Amendments to the Local Taxes and Fees Act: New vehicle tax system. Fewer reporting obligations.
13 December 2018
As of January 1, 2019, amendments to the Local Taxes and Fees Act shall come into effect and these amendments shall refine the existing public relations by correcting inaccuracies and incompleteness of the current legal framework in order to ensure accurate and uniform application of the law.
1. Amendments concerning the real estate tax
• It is no longer required to submit a tax declaration upon acquisition of real estate or limited property rights.
The individuals and legal entities have so far been obliged to submit such declaration within two months after the occurrence of the relevant circumstance. The required information shall from now on be provided ex officio by the notary who has performed the formalities relating to the transaction.
The obligation to submit a tax declaration shall remain valid only for the owners of newly-constructed buildings and constructions, where as of January 1, 2020 this requirement shall apply only in terms of buildings and structures which are not subject to entering into exploitation (putting into operation) under the provisions of the Spatial Development Act (SDA).
With regard to buildings and structures which are subject to entering into exploitation in accordance with the SPA, as of January 1, 2020 the contracting authority of the building shall be obliged to provide the data necessary for calculating the tax to the municipal administration officials after the completion of the building in a rough structure (phase). In this case, submission of a tax declaration shall not be required.
• The regulation relating to tax liabilities in case of construction of new buildings and structures is further refined. Tax liability in this case shall arise as follows:
a. Within a 2-year period from the date of construction of the building in a rough structure which is established by municipal administration officials with a certificate under Art. 181, Para 2 of the SDA in the cases where the building has not been put into operation or a use permit has not been issued within the said period;
b. Within a 1-year period from the issuance of Act sample 15 (Statement of findings for ascertainment of the conformity of the construction with the design projects) – in the cases where the building has not been put into operation or a use permit has not been issued within the said period. The construction supervisor or the technical manager (for the fifth category constructions) shall be obliged to submit a copy of the issued Act sample 15 to the tax office with the respective municipality within one week from its issuance;
c. From the beginning of the month following the month in which the buildings have been completed – the fact of completion shall be established with a certificate for putting into operation or a use permit issued in accordance with the provisions of the SDA, as well as with a certificate under Art. 54a, Para 3 of the Cadastre and Property Registry Act certifying that information regarding the new building has been applied onto the cadastral map.
The circumstances under letters a) and b) shall be established with a statement of findings issued by the municipality officials. The taxable person may challenge the findings contained in the statement within 7 days from the date of the notification. In the cases under letter c) the authorities issuing the respective document shall submit ex officio a copy of the document to the municipal tax authorities within one week after it has been issued.
• The real estate tax for properties located within the territories of resorts have been significantly increased:
- For properties located in balneological, climatic mountain and climatic sea resorts of national importance – rates of 5 to 7 per thousand over the real estate tax valuation shall be applied;
- For the rest of the properties – the tax rates shall range from 4.5 to 6 per thousand over the real estate tax valuation.
In comparison, the generally applicable tax rate of 0.1 to 4.5 thousand has been so far applied to such properties. The increased rates shall not be applicable in the cases where a property has been declared as a primary place of residence of the taxable person, has been leased or registered as a place of residence within the meaning of the Tourism Act.
In order to prevent abuse, where established that more than one primary place of residence has been declared, the tax relief provided for by law shall not apply and the tax shall be payable in full for each of the properties covering the period they have simultaneously been declared as primary place of residence.
The legal entities continue to be obliged to submit information on the book value and on other circumstances relevant for calculating the tax in respect of a newly-constructed building or otherwise acquired property or limited right of use. Another obligation which remains valid is to submit a corrective statement in case of any change in circumstances, and for the purposes of avoiding any doubt, the law explicitly states that this obligation also applies to the reconstruction/redevelopment/alteration works and/or change of the intended use of an existing building or a separate building site. It is expressly stipulated that submission of a tax declaration shall not be required where a change in circumstances relating to the calculation of a tax has been certified by the municipality in cases of admissibility of construction works in compliance with The Energy Efficiency of Multi-Family Residential Buildings National Programme or in the cases where the municipality is a contracting authority in accordance with the Spatial Development Act. In these cases, the changes shall be reflected in the technical characteristics of the property by a municipal administration official.
In cases of acquiring a property by inheritance, the municipal administration may now ex officio open a batch for the heirs and charge tax in cases where the latter have not submitted a tax declaration. This is expected to end the tax avoidance practices by not submitting a tax declaration.
2. Amendments concerning the vehicle tax
The concept of determining the vehicle tax shall be been completely transformed with the legal developments coming into effect. As of January 1, 2019, the tax on cargo trucks with a technically permissible maximum weight not exceeding 3.5 tons shall be determined on the basis of the general rules applicable to all passenger cars, rather than on the basis of loading capacity.
At the same time, the so-called two-component taxation is introduced, according to which the tax shall be calculated by a formula including two components: property and ecological.
The property component, as has been the case so far, shall depend on the engine power of the vehicle and the year of its production.
The ecological component shall depend on the vehicle category – the so-called Euro 1 to Euro 6 categories, where for the most environmentally friendly cars (those falling within Euro 6 category), the ratio can be up to 0.40 (i.e. up to 60% reduction of the tax determined according to the property component). For Euro 1 vehicles, the ratio may be up to 1.40 (i.e. up to 40% increase of the tax according to the property component).
The tax on cargo trucks with a technically permissible maximum weight over 3.5 tons but not exceeding 12 tons shall be increased, and the tax shall be now determined for each initial 750 kg loading capacity and not for each initial ton, as has been the case so far.
In order to prevent abuse and submission of false declarations, the amendments to the act remove the tax relief for vehicles equipped with a catalytic converter.
The tax incentives for mopeds and motorcycles with an engine power of up to 74 kW incl., falling within Euro 3 ecological categories shall also be removed. Such vehicles shall benefit the tax relief only if they fall within the Euro 4 and higher ecological category, and the relief for Euro 4 shall be reduced to 20%, whereas for the higher categories it remains in the amount of 60%.
The same restriction is also envisaged for buses, cargo trucks with a technically permissible maximum weight over 3.5 tons, trailer and motor tugs, and the relief for Euro 4 shall be reduced to 20%, whereas for the higher categories it remains in the amount of 50%.
In relation to the amendments, it is envisaged that municipal councils shall determine the vehicle tax rates for 2019 until January 31, 2019. When no new amounts have been determined within the specified period, the tax for 2019 shall be calculated in accordance with the minimum tax rates and corrective multipliers established by law.
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