‹#› DATE | PRESENTER Screen Shot 2016-02-03 at 10.58.13 AM.png LILP.png Transfer Taxes and Municipal User Fees/Charges ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-6.png Transfer Taxes and Municipal User Fees/Charges q19/5/2016 | Michal Radvan | Faculty of Law, Masaryk University ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Property Transfer Taxes •VAT (NETH, SPA – rules to avoid double taxation) •Stamp duties •Inheritance tax •Gift tax •Income taxes •Property-value increasement taxes • •PROPERTY TRANSFER TAXES • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Advantages •Property is immovable - fixed in location •It is impossible to hide the property •There is always a value of the property •Property is registered –Transfers are public and registered –Taxpayers are easily identifiable •Is the property transfer registered before or after the payment? •Easy to administer, low administration cost ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Disadvantages •Second tax (income tax, annual property tax, VAT) •Unfair tax: the decision of Czech Constitutional Court argued that this is a politicum •Benefits for taxpayer??? – Registration and protection of rights •Other legal acts not to tax property transfers •Undervaluation of property •Deformed market • •Movable property transfer tax –Easy to avoid taxation –What is to be taxed? –What is the value? – • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Types of property transfer taxes in EU •Transfer tax: AUS, CRO, GER, FIN, GRE, HUN, NETH, POL, PORT, SLO •Registration tax: BEL, FRA, ITA, LUX •Acquisition tax: BUL, CZE •Capital Tax: CYP (capital gains), SPA (capital transfers) •Stamp duty: GB (land tax), IRL, SWE •Tax on sale: DEN •Duty: LAT (for consolidation of ownership), MAL (property transfers) •No transfer taxation: EST, LIT, ROM, SVK • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Taxpayer •Buyer: BEL, BUL, CRO, FIN, FRA, GRE, IRL, LAT, LUX, MALT, NETH, POL, PORT, SPA, SWE, GB •Seller: DEN, CYP, CZE, SLO •Both: AUT, GER, ITA •Contract?: BUL, CZE, GER •Surety?: BUL (in case of contract buyer), CZE (byuer) ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Object of taxation •Transfer / Acquisition of the property •Transfer of the title to property •Sale by pubic auction ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Tax base •Contract price: AUS, BEL, DEN, GB, GER, IRL, LAT, MAL, SLO, SPA, SWE •Price vs. Market value: FIN, FRA, GRE, NETH •Price vs. Taxable value: PORT •Assessed value: BUL •Market value: CRO, ITA, LUX, POL •Re-evaluation of the cadastral income: ITA for houses purchased by private persons •Net profit: disposal proceeds less the greater of the cost or market value as at 1st Jan. 1980 as adjusted for inflation: CYP •Costs are often deductible from the tax base • •Set by: –Central authority –BEL(central and regional authority) • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Tax Rate •PORT: 0-8 % progressive, depend on type of the property and location •BUL: 0,1-3 % •IRL: 1-2 %, GB 1-15 % progressive •SWE: 1,5 % for natural persons, 4,25 % for legal persons •POL, SLO: 2 % •LAT: 2-6 % depends on type of the property, discounts for relatives •GRE, ITA: 3 % •MAL: 3-5 % degressive •AUT, GER: 3,5 % (2 % for relatives in AUS; decision of lands in GER) •FRA: 3,8 – 4,5 depends on departments + 1,2 % additional local tax •CZE, FIN: 4 % • • •CRO: 5 % •BEL: 5-12,5 % depends on region •LUC, NETH: 6 % (2% for dwellings in NETH) •SPA: 6-7 % depends on location •CYP: 20 % •DEN: taxed by income taxes • •Set by: –Central authority –BEL, SPA, PORT (central and regional authority) –GER – regional authority –BUL – local authority –FRA – central, regional and local authority • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Correction components •For relatives •Public institutions, charities, public benefit associations, churches, Red Cross, etc. •Protection of environment •Low value, especially used as permanent residence •In the act, sometimes depend on local or regional authorities • •Set by: –Central authority –BEL, SPA (central and regional authority) –FRA, PORT (central, regional and local authority) – ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Tax administrator Beneficiary •State tax offices •Region: FRA, GER •Local authority: BUL, SPA •Professional intermediaries like notaries: BEL •Land register: LAT •Central authority - generally •Regional authority – GER, SPA •Local authority – BUL, FRA, SLO, POL, PORT •Shared – BEL, ITA (central and regional), AUS, CRO, GRE (central and local) • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Municipal Fees and Charges: Do They Compete with the Property Tax? •Agricultural lands and buildings will be taxed in different (old) way •Higher administrative costs mean higher tax??? •Historical consequences (restitution, status quo in real estate market, rent regulation) •Possibilities to appeal against the tax base •Competence of municipalities (6300 municipalities) • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Local Tax vs. Local Charge •Too many different definitions •Amount of money defined by law as a revenue of local budgets, self government unit has right to impose this tax or anyhow influence the revenue setting the tax base, tax rate, or any of correction components •No matter if the taxpayer receives any compensation •No matter if it is paid regularly or irregularly •No matter who is the tax administrator •Includes taxes sensu stricto and charges ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Local Taxes Sensu Largo •PIT (shared or surcharge) •CIT (shared) •VAT (shared) •Property taxes incl. transfer taxes •Motor vehicle taxes •Local excise and sales taxes •User charges (water supply and sewerage, elektricity, gas. etc.) •Business registration and other registration taxes • •Tourist taxes •Poll taxes •Betterment fees incl. building permits, planning permissions etc. •Local wage taxes •Animal taxes (dogs, cows, etc.) •Etc. • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Limitations of charges in act •YES – limited self government authonomy •NO – full economic authonomy of local self governemnt •Voluntary or compulsory? •How: municipal by-law • •8 charges in the Czech Republic (dogs, waste, 2x tourism, public places using, entrance, entry permit, evaluation of building land) • • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Who is the taxpayer What is the tax base •In the act or by the municipality? •Possible correction components? •In the act or by the municipality? •Possible correction components? • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png What is the tax rate Administration •In the act or by the municipality? •Maximum rate? •Minimum rate? •Possible correction components? • •State or local self government? •What are the costs? –Mostly high costs compared to the revenue • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-02.png Solutions •Choose „the best“ charges •Remember other functions of the tax (repressive, stimulation) •Replace local taxes administered by municipality for centrally administered taxes, if there is any possible surcharge –PIT, CIT, VAT, Excises –Property taxes •For the Czech Republic: –Immovable property tax •Coefficients, especially local coefficient for higher revenue •Administered by state tax office •Abolish taxation of waste –Adopt tax on nuclear facilities –Adopt advertisement tax –Adopt just one tourist tax –Adopt general infrastructure tax –„Regional“ tax on motor vehicles • ‹#› DATE | PRESENTER LINCOLN-PPT-JPGS-7.png 113 BRATTLE STREET CAMBRIDGE, MA 02138 @LANDPOLICY LINCOLNINST.EDU DATE | PRESENTER | TITLE Thank you qMichal Radvan, Assoc. Prof. qFaculty of Law, Masaryk University qmichal.radvan@law.muni.cz