Property tax in Europe

Within Europe, there are varying systems of property tax assessment and collection. Property tax systems prevalent in the western European nations differ from those in the central and eastern European countries. Most of the Eastern as well as Central European nations are
just developing a property tax assessment, and management systems.

Such taxes are essential source of revenue for local bodies, which undertake several works for common good, such as organizing free medical help, building roads, ensuring water supply, arranging for drainage and waste collection, etc. The official valuation of property often forms an important part. A percentage of such official valuation of property is collected as property tax.

This is the commonly understood property tax or the main property tax. In many countries such as Spain and France, this amount ranges between 0.5 and 1 percent of the official valuation of property but it may be higher or lower than these percentages in some regions. This type of property tax is often collected annually.

Periodically, the official valuation of property is revised upwards. Accordingly, the property tax too keeps on increasing.  In addition to this property tax, there are other property related taxes such as those collected for drainage, and waste collection. These are comparatively lower and may be paid every quarter or every half year. Property tax in Europe may at times be based on the rent that the property can fetch.

This rental value may be determined from the records. It is also discounted as per inflation rate.  In France, property taxes are differentiated between those that are to be paid by the property owner, and those that any person occupying the property has to pay. If the owner occupies the property, then he or she has to incur both types of taxes. The property taxes payable by the owner have to be remitted on or before the first day of January of every year. Such taxes, or part of such taxes, can also be transferred to the seller. This is necessary at the time of sale, as the property owner would be interested in paying only the taxes proportionate to the period for which such property is held.
But, any conveyance document should specify how much the person selling the property has to pay, and how much property tax is payable by the new owner. As far as the occupier’s share of property taxes is concerned, they cannot be transferred. These have to be paid by the occupier.  But there are exemptions here. If the building is too old for anybody to occupy, then there are no occupier property taxes. Likewise, there are exemptions for occupiers who are over 60 years of age. Countries like France also collect property taxes on open land.  Therefore, property tax is payable in respect of any lot on which there is no building. The rate of property tax on open area surrounding the building is different from the rate that is applicable for any building forming part of any property. However, no property taxes are collected from owners of specified type of agricultural lands. Likewise, people who purchase new properties do not have to pay any property taxes in respect of such property for two years.

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