Property tax is a tax on the ownership of land and buildings, it is levied by municipalities and cities, it is therefore one of the municipal taxes. A distinction exists between property class A and property class B. The property tax A (agrarian) is levied on land of agriculture and the land tax B (structural) for buildings.
Calculation of property tax is determined by the unit value. The rental value register contributes to the formation of the partial basis (basis for calculating the tax) on a built property, the property tax on undeveloped land and housing tax.
In general, the tax payer is the owner. However if the building is encumbered with usufruct, leased or the subject of a temporary occupation permit in the public domain, then the property tax is established on behalf of the usufructuary, leaseholder or the holder of the authorization.The establishment of the assessment rate is effected by a decision of the council.
The property tax rate is usually expressed as a percentage or a permille, that is the amount of tax per thousand currency units of property value (millage rate or mill levy). A property that comes with an appraised value of EUR 50,000 situated in an area with a mill rate of 20 mills, translates to a property tax bill of EUR 1,000 annually.
The property tax levied by the municipalities is not as significant as the business tax, as the revenue is usually much lower. Generally, the assessed values of properties can not be altered and evolve through further developments, the same holds for the new states, where different calculation parameters are used.
Property tax on non-built properties allows an exemption of 50% from municipal and intermunicipal authorities, which can get to 100% if the tract of land is located in specific areas of conservation, national park, regional park, nature reserve. The exemption from property tax on undeveloped tracts located in wetlands aims to improve the conservation of wetlands by encouraging landowners to engage in sustainable management.
The rate of property tax in a municipality is a percentage of the value entered on the assessment roll, the value listed on the basis of the actual value of each building, which is in turn legally defined as equivalent to market value. The rate is set annually by the council based on estimates.
Given the impossibility to enter all properties at market value at a given time, the law requires that each assessment paid must be at similar levels compared to the value at a certain date. Annually, a municipality is required to ascertain the general level of values recorded by calculating the median proportion of the values found from those indicated by the transactions made during the year.