ECONOMY

New property tax bill is tabled

After months of delays, the bill for the new Single Property Tax to apply from 2014 was finally tabled in Parliament on Thursday.

The draft law includes other clauses, such as a reduction of the property transaction tax from 10 to 3 percent, the extension of benefits for taking cars out of circulation, and technical amendments regarding income tax.

The bill provides for the creation of a single tax on properties plus a supplementary tax, but with an increase of the tax-free ceiling for individual taxpayers from 200,000 euros that the existing so-called FAP tax has today to 300,000 euros. The main tax will apply to all categories of properties, such as buildings inside or outside town planning, plots of land including farms etc. The bill abolishes the charge paid via electricity bills.

Compared with the existing tax system, taxpayers who only own houses or apartments will pay less in 2014 than this year, with the 12 tax rates ranging from 2 to 13 euros per square meter.

However, the new system creates plenty of questions in terms of distribution as the new tax brackets for homeowners appear to have little proportionality. For instance, the fourth bracket has a rate of 4.50 euros/sq.m., while the fifth has a rate of 6 euros/sq.m. That means that from the fourth to the fifth bracket there is a 33.3 percent increase. At the same time, the increase between the higher brackets of the eighth and the ninth is just 3.2 percent.

Unfinished buildings that have no electricity supply will enjoy a 60 percent discount, while structures such as greenhouses on farms will be totally exempted from the tax.

The supplementary tax will apply to the total value of a taxpayer’s homes, other buildings and plots of land, with the tax-free level at 300,000 euros and progressive tax rates – starting from 0.1 percent of the total value – for properties just over 300,000 euros, rising to 1 percent for properties of more than 1 million euros.