The EACCNY, in partnership with the International Property Tax Institute (IPTI), wants to keep members up to date with the latest developments in property taxes both in the USA and Europe.
IPTI has put together a selection of brief reports from articles contained in IPTI Xtracts which can be found on its website (www.ipti.org).
As far as Europe is concerned, this month’s report includes articles on Greece, Ireland, Italy, Turkey and the United Kingdom. There is a separate IPTI report on the United States, with a focus on New York.
Greece: New objective values to be issued in June, with many ENFIA hikes
Greece’s 7 million property owners will find out next month what the new taxable rates in their area will be, ahead of receiving their Single Property Tax (ENFIA) pay notices in the last few days of August.
The recently formed committee tasked with processing the zone rates recommended by property surveyors has not yet completed its work, which has led to further delays in the announcement of the new so-called “objective values” (property rates used for tax purposes) – and possibly to the dismay of the country’s creditors who are to send their chief representatives to Athens next week.
Kathimerini understands that, following the adjustment, the losers will be the owners of properties with current zone rates ranging from 750 to 1,500 euros per square meter. In those areas ENFIA will rise between 3.5 and 21.6 percent, and in a handful of cases the increase will amount to 62 percent from last year. In any case the new objective values will change the map of the property market – which will not benefit from the changes – as well as the taxation landscape, as the rate adjustments closer to market prices will generate a domino effect of changes in some 20 taxes and levies imposed on property.
Sources say that the Finance Ministry committee is comparing the recommendations of surveyors with data from the Bank of Greece and the Property Transfer Register to establish whether there are any major differences. As committee members admit, they “have given up” on some 1,500-2,000 zones and have forwarded the data to the ministry’s second-level committee for it to make the definitive decisions.
The same sources add that before the new objective values are published, there will be some virtual ENFIA calculations to ensure the amount demanded reaches the target of 3.2 billion euros – the amount property owners are asked to pay every year, with an average of 2.65 billion eventually being collected.
Data show that several areas in the center of Athens will have higher ENFIA dues this year. In districts such as Metaxourgeio, Mets, Koukaki, Petralona, Pangrati and Kerameikos, the zone rates will grow significantly, according to the recommendations submitted to the ministry. A smaller increase (from 3.5 percent) is expected in less fashionable areas, such as Drapetsona in Piraeus.
Ireland: Council defends action on unpaid rates in Cork city
City officials in Cork have defended the timing of the issuing of more than 70 summonses for non-payment of commercial rates just weeks after the St Patrick’s St car ban controversy.
The city council insisted that the issuing of summonses is part of its normal collection procedure, that the quantity issued this month is in line with previous months, and that they are only issued after other avenues have been exhausted. And it said the summonses issued recently are in relation to historic arrears, not 2018 rates.
Several traders, who asked not to be named, expressed concerns last week about the issuing of a raft of summonses so soon after traders led opposition against the council’s failed attempt to introduce a time-regulated bus lane on St Patrick’s St — the afternoon car ban.
One trader said City Hall “didn’t wait long” after their opposition forced the suspension of the new traffic management measure to “hit traders” with these summonses.
Fianna Fáil councillor Tim Brosnan said he would be seeking an explanation from officials about why so many had been issued, and he said he was prepared to stand with traders in court if he felt they were being treated unfairly.
However, the council robustly defended its policy over non-payment of commercial rates, and released figures which show that 460 such summonses were issued last year. “This year to date, Cork City Council has issued 213. 75 summons were issued this month. In contrast, in September last year, 356 summons were issued,” it said in a statement.
A summons is only issued if, after exploring a number of avenues, the business owner is still not paying their arrears, it said. And before a summons is sent, the rate payer is given a six-day notice by registered post, then a pre-summons letter, before eventually a summons is posted, it added.
The council said rates bills and regular reminders are standard practice throughout the year.
Traders or business owners liable for commercial rates are sent a rates bill each year, normally in February or March, setting out details of the charge, along with any outstanding arrears. The annual bill is payable in two instalments: when the bill is received and July 1.
A payment reminder is sent to ratepayers in April. A second reminder is sent in June, and the second six-monthly payment reminder is posted in July. Further reminders may be issued throughout the year.
The council also pointed out that up to 1,500 rate- payers have availed of the council’s new rates incentive scheme so far this year.
The scheme makes a grant available to all compliant ratepayers when certain criteria are met.
The scheme is designed to support small and medium enterprises who represent more than half of all ratepayers, by reducing the overall amount of rates payable.
Figures released earlier this year showed that Cork City Council is owed almost €20m in unpaid rates.
A further €5.4m in commercial rates has been deemed irrecoverable.
The city council’s finance department said collection rates increased to 76% last year, but there are concerns that delays with the National Rates Valuation Office in valuing new developments is costing the city money in terms of lost rates revenue. Councillors have reported delays of up to 18 months.
Italy: Property Taxes in Italy.
After the purchase, homeowners are subject to taxes on the ownership of the property in Italy, namely IUC (“Imposta Municipale Unica”). The IUC is a new Municipal Tax introduced by the Law n.147/2013. The IUC is composed by the IMU, TASI and TARI. The owner of real estate has to pay IMU, with the exception for main houses (“abitazione principale”); the TASI is the service charged to cover the costs of indivisible services and the TARI the tax on waste needed to finance the costs of the waste collection and disposal service.
IMU: Municipality taxation (“Imposta Municipale Unica”).
Who has to pay IMU? Owners of buildings, land and building sites in the municipal territory are required to pay the IMU. If a real right of usufruct, use or habitation is established on the aforementioned properties, only the holder of the said real right is obliged to pay.
Methods and terms of payment. Usually, you should pay the I.M.U. as follows: – First 50% the IMU tax by 16 June; – Second 50% the IMU tax by 16 December. You can pay the IMU with the F24 model, using the tax codes approved by the “Agenzia delle Entrate” (Italian Fiscal Agency). The payment’s rates of the IMU are those established by Resolution of the Municipal Authority (“Consiglio Comunale”) territorially competent.
TASI: Tribute for indivisible services (“Tassa sui Servizi Indivisibili”).
From January 1, 2016, according to the Law n. 208/2015, the main house (“abitazione principale”) is exempt from the TASI taxation. The imposition requirement of TASI, according to the Law n. 147/2013, and to the Law Decree 16/2014 is the possession or detention, for any reason, of buildings (including the main house), any building areas, such as defined for the IMU, except for the agricultural land. The TASI rate is calculated by applying to the property value the rate deliberated annually by the Municipality (“Comune”). The tax base of the TASI is the same as the IMU, therefore follows the rules of the Law Decree n. 201/2011 and following modifications. Based on the definition of art. 43 of the TUIR (“Testo Unico delle Imposte sui Redditi”), the buildings subject to TASI are all the properties owned as instrumental goods related to the economic activity exercised by VAT subjects.
Methods and terms of payment. Usually, you should pay the T.A.S.I. as follows: – First 50% the TASI tax by 16 June; – Second 50% the TASI tax by 16 December. You can pay the TASI with the F24 model, using the tax codes approved by the “Agenzia delle Entrate” (Italian Fiscal Agency). The payment’s rates of the TASI are those established by Resolution of the Municipal Authority (“Consiglio Comunale”) territorially competent.
TARI: Waste taxation (“Tassa sui Rifiuti”).
The Stability Law of 2014 (“Legge di Stabilità”) introduced the TARI. All subjects who occupy or hold, in any capacity even “de facto”, properties and uncovered areas, for any use, capable of producing urban and similar waste, in the territory of each Municipality have to pay the taxation on waste. In the case of a duration’s use within six months in the same calendar year, the tax is due only by the owner of the properties or areas as property, usufruct, use of dwelling house (“uso abitazione”) and right of superficies (“diritto di superficie”).
Methods and terms of payment. Usually, you should pay the T.A.R.I. as follows: – First payment tranche (or whole payment), by 16 July; – Second payment tranche by 16 August; – Third payment tranche by 16 September; – Forth payment tranche by 16 October. You can pay the TARI with the F24 model, using the tax codes approved by the “Agenzia delle Entrate” (Italian Fiscal Agency).
TARI payment reduction cases. The application of TARI has a limited extent both in the fixed and variable quota, if you make a specific application within the established terms, to the domestic users who are in the following conditions: 1) 30% reduction: if carried out by a single occupant, of over seventy years, resident in the Municipality, provided that the ISEE income is less than 20,000 euros (yearly), and it is subject to a special declaration; 2) 30% reduction: if carried out by persons residing or staying more than six months a year abroad, or if conducted by persons registered in the registry of Italians residing abroad (A.I.R.E.).
Discount for Landlords. The Law n. 431 of 9 December 1998 introduced the rental agreement with an agreed rent. Homeowners who rent out their homes with an “agreed rental” contract (“contratto di locazione a canone concordato”) will receive a 75% discount on the rates upon which the IMU and TASI taxation are calculated. This contract has a minimum duration of 3 + 2 years (or 3 + 3 years) of renewal for residential properties, or a minimum duration from 6 months to 3 years for rentals to university students and from 1 month to 18 months for brief contracts.
Agricultural land. There is a differentiation between agricultural land (“terreno agricolo”) and building area (“area edificabile”), in fact, the agricultural land benefits from an exemption from IMU and TASI. From 1 January 2016, there is an exemption for the IMU on agricultural land with particular characteristics of location and destination. Moreover, the uncultivated agricultural land is exempt from IMU payment, but this exemption is only available if the land’s owner is a direct farmer and professional agricultural entrepreneur or if the land is located in mountain and hill towns.
Turkey: Turkish gov’t cuts property taxes ahead of snap election
The government has slashed property taxes ahead of the snap June 24 elections, with a new legal package also including a higher income tax exemption for female workers whose children go to a day care center and changes to the special consumption tax for a group of alcoholic beverages.
According to a cabinet decision released over the weekend of May 5-6, the value-added tax (VAT) for properties has been decreased from 18 percent to 8 percent until the end of October.
Title deed fees were also slashed from 4 percent to 3 percent according to the cabinet decision, which was later elaborated by the Finance Ministry.
The income tax exemption for women workers with children going to day care centers was also increased, in what the ministry said was part of an attempt to support women’s employment.
The tax exemption has been raised to 50 percent of the gross monthly minimum wage for each child, up from 15 percent.
“We have thus increased the income tax exemption from 304 Turkish Liras [$71.3] to 1,015 liras [$238] on a monthly basis. We aim to support women’s employment in this way,” read the Finance Ministry statement.
United Kingdom: Councils trying to charge charity shops full business rates
Local authorities are trying to charge charity shops full business rates if they are registered to a trading subsidiary, an expert has said.
Charity shops receive mandatory 80 per cent business rates relief and can be offered the remaining 20 per cent relief at their local authority’s discretion.
In recent years, fewer charity shops have been awarded the extra 20 per cent as local authorities’ finances have been squeezed and umbrella body the Charity Retail Association estimates that only one in seven now receives the full relief.
But, speaking at the Annual Tax Conference on Tuesday, CRA chief executive Robin Osterley said some local authorities had started challenging his members’ right to the mandatory 80 per cent rate relief if the shop is registered through a trading subsidiary.
Many charity shops are registered under charities’ trading subsidiaries in order to gain other tax benefits. Osterley said while his members had so far successfully argued their case, if mandatory rate relief were to stop being offered, about half the charity shops in the country would close.
He said: “It is completely crazy that the ownership structure of a charity shop should in some way mitigate against them getting rate relief just because they happen to own a tax efficient system called a trading subsidiary.”
Osterley said he was also concerned that the Charity Commission might make it harder for charities to run trading subsidiaries in its current consultation on connected companies.
He said if this were to happen, “many of our shops will have to revert to charity ownership, which will cause some issues down the other end in terms of taxation and VAT”.
Osterley said one of the country’s largest charity shop chains had employed a full time member of staff to negotiate the discretionary 20 per cent business rates relief with different local authorities across the country. He said this was evidence that the discretionary relief system was inconsistent and anti-democratic as a lot of smaller charity shop chains could not afford to employ such a person to negotiate.
Osterley said: “It would be much more sensible to have 100 per cent rate relief across the board. It would be much easier to administer. It would be more logical. It would be much fairer for the charities. It would be more transparent. Everyone would understand what is going on.”
Compliments of IPTI, a member of the EACCNY