Who is liable, when the tax is not payable, and how to challenge the decision
Property tax was introduced by amendments to the Local Taxes Act and has applied since 1 January 2025, replacing the former tax on holiday homes. Property tax is assessed by reference to the position on one specific date - 31 March of the year for which the tax is assessed. That date determines who is liable, which floor area is charged, and whether an exemption applies.
Who pays the tax
The taxpayers are domestic and foreign legal and natural persons who own property on 31 March of the year for which the tax is assessed. Where the owner cannot be established, the tax is payable by the user of the property.
How much it is
The tax is payable annually at a rate between EUR 0.60 and EUR 8.00 per m² of usable floor area. The exact rate within that range is set by decision of the representative body of the local government unit, and if no rate is set, the tax is EUR 0.60 per m².
A local government unit may vary the rate according to the location, street, settlement or zone in which the property lies, and may increase it by reference to other criteria affecting the value of the property, such as its age and the presence of features that increase its value.
When the tax is not payable
The Act lists nine categories of property outside the charge:
- property used for permanent residence;
- property let under a lease for permanent residence;
- property in public use and property intended for the institutional accommodation of persons;
- property recorded in a company’s books as held for sale, where less than six months have passed between entry in the books and 31 March;
- property taken over in exchange for uncollected receivables, where less than six months have passed between the takeover and 31 March;
- property which, because of a declared natural disaster in the tax period, is not fit for residential use;
- property where all the circumstances show that residential use has been rendered impossible;
- property owned by local government units and situated exclusively within their own territory;
- property used for permanent residence by a host as defined under the rules governing the hospitality industry.
Permanent residence must be proven - registered domicile is not enough
The most important exemption in practice is also the most sensitive. The Act expressly provides that permanent residence is not proven by the registration of domicile at the property. The taxpayer must prove that fact when called upon by the tax authority, and the authority is entitled to collect data from other persons who hold it, in particular those holding data on the use of infrastructure.
A separate test applies to letting: property is regarded as let for permanent residence if it was let for at least ten months in the tax period. For property whose residential use has been rendered impossible, that use is determined by reference to the existence of infrastructure, or of equipment or devices replacing a connection to it, and the burden of proof lies with the taxpayer.
The decision, payment and appeal
The tax authority issues a property tax decision for each calendar year, based on the status, use and ownership of the property on 31 March. No decision is issued where the taxpayer is exempt. Changes occurring during the year that affect the liability apply only from the following calendar year.
The tax is payable within 15 days of service of the decision. An appeal may be lodged within 30 days of service, submitted to the tax authority that issued the decision and decided by the second-instance tax authority.
By 31 March of the year of assessment the taxpayer must report any change in the data relevant to the liability, in particular a change in the chargeable floor area or in the use of the property, as well as evidence bearing on the conditions for an exemption. Failure to report is the most common cause of an incorrect assessment.
Practical notes
- Check the data in the decision - floor area, use and ownership are often taken from utility-charge records and need not reflect the actual position.
- Prepare your evidence in advance - utility and energy bills are regularly the decisive proof of permanent residence.
- Watch the 31 March date - a change occurring after that date takes effect only for the following tax year.
- Keep the lease together with proof of its duration - the exemption requires a lease for permanent residence of at least ten months.
Property tax decisions are in many cases based on data drawn from existing records, which do not always reflect the actual status, use or ownership of the property. If you have received a decision you believe to be incorrect, our office is available to assess the prospects of success, to gather and prepare the necessary evidence, and to draft and lodge an appeal within the statutory deadline.