Local Tax Act
The most important change concerns the obligation of local government units to introduce property tax.
The “newly introduced” property tax will be paid by domestic and foreign legal and physical persons who are property owners on March 31 of the year for which the tax is determined. For newly constructed buildings, the effective date of the building permit is decisive, while for properties used without a building permit, the tax is determined from the start date of use. The obligation to pay personal income tax and/or other taxes based on the performance of activities, as well as the registration of property as non-commercial accommodation, does not affect the determination of the property’s status for property tax purposes, nor does it exempt from taxation.
Property tax is paid annually according to the Decision of the Tax Administration, in the amount of 0.60 to 8.00 EUR/m² of the property’s usable area. The deadline for payment is 15 days from the date of the Decision. The amount of tax is determined by the representative body of the local government unit by decision. If the representative body does not set the tax rate, the minimum amount of 0.60 EUR/m² applies. Changes affecting the determination of the tax obligation apply from the following calendar year.
The Local Tax Act also provides for exemptions from the property tax in the following cases:
- Properties being used for permanent residence.
- Properties rented based on a lease agreement for permanent residence, with permanent residence being defined as renting for a period longer than 10 months in the tax period.
- Public properties and properties intended for institutional accommodation of individuals.
- Properties listed in the business books of commercial companies as intended for sale, if less than six months have passed from the date of entry into the business books to March 31 of the year for which the tax is determined.
- Properties acquired in exchange for unpaid receivables, if less than six months have passed from the date of acquisition to March 31 of the year for which the tax is determined.
- Properties that, due to the declaration of natural disasters in a specific tax period, are unfit for residential purposes.
- Properties for which it can be determined based on all circumstances that their residential purpose is hindered. The burden of proof for the hindrance lies with the taxpayer.
- Properties owned by local government units located exclusively within the territory of that local government unit.
- Properties used by hosts for permanent residence, according to the regulations governing hospitality activities.
Please keep in mind the fact that legislation tends to change frequently. This article is therefore necessarily based on our understanding and correct interpretation of the law and practice at the time of issuing this article. This article will not be updated due to changes in legislation that occur after this article is issued.