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Slovenia to Introduce Real Estate Tax Next Year

Ljubljana, 15 July (STA) - Slovenia is expected to get its first proper real estate tax next year, as the Finance Ministry published on Thursday a draft bill to that effect which it says is designed to introduce comprehensive, fair and transparent taxation of real property.

The real estate tax will replace the currently used tax on the use of building land, property tax and fee for the maintenance of forest roads. The receipts will be municipalities' revenue, just like the tax on the use of building land has been.

The tax base is being set at 80% of the generalised market value of real estate based on a mass appraisal of real estate that the Surveying and Mapping Authority is close to completing.

Municipalities will be free to set the tax rate. The minimum has been set at 0.03% whereas the current proposal does not yet include a top rate.

The ministry says that the tax rate in the first year will be set so that taxation will not differ substantially compared to the current system.

However, since the tax is based on generalised value of real estate some will see their tax bills rise.

Municipalities will be able to apply different tax rates based on type of real estate (residential, commercial, industrial).

The tax will apply to all real estate except public good, cultural monuments, buildings used by diplomatic and international representations and buildings used for religious rituals.

All real estate owners will be notified of the appraised value of their real estate in September or October this year. Tax will be payable once a year.

The Institute for Macroeconomic Analysis and Development (IMAD) estimates that receipts from the current tax on the use of building land average EUR 150m a year and account for 8% of municipal revenue.

The tax is determined based on size of land, location, commercial potential and availability of amenities such as public transportation.

But the current taxation of real estate has been the subject of extensive criticism for its lack of transparency and inadequate fiscal impact.

The IMAD has argued that a modern real estate tax would improve the financial independence of municipalities and ultimately improve the utilisation of real estate and, by extension, improve the real estate market.

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