With more than a week left until the 15th of December, i.e. the date till which the immovable property tax must be declared and paid for the year 2015, the State Tax Inspectorate has at last provided the clarification concerning the procedure for declaration and payment of the immovable property tax applicable this year.
Aspects regarding imposing taxes on immovable property till the date of the ruling of the Constitutional Court
Pursuant to the Law on Immovable Property Tax in force, the natural persons shall be obliged to pay the tax for the structures (premises) belonging to them by the right of ownership and acquired by them and intended for purposes of dwelling, gardens, garages, homesteads, greenhouses, farms, subsidiary farms, research, religion, and recreation, fish-farming structures as well as engineering structures if the total value of such property is higher than EUR 220k. For example, if a person owns the immovable property intended for such purposes, the value of which amounts to EUR 250k, the person must declare and pay the immovable property tax upon the amount of EUR 30k.
Nevertheless, for the persons who are considered family members (according to the afore-mentioned law, the family members are deemed to include the spouses, their children (adopted children) under 18 years old living together with them and the persons raising children or adopted children under 18 years old alone), the immovable property belonging to them by the right of ownership or acquired by them shall be subject to tax together with the property of other family members taking into account the total value of the property. For example, if the natural person owns immovable property, the value of which amounts to EUR 20k, and other family members own property, the value of which amounts to EUR 100k, they all together must declare and pay the immovable property tax upon the amount of EUR 80k.
No tax reliefs for family members
Nevertheless, on 22 September 2015 the Constitutional Court has made a finding that the provision of the Law on Immovable Property Tax setting forth that all common immovable property of family members shall be subject to tax with the same applicable property value exempt from tax as the one applicable to the property of one natural person what is contrary to the principles of equal treatment established in the Constitution and the provisions ensuring the State protection and care of family, maternity, paternity and childhood.
Form the point of view of the Constitutional Court, the person who is deemed to be a family member is subject to less favourable legal regulation than other natural persons: when determining the amount of the immovable property tax imposed on the person who is deemed to be a family member, not only the value of the property owned or acquired by him/her, but also the value of the immovable property owned by his/her family members is included in calculation. The property of a natural person and the property of all family members are subject to the same value of immovable property exempt from tax (currently, EUR 220k).
From the point of view of the Constitutional Court, this creates preconditions for imposing the immovable property tax on the immovable property of family members which compared with the property owned by other natural persons is lower.
Declaration and payment of the immovable property tax
Notwithstanding the fact that the ruling of the Constitutional Court was proclaimed only on 22 September 2015, the provision which is in conflict with the Constitution cannot be applicable during the tax period of the year 2015. Therefore, the immovable property tax for the whole tax period of 2015 must be calculated applying the individual value exempt from tax amounting to EUR 220k to each natural person. The individual value is also applicable to the spouses to whom the property belongs by the right of joint ownership. This implies that each spouse must file a return and individually pay the immovable property tax. For example, if the spouses own property by the right of joint ownership and the tax value of the property amounts to EUR 250k, the spouses are not obliged to pay the immovable property tax, since the share of property belonging to each of them does not exceed EUR 220k (EUR 250k/2 = EUR 125k).
What should be done if the immovable property tax has already been paid?
If the immovable property tax for the tax period of 2015 has already been paid, but, according to the ruling of the Constitutional Court and the clarification of the State Tax Inspectorate, such duty has not arisen, this does not mean that the tax has been lost. The overpayment of the immovable property tax for the year 2015 will be repaid after filing the respective application to the State Tax Inspectorate.