PROPERTY TAXATION

Supplementary tax on way to being slashed

The annual levy imposed on owners of large properties is to be reduced or abolished in 2022

supplementary-tax-on-way-to-being-slashed

The Finance Ministry is considering the abolition of the supplementary property tax as of next year, relieving some 450,000 property owners from an additional burden.

The upcoming test by the ministry’s agencies on next year’s Single Property Tax (ENFIA), following the adjustment of the new zone rates across the country and the inclusion of 3,500 new areas in the system of taxable prices (known as objective values), will show whether the government can abolish the supplementary tax altogether at once or gradually within two years.

According to a top ministry official, the new inclusions will lead to a rise in the property tax that can be collected through ENFIA, offering some leeway for the reduction or abolition of the supplementary tax imposed on owners of property worth at least 250,000 euros.

What the ministry is waiting for is to establish the fiscal space generated from the expansion of the objective values system before intervening in the supplementary tax. Provisional estimates by ministry officials say the new areas in the system will add €300-400 million of tax, which will allow for some interventions.

The ministry is therefore facing three choices: The first provides for the full abolition of the supplementary tax for individual owners, who currently pay some €358 million per year. That would mean corporations would continue to pay the tax that amounts to €272.8 million for them.

The second scenario concerns a 50% reduction of the supplementary property tax for individual owners and corporations. The cost of such a measure is estimated at €300 million for 2022, and would be followed by the full abolition of the levy in 2023. The other choice is to maintain the supplementary tax only for very large ownerships, with the creation of a new Large Property Tax for ownerships of at least €500,000-€600,000. That would lead to the collection of €300 million per annum from individuals and corporations.

In any case, property tax takings will need to be no less than €2.1 billion per year.