ECONOMY

Universal property tax net in the works

Taxpayers whose properties are in areas with official valuations of over 2,000 euros per square meter will pay higher taxes in 2014, but those in less expensive areas will have their burden lightened, according to the latest rates approved by the troika.

Nevertheless, it is possible that all rates will be revised upward if the country’s fiscal figures fall short of targets.

The Finance Ministry’s planned single property tax will be calculated on the basis of 33 zone rates which will be scaled from 2 euros/sq.m. for properties in areas with valuations up to 500 euros/sq.m. to 23.10 euros/sq.m. in areas where valuations exceed 8,500 euros/sq.m.

The final amount to be paid will result from a multiplication of the respective valuation rate by the area of the property by its age coefficient.

The total to be paid by property owners in 2014 has been set at 4.15 billion euros. Even in areas with valuations below 2,000 euros/sq.m. owners will have to pay more if their assets include undeveloped land or farm plots, as these are being taxed for the first time.

The respective land rate is seen ranging between 10 and 600 euros per hectare.

There will be no threshold for exemption from the tax but the long-term unemployed and those earning incomes below the poverty line will not be liable to pay.

The changes will be included in a draft bill to be prepared by the beginning of September and which will be subject to negotiation with the troika.

Besides the single property tax that will integrate all existing dues – such as the emergency property tax collected via electricity bills and the Real Estate Tax – which will come into force next year, the bill will also provide for the abolition of the property transfer tax. Changes in existing provisions regarding inheritance taxes and parental transfers cannot be ruled out.

The taxation base is being extended to commercial, industrial and farm properties, which will shoulder an estimated 25-30 percent of the total burden.

As a large number of properties built in the past have not been declared to the inland revenue department, the Finance Ministry plans to use the records of the Public Power Corporation to identify their owners. Sanctions for nonpayment will include confiscations.

The new tax is considered transitional and is expected to be revised in three years’ time.