Law on Immovable Property Tax


Published: 2005-07-06

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OFFICIAL TRANSLATION
 
 
 
Republic of Lithuania
 
LAw on immovable property tax
 
 
7 June 2005  No X-233 Vilnius
 
 
 
CHAPTER I
GENERAL PROVISIONS
 
Article 1. Purpose of the Law
This Law shall set forth the procedure for imposing the immovable property tax (hereinafter referred to as “the tax”) on immovable property.
 
Article 2. Definitions
1. “Economic activities” shall mean the activities which are considered as economic activities under the Republic of Lithuania Law on Value Added Tax.
2. “Immovable property used for economic or individual activities” shall mean the immovable property assigned by the owner of the immovable property or by another natural person to:
1) the property related to individual activities, as this concept has been defined in the Republic of Lithuania Law on Income Tax of Individuals;
2) the property used for economic or individual activities, where the expenses related to this property are treated as allowable deductions and/or input (import) VAT is deducted.
3. “Natural person” shall mean a citizen of the Republic of Lithuania, a citizen of a foreign state and a stateless person.
4. “Individual activities” shall mean the activities which are considered as individual activities under the Republic of Lithuania Law on Income Tax of Individuals.
5. “Legal person” shall mean a legal person registered in accordance with the procedure set forth by legal acts of the Republic of Lithuania, a legal person of a foreign state as well as any organisation of a foreign state which is recognised a legal entity under laws of the Republic of Lithuania or of the foreign state.
6. “Immovable property for commercial use” shall mean the structures (premises) intended for administration, catering, services, trading, hotels, recreation, health treatment, culture, science and sports.
7. “Immovable property” shall mean the premises, engineering and other structures registered in the Real Property Register.
8. “Mass valuation of immovable property” shall mean a process whereby a group of similar objects of immovable property is valued within a set period of time with the help of a common methodology and automated technologies of analysis and evaluation of the data accumulated in the Read Property Register and in market databases. Upon the mass valuation of immovable property, a general report of the valuation of the group of similar objects of immovable property shall be prepared, whereas a report of every item of immovable property shall not prepared.
9. “Average market value of immovable property” shall mean the value of the objects of immovable property having the same principal purpose of use, reflecting the average market price of immovable property in the territory (area) concerned and determined with the help of mass valuation using the property valuation methods provided for in the Republic of Lithuania Law on Basics of Property and Business Valuation.
10. “Education endeavours” shall mean the activities which are considered as education endeavours under the Republic of Lithuania Law on Education.
11. “Property valuer” shall mean a property valuation entity keeping the Real Property Cadastre and the Real Property Register.
12. “Fish-farming structures” shall mean water reservoirs as well as the structures and facilities intended for servicing them and for the rearing and growing of fish.
13. The purposes of use of immovable property as specified in this Law shall correspond to the purposes of use of immovable property specified in the regulations of the Real Property Cadastre.
 
Article 3. Taxpayers
The tax shall be paid by natural and legal persons.
 
Article 4. Scope of the tax
The tax shall be imposed on:
1) the immovable property (or part thereof) belonging to natural persons by the right of ownership and located in the territory of the Republic of Lithuania, with the exception of the structures (premises) intended for dwelling purposes, gardens, garages, homesteads, greenhouses, farms, subsidiary farms, science, religion, and recreation, fish-farming structures as well as engineering structures, where they are not the immovable property used for economic or individual activities or have not been transferred, for an indefinite period or for a period exceeding one month, for use to legal persons;
2) the immovable property belonging to legal persons by the right of ownership and located in the Republic of Lithuania.
 
Article 5. Tax period of the tax
A tax period of the tax shall be a calendar year.
 
Article 6. Tax rate
The tax rate shall be 1 per cent of the tax value of immovable property.
 
Article 7. Tax reliefs
1. The following immovable property belonging to natural persons by the right of ownership shall be exempt from tax:
1) immovable property (or part thereof) used by a natural person for the manufacture of cult articles as well as for social welfare;
2) immovable property (or part thereof) used by a natural person for agricultural activities as well as the agricultural land used for the growing or processing of the products grown in such a way, where the income derived from such activities is exempt from tax under provisions of subparagraph 25 of paragraph 1 of Article 17 of the Republic of Lithuania Law on Income Tax of Individuals;
3) immovable property (or part thereof) used by a natural person for education endeavours;
4) immovable property (or part thereof) used by a natural person for the provision of burial services or located in the territory of a cemetery;
5) immovable property (or part thereof) used by a natural person having the status of an artist as studios for individual creative activities.
2. The following immovable property belonging to legal persons by the right of ownership or the immovable property (or part thereof) belonging to natural persons by the right of ownership and transferred, for an indefinite period or for a period exceeding one month, for use to legal persons shall be exempt from tax:
1) the immovable property of diplomatic missions and consular posts of foreign states, international inter-governmental organisations or missions thereof;
2) state-owned or municipal immovable property;
3) immovable property of the state or municipal enterprises operating under the Republic of Lithuania State and Municipal Enterprise Law;
4) immovable property of the budgetary institutions operating under the Republic of Lithuania Law on Budgetary Institutions;
5) immovable property of the undertakings of free economic zones;
6) the immovable property used for environmental protection and fire prevention and general-purpose objects according to a list approved by the Government of the Republic of Lithuania;
7) immovable property of a bankrupt undertaking;
8) immovable property (or part thereof) of religious communities, societies and centres used solely for non-commercial activities or for the manufacture of cult articles;
9) immovable property (or part thereof) used for burial services or located in the territory of a cemetery;
10) immovable property of societies for disabled persons and their enterprises;
11) immovable property of entities of agricultural activities and cooperative companies (cooperatives) the taxable profit whereof is applied the corporate tax rate of 0 per cent under provisions of the Republic of Lithuania Law on Corporate Tax;
12) immovable property (or part thereof) of multi-occupancy dwelling owners associations, home building societies, garages maintenance and gardeners’ societies used solely for non-commercial activities;
13) immovable property (or part thereof) of the charity and sponsorship funds operating under the Republic of Lithuania Law on Charity and Sponsorship used solely for non-commercial activities;
14) immovable property of science and study institutions listed in the Republic of Lithuania Law on Science and Study;
15) immovable property of the educational establishments listed in the Republic of Lithuania Law on Education;
16) immovable property of the establishments providing social services and operating under the Republic of Lithuania Law on Social Services;
17) immovable property (or part thereof) of trade unions used solely for the non-commercial activities provided for in articles of association of the trade unions;
18) immovable property (or part thereof) of the legal persons operating under the Republic of Lithuania Law on Associations used solely for non-commercial activities;
19) immovable property of the Bank of Lithuania, the Lithuanian Labour Exchange at the Republic of Lithuania Ministry of Social Security and Labour and the Lithuanian Labour Market Training Authority at the Republic of Lithuania Ministry of Social Security and Labour;
20) immovable property of the legal persons operating under the Republic of Lithuania Law on the Status of Artists and Their Organisations.
3. The structures which have not been recognised as suitable for use, where they are not actually used, shall also be exempt from tax.
4. Tax reliefs shall be applied in accordance with the following procedure:
1) upon the acquisition of the right to a relief, the relief shall be applied as of the month when the right to the relief was acquired;
2) upon the loss of the right to a relief, the relief shall cease to be applied as of the month following the month when the right to the relief was lost.
5. Municipal councils shall have the right to reduce the tax at the expense of their budget or to completely exempt from payment thereof.
 
CHAPTER II
TAXABLE VALUE OF IMMOVABLE PROPERTY
 
Article 8. Taxable value of immovable property
1. The taxable value of immovable property shall be the average market value of the immovable property as well as the value of the immovable property specified in subparagraphs 3 and 4 of paragraph 2 of Article 9 of this Law which has been determined by the recoverable value (cost) method.
2. The taxable value of immovable property may be the value of the immovable property as determined by individual valuation of the immovable property. Taxpayers may submit a request to a property valuer to consider as the tax value of the immovable property the value of the immovable property determined by individual valuation of the immovable property, where the average market value of the immovable property as determined with the help of mass valuation of the immovable property or the value of the immovable property specified in subparagraphs 3 and 4 of paragraph 2 of Article 9 of this Law determined by the recoverable value (costs) method is different from the value of the immovable property as determined by the individual valuation by more than 20 per cent.
 
Article 9. Valuation of immovable property
1. Valuation of immovable property shall be performed by a property valuer.
2. Immovable property shall be valued:
1) immovable property used for commerce – with the help of the methods of comparative value (sales comparables) and value-in-use (capitalisation of income or discounted cash flows) by applying mass valuation of the immovable property;
2) immovable property intended for dwelling purposes, gardens and garages (with the exception of industrial garages)– with the help of the method of comparative value (comparison of sales prices) by applying mass valuation of the immovable property;
3) engineering structures – with the help of the recoverable value (costs) method (by calculating the percentage of physical deterioration);
4) other immovable property  not specified in subparagraphs 1-3 of this paragraph – the recoverable value (costs) method (by calculating the percentage of physical deterioration), applying the location adjustment coefficient taking account of the impact of the location of the immovable property.
3. Valuation of immovable property shall be performed in accordance with the procedure set forth by the Government of the Republic of Lithuania at least every 5 years according to the condition as of 1 January of the calendar year.
 
Article 10. Complaints and applications in respect of the determined tax value of immovable property
1. Complaints by payers of the tax in respect of the determined tax value of immovable property (hereinafter referred to as “a complaint”) and applications on the use of the value of the immovable property as determined by individual valuation for the calculation of the tax value (hereinafter referred to as “an application”) shall be submitted to a property valuer within one month of the determination of the tax value of the immovable property. The property valuer shall examine the complaints and applications within one month of the receipt of a complaint or an application and shall take a decision thereon. The decision may be appealed against in accordance with the procedure set forth the Republic of Lithuania Law on Administrative Proceedings.
2. A property valuer shall notify the local tax administrator of the receipt of a complaint or an application by a payer of the tax and a decision taken on the complaint or application not later than within one working day of the receipt of the respective complaint or application or of the taking of the decision.
3. The submission of a complaint or an application by a taxpayer to a property valuer shall have a suspensory effect on the recovery of the tax and related amounts of funds until a decision of the property valuer is taken on the complaint or application or until the entry into force of a court decision (ruling), where the taxpayer has appealed against the decision of the property valuer in accordance with the procedure set forth by the Republic of Lithuania Law on Administrative Proceedings, however, this shall not preclude the application of the tax duty enforcement measures specified in Article 95 of the Republic of Lithuania Law on Tax Administration or serve as the basis for revocation thereof.
 
CHAPTER III
PAYMENT OF THE TAX
 
Article 11. Submission of the data required for calculation of the tax
1. A property valuer shall submit the data of the Real Property Register and the Real Property Cadastre required for the calculation of the tax to the local tax administrator twice per year: until 1 February and until 1 August.
2. The procedure for submitting the data specified in paragraph 1 of this Article shall be set forth in the ways and within the time limits laid down in an agreement concluded between a property valuer and the central tax administrator.
3. At the request of a taxpayer, a property valuer shall prepare, in accordance with the procedure set forth by the Republic of Lithuania Law on the Real Property Register, an extract from the Real Property Register specifying the tax value of immovable property. These extracts shall be prepared and delivered or sent to natural persons free of charge.
 
Article 12. Calculation, declaration and payment of the tax
1. The tax imposed on the immovable property (or part thereof) belonging by the right of ownership to natural persons, with the exception of the immovable property (or part thereof) transferred for use to legal persons for an unlimited time period or for a time period exceeding one month, shall be calculated, declared and paid by the natural persons. The tax imposed on the immovable property (or part thereof) belonging by the right of ownership to legal persons and the immovable property (or part thereof) belonging by the right of ownership to natural persons and transferred for use to legal persons for an unlimited time period or for a time period exceeding one month shall be calculated, declared and paid by the legal persons.
2. Co-owners shall pay the tax in proportion to the proportion of immovable property held by them. The tax imposed on the immovable property belonging by the right of joint ownership may be calculated, declared and paid by one of co-owners.
3. Legal persons shall make advance payments of the tax. Each advance payment shall make up 1/4 of the amount calculated by applying the tax rate referred to in Article 6 of this Law to the tax value of the immovable property belonging by the right of ownership to a legal person as of 1 January of the current calendar year. Advance payments of the tax shall be made respectively until 31 March, 30 June and 30 September of the current calendar year. Where the amount calculated by applying the tax rate referred to in Article 6 of this Law to the tax value of the immovable property belonging by the right of ownership to a legal person as of 1 January of the current calendar year does not exceed LTL 1500, the legal person shall not be under an obligation to pay the tax in advance.
4. Taxpayers shall submit to the local tax administrator a tax declaration for an appropriate tax period until 1 February of the next calendar year. The layout of the declaration and the procedure for completing and submitting it shall be set forth by the central tax administrator.
5. In a declaration for a tax period, natural persons shall, by applying the rate specified in Article 6 of this Law, calculate the tax imposed on the immovable property belonging by the right of ownership to a natural person during the tax period (with the exception of immovable property the tax imposed whereon must be paid, under paragraph 1 of this Article, by the legal person that has taken it over).
6. In a declaration for a tax period, legal persons shall, by applying the rate specified in Article 6 of this Law, calculate the tax imposed during the tax period on the immovable property belonging by the right of ownership to a legal person and on the immovable property belonging to natural persons during the tax period and received for use for an unlimited time period or for a time period exceeding one month.
7. Where the immovable property the tax imposed whereon must be calculated by a taxpayer according to provisions of paragraphs 5 or 6 of this Article belonged to him by the right of ownership, was used for economic or individual activities or was transferred to a legal person (in the case of the immovable property transferred for use to legal persons for an unlimited time period or for a time period exceeding one month and belonging by the right of ownership to natural persons) not during the whole tax period, the tax shall be calculated in proportion to a part of the tax period (in months) during which the immovable property belonged by the right of ownership, was used for economic or individual activities or was transferred to the legal person in compliance with the following rules:
1) the tax shall be calculated as of the month when the right of ownership to the immovable property is acquired, the immovable property starts to used for economic or individual activities or the immovable property is taken over by the legal person;
2) the tax shall not be calculated as of the month following the month when the right of ownership to the immovable property is transferred, the immovable property is no longer used for economic or individual activities or the immovable property is returned by the legal person, with the exception of the cases when the transfer or conveyance of the immovable property gives rise to the duty to calculate the tax according to subparagraph 1 of this paragraph – in such a case, the tax shall not calculated as of the same month when the right of ownership is transferred and the property is conveyed.
8. Where immovable property ceases to exist (is pulled down, is destroyed by burning or is otherwise physically lost), the tax shall not be calculated as of the month following the month when the immovable property ceased to exist.
9. The amount of the tax calculated in a tax declaration and, where the tax has been paid in advance, the difference between the amount of the tax calculated and the tax paid in advance must be paid to the budget not later than until the last day specified in paragraph 4 of this Article for the submission of a declaration for an appropriate tax period. Overpayment of the tax shall be repaid in accordance with the procedure set forth by the Republic of Lithuania Law on Tax Administration.
10. Taxpayers shall calculate the tax according to data of an extract from the Real Property Register specified in paragraph 3 of Article 11 of this Law.
 
 
CHAPTER IV
LIABILITY
 
Article 13. Liability
In the event of a breach of provisions of this Law, fines shall be imposed and penalties shall be calculated in accordance with the procedure set forth by the Republic of Lithuania Law on Tax Administration.
 
 
CHAPTER V
ENTRY OF THE TAX
 
Article 14. Entry of the tax
1. The tax shall be entered in the budget of a municipality in the territory whereof immovable property is located.
2. Where immovable property is located in the territory of several municipalities, the tax shall be entered in proportion to the portion of the immovable property held by the relevant municipality.
 
CHAPTER VI
FINAL PROVISIONS
 
Article 15. Entry into force and application of the Law
1. This Law shall enter into force on 1 January 2006.
2. The tax on the immovable property of enterprises and organisations for the last quarter of 2005 shall be paid until 25 January 2006.
3. Upon the entry into force of this Law, the following laws shall be repealed:
1) Republic of Lithuania Law on the Tax on the Immovable Property of Enterprises and Organisations (Official Gazette, 1994, No. 59-1156);
2) Republic of Lithuania Law Supplementing Article 3 of the Law on the Tax on the Immovable Property of Enterprises and Organisations (Official Gazette, 1996, No. 35-860);
3) Republic of Lithuania Law Amending Articles 7 and 9 of the Law on the Tax on the Immovable Property of Enterprises and Organisations (Official Gazette, 1996, No. 46-1106);
4) Republic of Lithuania Law Amending Articles 1, 2, 3, 4, 5 and 11 of the Law on the Tax on the Immovable Property of Enterprises and Organisations (Official Gazette, 1996, No. 68-1635);
5) Republic of Lithuania Law Supplementing Article 5 of the Law on the Tax on the Immovable Property of Enterprises and Organisations (Official Gazette, 1997, No. 64-1497);
6) Republic of Lithuania Law Supplementing Article 5 of the Law on the Tax on the Immovable Property of Enterprises and Organisations (Official Gazette, 2000, No. 92-2888);
7) Republic of Lithuania Law Amending Articles 1, 2, 3, 6 and 7 of the Law on the Tax on the Immovable Property of Enterprises and Organisations (Official Gazette, 2001, No. 62-2232);
8) Republic of Lithuania Law Amending Article 5 of the Law on the Tax on the Immovable Property of Enterprises and Organisations (Official Gazette, 2003, No. 104-4648);
9) Republic of Lithuania Law Supplementing Article 5 of the Law on the Tax on the Immovable Property of Enterprises and Organisations (Official Gazette, 2003, No. 116-5256);
10) Chapter I of the Republic of Lithuania Law Amending and Supplementing the Law on the Tax on the Immovable Property of Enterprises and Organisations, the Law on the Financing of Road Maintenance and Development Programme, the Law on Guarantee Fund, the Law on Fees and Charges, the Law on Fees for the Registration of Industrial Property Objects, the Law on Pollution Tax, the Law on Consular Fees, the Law the Law on the Bank of Lithuania (Official Gazette, 2004, Nr. 61-2188).
 
Article 16. Proposal to the Government of the Republic of Lithuania
The Government of the Republic of Lithuania shall, by 1 October 2005, draft and approve rules for the valuation of immovable property.
 
 
I promulgate this Law passed by the Seimas of the Republic of Lithuania.
 
 
 
PRESIDENT OF THE REPUBLIC                                                 VALDAS ADAMKUS