Which changes are about to happen on 2014 regarding the property taxes

Although the draft law on the taxation of properties’ transfer remains under discussion, the Ministry of Finance has confirmed that the legislation will include a provision for the reduction of properties’ transfer tax from January 2014. According to the Ministry, this action will give a boost to the purchase of properties and allow, gradually, the reduction of the difference between the commercial and the asset value of a property. The surplus value tax will then be a standard percentage of 15 % on the difference between the sale and acquire value, whilst the bigger the time between the two purchases the lower the tax will be. Although, from the 01.01.2014 the tax will be levied not only on properties that change owner for a second time after 01.01.2013, but on all the purchases. Anyway, most of the properties bought the last 5 – 10 years have currently negative surplus value, thus if sold they will not be burdened with surplus value tax. Regarding the asset values on which the Single Tax will be counted, the Ministry of Finance claims that the new pattern will bring not only reductions, but also increases.

Below are all the details about taxes - duties on the transfer and ownership of property:

Unchanged will remain the percentages of VAT for newly built buildings and  valuable consideration (23 %), the Property Transfer City Tax (3% on the Property Transfer Tax), the Exchange – Unification of plots Tax (4 – 5 %), the Property Distribution Tax (2 – 2,5 %), the Property Usucaption Tax (8 – 10 %), the Additional Contract Transfer Tax (4,5 – 7,5 ‰), as well as the Duty in Favor of the Law Fund (7,75 ‰). A significant reduction will take place in the Property Transfer Tax, which will be reduced from 8 – 10 % to 3 – 4 %.

The annual Property Tax will vary from 2 ‰ to 2 % for natural persons, whilst it will be standard 6 ‰ for legal persons, but the tax – free amount of 200.000 € will remain. The Temporary Special Property Tax is a percentage of 2,55 – 17 €/ sq.m. and, finally, the Annual Property Duty for buildings and parcels will be 0,25 – 0,35 ‰.