Edition 2020 Ninth edition

support more inclusive and sustainable growth. In particular, recurrent proper-
ty taxes are found to be relatively growth-friendly and progressive, as higher-in-
come earners are likely to possess more housing wealth. However, due to a largely 
outdated tax base, revenue from recurrent property taxes in Austria remains low 
and well below the Union average. A revaluation of the tax base would help gen-
erate more revenue and address fairness issues that arise when land/real estate 
values are decoupled from market prices" 
(Recital 11)
;
•
Italy that "tax bases less detrimental to growth, such as property and consump-
tion, are underused, leaving room to shift the tax burden away from labour and 
capital in a budgetary neutral way. The recurrent property tax on first residences 
was repealed in 2015, including for wealthier households. In addition, land and 
property values (or 'cadastral' values), which serve as the basis for calculating 
property tax, are largely outdated, and a reform to align them with current Market 
Values is still pending" 
(Recital 11)
;
•
Latvia that "capital and property are relatively undertaxed and the freezing of the 
values used to calculate land and property taxes will reduce their revenue further" 
(Recital 9)
. Revision of those values of 2012/13 had been postponed with relative 
undervaluation of new apartments and agricultural land 
(European Semester 2019 
Country Report)
.
Other member states had already acted to comply with such recommendations 
in previous years.
5.10. 
Ireland replaced its previous rating system based on valuations that had last been 
reviewed in 1935 first with a one-off charge of €100 on all households in 2012 and 
then from mid-2013 with a Local Property Tax based on a property's value. Among 
the exempted properties are state buildings. The European Commission urged 
that the Local Property Tax be extended to cover a wider range of property in-
cluding farmland, development and derelict sites.
5.11. 
As a condition of its rescue package, Greece introduced a new property tax, re-
placing several previous taxes, levied on all types of property whether income 
generating or not, including housing, commercial property, vacant property, ag-
ricultural land and sports fields. The new tax, based on the property as an asset 
rather than on value to an occupier, replaced the property supplement to electric-
ity charges and previous taxes that were largely on more substantial properties. 
At the same time Greece cut taxes on property transactions from 8-to-10% to 3%.

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5.12. 
In Cyprus, values from 1980 were used for its Immoveable Property Tax and it was 
thought that the register had not been maintained. A condition for the financial 
support extended by the EU was that a full revaluation be undetaken. This was 
completed in mid-2014 with 1
st
January 2013 as the valuation date. That identified 
a further 300,000 taxable properties, with a 1% tax to be applied to those over 
€200,000. However, protests in reaction to the revaluation led to the old register 
being used for 2014 assessments.
6. Challenges, disputes and appeals
6.1. 
It is inevitable that in large and complex property markets, there will be disagree-
ments about the value of properties, especially where there are significant taxa-
tion consequences. The valuation system has to accept and manage that as there 
will always be some mis-valuations.
6.2. 
Some systems manage part of this by placing properties into valuation bands with 
each band carrying the same tax charge. In such a system, it is only worth a taxpay-
er appealing where is there is realistic prospect of the property moving to a lower 
valuation band and so a lower tax charge.
6.3. 
Valuer's professional advice — The process of challenge may work best if the tax-
payer, taking professional advice from a relevant valuer, can raise a concern about 
the valuation with those managing the official register. That may be to ask them to 
review it, providing evidence either:
•
As to the way in which the property had been mis-described;
•
Even if it has been correctly described, showing that it should be given a dif-
ferent value.
It may be very obvious from that review that an error has been made or the po-
sition appears correct but can be better explained to the taxpayer. However, if a 
disagreement ensues, there needs to be an independent tribunal that can receive 
evidence from the taxpayer and the official valuer and settle the dispute. A spe-
cialist valuation tribunal is more likely to have the skills for this work but, occasion-
ally, there may be points of law that need to go further into the law courts.
6.4. 
Such a system, working within each national judicial framework, is essential to the 
proper functioning of the property tax. The prospect of challenge and independ-
ent determination should ensure good practice and support professional stand-
ards in the whole process and so aid taxpayer acceptance of the system.

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7. Applying the tax
7.1. 
Once a value is established, the tax regime can be applied to it. In some systems 
there is a de minimis threshold below which very low value properties are not taxed.
7.2. 
The common approach is that the tax rate is set as a percentage of the value. 
That may be a common percentage but sometimes higher or lower rates may be 
applied to particular types of property (second homes sometimes see a discount 
or a higher rate according to the view taken of them). Exemptions and reliefs are 
considered below.
7.3. 
The proposed German reforms of 2019 provide for a higher level of charge to be 
applied to undeveloped land deemed suitable for development. That could be seen 
to follow the argument of the Irish Vacant Sites Levy, again designed to drive land 
forward for development, especially housing. This can be controversial where a 
longstanding owner has other intentions and for farmed land.
7.4. 
Where there is major revaluation it may be politically or economically necessary to 
allow a phasing in of new liabilities.
8. Exemptions and reliefs
8.1. 
While there may be some exemptions or reliefs that are necessary for practical 
reasons, these will more commonly reflect the accumulation of political con-
cerns during the life of the regime. The political process tends to develop more 
exemptions and reliefs to resolve issues as they arise but each extension of these 
narrows the tax base to the cost of other taxpayers.
8.2. 
An exemption may usually mean that the property does not have to be valued. A 
relief may give partial or full relief from the tax assessment and may have to be 
claimed by the taxpayer or be applied automatically.
8.3. 
The different taxes in member states will offer exemptions reflecting domestic 
concerns and history. Religious and heritage properties may often have an ex-
emption. Agricultural and/or forestry land and/or buildings often have their own 
treatment having, as examples, a separate regime (the current "Property Tax A" in 
Germany) and exemption in the United Kingdom, partly on the basis of being seen 
as part of the food production process rather than premises within which business 

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activity happens. Embassies and other diplomatic buildings are generally exempt. 
All or some government buildings are taxed in some countries but not in others.
8.4. 
Rate relief or exemption is often seen as a way to assist businesses. It may be 
offered to small businesses, enterprise zones and other development areas 
(promoting investment as well as easing the costs of business users) or fa-
voured categories.
8.5. 
Vacant property benefits from relief in some systems but England and Wales have 
greatly limited that relief for both commercial and residential properties to en-
courage their re-use, if only at lower rents.
8.6. 
The United Kingdom offers a general discretionary relief mitigating the impact of 
property taxes on charities while some countries (such as Spain) focus on their 
Red Cross but there may also be countries where many charitable works are un-
dertaken by exempt religious bodies.
8.7. 
Several countries offer initial exemption or relief to new dwellings or other prop-
erties. The proposed 2019 reforms in Germany would allow a reduced federal rate 
on social housing properties, local/community housing corporations or housing 
cooperatives on the basis that they are rented out to provide affordable housing, 
rather than for profit.
8.8. 
The size of household can affect liability to residential tax with some countries 
such as Spain giving reliefs for larger households, England allows a discount for 
sole occupiers and Lithuania has in 2018 introduced both progressive banding by 
value with adjustment for family circumstances.
8.9. 
There may usually be assistance to poorer residential taxpayers through national 
social security systems. Relief may be offered to both residential and commercial 
taxpayers affected by natural emergencies such as sustained flooding.
8.10. 
The European Commission has noted differing levels of tax (0.2% to 1.5%) and 
rebates (up to 90%) between municipalities in Latvia