a blanket exemption from property tax. Organizations must meet specific criteria to qualify for relief under the Act of January 12, 1991, on Local Taxes and Charges.

Article 7, paragraph 1, item 14 of the act provides an exemption for properties or portions thereof occupied for non-profit statutory activities by public benefit organizations. Despite the apparent simplicity of the law, ambiguity often arises regarding the phrase “occupied for the purpose of.”

Defining “Occupied” Property

Consistent jurisprudence, including recent rulings from the Supreme Administrative Court (NSA), defines “occupied” as the actual and exclusive use of land, buildings, or premises for tasks that constitute public benefit activity. The mere ownership of property by a foundation is insufficient for an exemption; the entity must prove that the property is used exclusively for the specific goals defined in its statutes.

In cases such as the ruling from June 18, 2025 (file no. III FSK 1135/24), the court emphasized that any parallel use of the property for other functions disqualifies the owner from the tax exemption. The burden of proof lies on the organization to demonstrate concrete actions linked to their statutory objectives.

Commercial Use Voids Eligibility

Attempts to minimize tax burdens by renting or sharing property with public benefit organizations while simultaneously using the same premises for commercial activities have proven unsuccessful. The Supreme Administrative Court, in a ruling on November 21, 2025 (file no. III FSK 996/24), rejected a taxpayer’s appeal in a case involving a mixed-use property.

The court clarified that if there is even the slightest form of commercial exploitation of the property, the tax exemption cannot be applied. This principle remains a cornerstone for tax authorities when assessing whether an organization is truly entitled to property tax relief.