Stratos Paradias is making serious allegations regarding the new Local Government Code. As he argues, property owners face a threefold increase in their annual financial burden due to a new double tax—benefiting municipalities and now also the regions—essentially a new annual “Local Government ENFIA” that will apply alongside the state tax, with a total rate of up to 1.05% per year...
In detail:
The draft bill for the new "Local Government Code," which has been posted on the Ministry of the Interior’s consultation website for public comment until June 4, 2026.
Its provisions impose a threefold annual financial burden on property owners through a new double tax, benefiting municipalities and now also the regions—essentially a new annual “LOCAL GOVERNMENT ENFIA” that will apply alongside the state tax, with a total rate of up to 1.05% per year...
Along side these provisions, a 27-year mandatory "Rent Cap" on new private real estate leases, which will result in municipalities and regions—instead of profiting from it—being unable to find properties to meet the housing needs of their services!
The main changes under the new “Local Government Code” are as follows:
Article 389. MUNICIPAL CLEANING AND LIGHTING FEES.
The new reduced rate of 10% for municipal sanitation and lighting fees, as provided for in the draft, remains in effect for the following categories of properties:
- 1. Covered areas used without electrical wiring
- 2. Covered spaces with minimal electricity consumption for safety reasons
- 3. Properties with disconnected power supply, automatically reclassified under the reduced rate, without any obligation for owners to file a declaration.
This provision is positive, responding to a long-standing request by POMIDA. However, our view is that this category must explicitly include storage rooms and common areas in apartment buildings, which, although they are auxiliary spaces where no activity takes place and the electrical installation is rudimentary and electricity consumption is minimal, are nevertheless charged municipal fees as if they were primary-use spaces (residences).
Article 393. IMPOSITION OF THE MUNICIPAL “ENFIA” (Local Development Fee).
The rate is doubled compared to the current TAP rate (from 0.25–0.35% to 0.30–0.70%) instead of the tripling provided for in the initial draft, but…
Article 447. …AND REGIONAL “ENFIA” (Regional Development Fee).
…However, a decision by the Regional Council potentially provides for the imposition of a new Regional Development Fee within a range of 0.15–0.35%, which will be assessed and collected through the same procedure.
MULTIPLE CONSEQUENCES OF THE LOCAL GOVERNMENT “ENFIA”: Essentially, with the addition of the Regional Fee, we end up once again with a tripling (from 0.35 to 1.05 per mille) of the current burden from the TAP, that is, a new “LOCAL GOVERNMENT ENFIA, ” which is actually higher than the ETAK, the precursor to the current national ENFIA where the rate was 1%! The abolition of the Tax on Electrified Spaces (F.I.X.) does not offset the new burdens, because that tax was borne by tenants, while the new fee is borne entirely by owners.
Procedurally, the amounts of the two new fees—which are three times higher—will also be collected through energy bills, and when tenants pay them, they will be able to deduct them from the rent they pay to the owners. However, the payment of reduced monthly rent amounts, in accordance with the new law requiring their mandatory bank transfer, will be considered by the Independent Authority for Public Revenue (AADE) as an incomplete payment, resulting in landlords losing the 5% tax-exempt portion of their rent, while tenants will lose their rent refund and housing allowance. For this reason, these provisions must be deleted in their entirety.
Article 428 Imposition of a Reciprocal Expropriation Fee and
Article 430.
Imposition of Potential Fees for any service or project, by decisions of municipal and regional councils.
Article 510. STATUTE OF LIMITATIONS ON DEBTS
Following protests by POMIDA, the statute of limitations for duly assessed debts is limited to five years, while the statute of limitations for any undeclared municipal fees—which under the original draft would have been up to 65 years—is limited to ten years, and TAP, which under the draft would have been up to 33 years. The statute of limitations must generally be limited to five years, as ruled by the Council of State and already in effect in the public sector.
Article 555. PROPERTY LEASES: AND A 27-YEAR LOCAL GOVERNMENT “RENTAL PERIOD”!
3. The term of new real estate leases to Municipalities and Regions shall be up to twelve (12) years, with the right to unilaterally extend them for up to twelve (12) + three (3) additional years, regardless of whether the tender notice or the lease agreement provides for a shorter period. Following protests by POMIDA, existing leases of private properties were exempted, and other highly unfavorable provisions of the initial draft were removed.
However, the Municipality or the Region may unilaterally terminate the lease early, without penalty, within 30 days of notifying the lessor of the decision. From that date, the bill provides that any obligation to pay rent ceases, even if the property continues to be arbitrarily withheld and not returned to its owner!
In this way, the private property of the property’s lessor is tied up for 27 years (!), regardless of what the notice or lease agreement states, while the local government tenant has absolutely no obligation, since it can terminate the lease unilaterally at any time with one month’s notice.
And these provisions must be repealed, as they create a new, unacceptable “rental system” at the expense of property lessors, the establishment of which will also be detrimental to local government, which will no longer be able to find properties to lease, since no owner will agree to participate in a property lease tender so as not to effectively “lose” their property due to this unreasonable 27-year mandatory commitment!