The government is preparing to raise property taxes to benefit municipalities and regions through a bill from the Ministry of the Interior, giving a new boost to rising rents.
Essentially, what is happening is that alargeportion of the ENFIA tax, which was reduced by the central government, is being reimposed on the market in the form of the Local Development Fee and the Regional Development Fee. However, this time the money will go to local government coffers instead of the Ministry of Finance, as is the case with ENFIA.
Property owners will have to dig deep into their pockets. According to rough estimates, for a property valued at 200,000 euros, the annual burden will increase from approximately 60 euros today to 90 to 200 euros under the new fees, representing an increase of 30 to 140 euros per year.
Owners and investors are speaking of a“backdoor”increase in property taxes and a new burden that will be passed on to tenants, driving up rents.
The Ministry of the Interior’s bill titled “Public Electronic Consultation on the Ministry of the Interior’s Draft Law Entitled:‘Local Government Code’”was opened for public consultation until June 4.
And bureaucratic problems
In the market, the new fees are referred to as the“Local Government ENFIA.” Article 393 of the draft law refers to the Local Development Fee Rate.
Specifically, the local development fee rate is determined by a decision of the municipal council and ranges from zero point three percent (0.30‰) to zero point seven percent (0.70‰) and may vary by municipal district. Its range is doubled compared to the current TAP range (from 0.25–0.35‰ to 0.30–0.70‰).
Subsequently, under Article 447, a new Regional Development Fee (T.P.A.) may be imposed. The RDF rates range from zero point fifteen per thousand (0.15‰) to zero point thirty-five per thousand (0.35‰) and may vary by Regional Unit. Revenues from the T.P.A. are allocated exclusively to finance projects under the jurisdiction of the region.
Commenting on the new articles, Stratos Paradias, president of POMIDA, highlights the multiple consequences of the “Local Government ENFIA.”
“Essentially, with the addition of the Regional Fee, we end up once again with a tripling of the current burden from the TAP, that is, a new ‘LOCAL GOVERNMENT ENFIA,’ which is even higher than the ETAK, the precursor to the current state 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," he emphasizes.
The increases also create difficulties in terms of bureaucracy.
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, it will be possible to deduct them from the rent they pay to landlords.
“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.
“That is why these provisions must be repealed in their entirety,” concludes Mr. Paradias.