IPTI: A property tax update for various European Countries countries

The International Property Tax Institute [IPTI] offers a quick look around the world to see what is happening in respect of property tax in various countries. Here is an extract from IPTI’s president, Paul Sanderson:

“Time now for my usual quick look around the world to see what is happening in respect of property tax in various countries.

As I am currently in Ireland, perhaps that is a good place to start. The Irish government is to freeze the amount homeowners pay in local property tax (LPT) until 2019 and is to exempt homes affected by pyrite from the levy. In his Budget 2016 speech, the Minister for Finance said he would be making a proposal to Government to postpone the revaluation date for the property tax until 2019. The move comes as a report on reforms to the levy by former public servant Dr Don Thornhill was published. The study sets out a number of options for the levy, following concerns that rising property prices in Dublin over the past few years could lead to significant increases in the amount of tax paid by homeowners.

The rate of property tax paid by homeowners from July 2013 to 2016 was based on how houses were valued in May 2013. A revaluation was due to be introduced next month. The annual self-assessed tax is charged on the market value of all residential properties in the State and rises in bands, with a cap on the first band at €100,000 and rising by €50,000 thereafter. It is estimated that more than €1 billion will have been raised for authorities from the levy by the end of 2015. According to the report, compliance rates are high, with more than 96 per cent of homeowners having paid the property tax each year since its introduction. The Society of Chartered Surveyors Ireland said postponement of the revaluation until 2019 was “welcome and prudent”.

In France, the taxe foncière, French property tax (one of the two), has been hiked this year by as much as 100 times for some property owners. This comes as a law that changes how taxe foncière is calculated on building land comes into effect. Up 25% this year or €5/m2 and in 2017 by a further €10/m2. Owners of some large back gardens or paddocks have had a shock to receive taxe foncière bills this month that are as much as 100 times the normal amount. In one locality in the South of France it is reported that an owner who was paying €240 in property tax on unbuilt land last year has received a bill this year for €25,000! This is because the government is said to be trying to put pressure on people who own land considered suitable for building in some 618 communes where housing is in short supply.

Moving on to Italy, during its October meeting, the Italian Cabinet approved the draft 2016 Stability (Budget) Law, which includes proposals for property and corporate tax cuts. As previously announced by Italy’s Premier Matteo Renzi, the proposals include the elimination of local property and service taxes on primary residences in 2016. Also included are proposals for the repeal of the property tax and the regional tax on production for the agricultural sector. The property tax on factory fixtures and fittings would also be repealed. The proposals run contrary to an earlier recommendation from the European Commission that Italy should shift its heavy tax burdens on labor and capital onto property and consumption.

In the UK, British business groups are joining forces to issue an unprecedented warning to the Government to not use devolution plans as an excuse to abandon an overhaul of business rates. In March, the Government made a commitment to initiate a radical review of the outdated business rates system. However, the Chancellor of the Exchequer made a surprise announcement recently that local councils would be handed full control of business rates. A UK Treasury spokesman said that the government still aimed to report back on business rates by the end of the year on business rates, as planned. However, the lobby groups emphasised that, with two months left, the signs were not promising.”

Courtesy of IPTI – IPTI is a member of the EACCNY