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Real estate tax collection and revenues will be handed over to municipalities to encourage them to implement the taxes more stringently under new proposals from Finance Minister Rimantas Šadžius.
© DELFI / Tomas Vinickas

“Now municipalities do not have sufficient incentive to take care of it themselves. Maybe there are people who in one way or another are trying to escape from this tax. The traditional way is to not register the finished construction. I think it would be a better incentive to allow municipalities to collect this tax to their budgets and not the state budget as it is now. We will try to submit proposals in this direction,” Šadžius told LNK news.

Municipalities said they would be willing to collect the tax for luxury real estate but only if they were not deprived of income tax collection which brings more revenue than the real estate tax would.

“Otherwise, the municipalities would lose a relatively larger part of income than what they would get from the new tax. Losses would be in a sense that real estate value is fixed for a 5-year term, while the income tax value increases every year,” said Rimantas Čapas, Deputy Director of the Lithuanian Association of Municipalities on LNK news.

A total of €477,100 real estate tax was declared and paid by 1,038 residents in 2015, according to the State Tax Inspectorate.

Property tax is imposed on residential buildings, gardens, garages, greenhouses, agricultural, scientific, religious, recreational purpose buildings or premises, fisheries and other buildings, the value of which exceeds €220,000, unless the asset is used for income from agricultural activities or for funeral services, educational work or as creative workshops, for craft goods production, or social care and support.

DELFI