Czech state-owned real estate that is not used for business will remain exempt from tax. The Constitutional Court (CC) rejected the motion to repeal part of the Real Estate Tax Act. The proposal was submitted last year by a group of 24 senators, represented by the then member of the upper chamber, Ivo Valenta (for the Private Association).
According to a group of senators, the exemption of state real estate from the tax is unconstitutional and damages municipalities, for which taxes on land or buildings are an important budget revenue. According to the Constitutional Court, however, the share of real estate tax in the income of municipalities is not so high that the exemption of state real estate can have a so-called suffocating effect.
Even in the smallest municipalities, it cannot be concluded that the challenged regulation would make their self-governing existence impossible, according to the judgment of the judge-rapporteur Radovan Suchánek.
Senators, whose representatives did not take part in the announcement of the ruling, pointed out that the exemption of state-owned land and buildings from real estate tax is a remnant of the historical arrangement. The feudal monarch once owned all the land, entrusted some to his vassals, but managed some directly, so it would not make sense for him to pay himself.
According to the proposed situation, the current real estate tax is different. “The tax office only collects this tax, but then transfers the proceeds to the municipality on whose territory the taxed real estate is located. In such a case, a flat state exemption leads to a reduction in budget revenues of municipalities rule of law, “the proposal said.
The CC recalled that it has long been reluctant to review tax laws if the effects of the tax do not have a crushing effect or violate the principle of equality. In the case of the exemption of state-owned real estate, no unconstitutional effects were demonstrated. The constitutional judges were united, the finding is not accompanied by any different opinions.
The tax revenue belongs to the municipality in whose territory the taxed real estate is located. According to the Constitutional Court, on average less than three percent of total tax revenues in municipal budgets, in smaller municipalities up to ten percent.
Source: CTK
