Regulation on the fee for the lawful use of land and the procedure for cadastral valuation of land in lawful use in incompatible with the Constitutional Court delivered
Today, on 10 December, the Constitutional Court delivered its judgement in case No. 2024-21-0103 and recognised the regulation on the fee for the lawful use of land and the procedure for cadastral valuation of such land as being incompatible with the Constitution. The Constitutional Court concluded: fair balance between the right of every landowner to receive such fee for the lawful use of land that fulfils the remunerative function and protection of the rights of building owners still has not been reached. Legal regulation that obviously places one participant of legal relationship in a worse situation compared to the other cannot ensure social peace and protection of public welfare.
The applicants in the case are 21 private persons who own land, on which buildings that are in the ownership of other persons are situation. The constitutionality of three such regulatory enactments that define the fee for the lawful use of land and the principles for calculating it, was contested in the case.
The Constitutional Court recognised that the legislator had taken measures aimed at eliminating deficiencies in the legal regulation referred to in the Constitutional Court’s judgement of 2 May 2023 in Case No. 2022-02-01, inter alia, updated the cadastral values of land. The legislator has introduced two cadastral values – universal and fiscal. The universal cadastral value is the updated cadastral value of a cadastral object, approximated to the market situation and it is not applied to tax and other public payments. Whereas the fiscal cadastral value, which has not been updated, is used to calculate taxes and other public payments. The universal cadastral value, compared to the fiscal cadastral value, may both increase and decrease, as well as remain constant.
The Constitutional Court found that there were such landowners, several applicants among them, for whom the fee for lawful use of land decreased because the universal cadastral value of land was lower that the fiscal cadastral value. Namely, since 1 January 2025, these persons receive lower remuneration than before. This situation is impacted also by the application of standard area and its correction coefficient in calculating the universal cadastral value of land with multiapartment houses on it.
If the fee for the lawful use of land does not cover the payment of immovable property tax for the respective land or is equal to it, or if, after paying this tax, the remuneration that is left at the owner’s disposal is disproportionately small then such a fee for the lawful use of land cannot be considered as being such that fulfils the remunerative function. Thus, in part of the cases fair balance between the right of every landowner to receive such fee for the lawful use of land that fulfils the remunerative function and protection of the rights of building owners still has not been reached. Such legal regulation cannot ensure social peace and protection of public welfare.
Likewise, the Constitutional Court concluded that for owners of land, the cadastral value of which had increased, the fee for the lawful use in many cases has been decreased also by the limit on its increase in the amount of 30 per cent compared to the payment of the previous year with respect to the owners of residential buildings. Also in adopting this provision, the legislator has not in all cases balanced the rights of the owners of residential buildings and the landowners’ rights. By the aforementioned provision, the legislator has ensured protection for the rights of the owners of residential buildings, on the basis of the assumption that they are more socially vulnerable than the landowners. However, the Constitutional Court held that such general assumption was unfounded. This provision equally applies also to legal persons who cannot be regarded as being a socially vulnerable group. Whereas other solutions can be found in situations where the owners of residential buildings may find it hard to pay the fee for the lawful use.
To give the legislator time for regulating the legal relationship in a way that would ensure that all landowners would receive such a fee for the lawful use of land that fulfils the remunerative function, at the same time respecting the right of building owners, the Constitutional Court recognised the contested provisions with respect to the legal relationship of the lawful use of land as being void since 1 January 2027. At the same time, the Constitutional Court ruled that the legislator had to adopt, by 1 June 2026, regulation that would ensure to landowners the right to commensurate remuneration in cases where their fundamental rights are violated without grounds, i.e., when the fee for the lawful use of land does not cover the payment of the immoveable property tax for the particular land, is equal to it, or if, after paying this tax, the remuneration that is left at the owner’s disposal is disproportionately small. Landowners are entitled to commensurate remuneration for unfounded violations of their fundamental rights from 1 January 2025 until the date when the new regulation on the lawful use of land enters into effect. Otherwise, these landowners will have the right to claim commensurate remuneration from the State in legal proceedings.
The Constitutional Court’s judgement is final and not subject to appeal; it has entered into effect at the moment of its pronouncement.