Last week, members of the Levica party submitted to the National Parliament a bill on the Tax on Empty and Large Real Estate, which would bring progressive taxation of empty, larger and more expensive real estate. The Chamber of Real Estate (Zbornica za poslovanje z nepremičninami) is not in favor of the proposal, as in their opinion it cannot bring improvements, and the tax revenue would be negligible anyway.
According to the proposal, the tax base would be the value of the property after the mass valuation of real estate, which would be reduced by an amount corresponding to the value of 120 square meters of usable living space, but only if the owner or his immediate family members live there permanently. Owners of apartments with a usable area of less than 120 square meters, intended for their residence, would not pay tax. In the case of passing the tax on tenants, the owners are expected to be fined from 2,000 to 20,000 euros.
In the bill, tax rates are different. For buildings, which also include apartments, they are expected to range from 0.1 to 1.5%. For apartments intended for rent, they are expected to increase by 50%, and for apartments that are neither rented out nor used by the owner, by 150%. Tax rates for leisure and recreation facilities are expected to range from 0.2 to 4.5%, and for business premises from 0.15 to 3.3%. For business premises not used by the owner or rented out for business purposes, tax rates would be increased by 50%.
However, the following should be exempt from taxation:
- agricultural farm buildings,
- business premises used by the owner to carry out activities,
- residential buildings of agricultural taxpayers who are themselves or their family members pension and disability insured on the basis of agricultural income,
- buildings declared a cultural or historical monument and
- buildings that may not be used for objective reasons.
Opinion of the Chamber of Real Estate (Zbornica za poslovanje z nepremičninami)
Levica, which submitted the bill, estimates that 175,000 flats are empty in Slovenia, despite the lack of 30,000 public rental flats. In addition, according to real estate agents, 30% of all real estate purchases in Slovenia are related to real estate investments. This is allegedly due to inadequate housing policy and incorrect real estate taxation. It is important to note that property taxes in Slovenia collect only 1.8% of all tax revenues, meanwhile in other OECD countries than number is three times higher.
The director of the Chamber of Real Estate, Boštjan Udovič, says that the new law cannot solve the problems mentioned by Levica. According to him, the purpose of the proposal is more political marketing than the serious purpose of regulating real estate taxation, as the profession did not participate in the drafting of the law. In addition, inequality in Slovenia is not such as to justify such high differences in the level of taxation. The tax revenue would be small even if the law was passed, as there are very few owners with a larger number of flats, and the planned progressive taxation would lead to a dispersion of ownership, as larger owners would transfer property to family members. Nevertheless, the Chamber agrees that the current taxation of real estate in Slovenia is too low, which has been also pointed out by the OECD.