PROCESO DE SELECCIÓN OBJETIVA: SUBASTA

a) Tax on real estates in Hungary

In the Republic of Hungary, the local taxes on real estates are mainly property tax and building tax, furthermore one type of tourism tax. Building tax (in this form only in Hungary)

The structures located in the area of jurisdiction of a local government, dwelling places, buildings and building sections not used for housing purposes, as well as the related parcel of land shall be subject to tax liability. The person subject to tax liability is the person who is the owner of the building as of the first day of the calendar year (if there is

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T. İry (ed.), Az Európai Unió adójoga [The Tax Law of the European Union] (Budapest, Osiris Kiadó 2003) pp. 403-405.

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more than one owner, the owners shall be subject to taxation in the percentage of their respective ownership share in the property); if there is any incorporeal right registered on the building in the real estate register, the person registered as the holder of such right shall be subject to tax liability. The following shall be exempt from tax: temporary housing units; 100 square meters of a dwelling place without any amenities that is located in a small settlement not qualifying as a health or holiday resort; premises used for the purposes of social, health care, child welfare and educational institutions; buildings owned by budgetary agencies, religious organizations; and buildings registered in the real estate register as being used for animal husbandry or plant cultivation (e.g., stables, greenhouses, facilities for storing crops or fertilizer, barns) if they are used solely for such activities. The tax liability shall commence on the first day of the year following the year when the occupancy or continuation permit was issued. For buildings built or occupied without a permit, tax liability shall commence on the first day of the year following the year when the building was occupied. The tax base, depending upon the decision of the local government, shall be the net floor space of the building expressed in square meters, or the adjusted market value of the building. The maximum rate of tax per annum is 900 HUF/square meter if the tax base is established in square meters, or 3% of the adjusted market value, if the tax base is established in accordance with the adjusted market value.

Property tax, tax on land parcels (in that form only in Hungary)

Undeveloped parcels of land situated in incorporated areas within the area of jurisdiction of a local government shall be subject to taxation. The person subject to tax liability is the person who is the owner of the land parcel on the first day of the year. If there is more than one owner, the owners shall be subject to taxation in the percentage of their respective ownership share in the property. If there is any incorporeal right registered on the land parcel in the real estate register, the person registered as the holder of such right shall be subject to tax liability. The following shall be exempt from tax: land parcels subject to building ban until the ban is lifted; taxpayers providing scheduled local and long- distance public transportation services, in respect of land parcels used for such purpose; portions of parcels subject to building tax; the safety (protection) zone of buildings, structures not qualifying as building, or public utility lines; land parcels registered in the forestry sector. Tax liability commences on the first day of the year following the year when

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the resolution of the local government for the incorporation of a land parcel is promulgated, or when the land is removed from agricultural production and/or its designated cultivation profile is changed, or in connection with any building that is demolished or destroyed, on the first day following the half-year period when the building was in fact demolished or destroyed. The basis for tax, depending upon the decision of the local government, shall be the actual area of the land parcel expressed in square meters, or the adjusted market value of the parcel. The maximum rate of tax per annum is 200 HUF/square meter if the tax base is established according to the square meter calculation, or 3% of the adjusted market value if the tax base is established in accordance with the adjusted market value of the parcel.

Tourism tax (in that form only in Hungary)

Only one form of this type of Hungarian local taxes – as discussed below – belong to the real estate taxes. A private individual shall be subject to tax liability,

- who is not a permanent resident, spending at least one guest- night within the area of jurisdiction of a local government, or - who is the owner of a building designed for recreational

purposes, which does not qualify as a dwelling place and is located within the area of jurisdiction of a local government. Therefore tourism tax has two separated subjects: the stay at the territory of the self-government and the holiday building located at the territory of the self-government. Tourism tax to be paid upon the stay shall be collected by the hosts of private lodgings or the agency for private lodgings; therefore it is an indirect type of tax. The tourism tax to be paid upon the holiday building is basically a real estate tax, which is applicable only for a building designed for recreational purposes owned by a private individual. The building separate from the holiday building and used temporarily for recreational purposes (for instance boat-house) shall be considered also as taxable object. Private individuals under the age of 18; or receiving inpatient care in health institutions or regular care in social institutions; and who reside within the jurisdictional area of a local government because they are students in an institution of secondary or higher education, under official or court order to do so, undergoing vocational training, fulfilling a service obligation, furthermore entrepreneurs pursing business activities who have a registered office or place of business in the community or an employee in such a company, last but not least private individuals who own or

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lease a holiday resort which is located in the area of jurisdiction of a local government shall be exempt from tax regarding the tax to be paid upon spending a guest-night. The tax base is the number of guest-nights and any fraction thereof or the accommodation fee for a guest-night; or the net floor space of the building in respect of the tax liability of the nature of real estate tax. The maximum rate of tax is HUF 300 per person and per guest-night or 4% of the tax base; or, regarding the tax to be paid upon the holiday building, 900 HUF/ square meter payable annually for the building in question.

b) Tax on holiday homes in the Republic of Croatia

The taxpayer is a legal entity or natural person, who is the owner of a holiday home. Holiday home is any building, its part or apartment used occasionally or seasonally. A holiday home is not considered to be a building which serves as accommodation for agricultural machinery, tools and other accessories. The tax basis is a square meter of usable area of the holiday home. The tax amount is from 5,0 to 15,00 HRK per square meter of usable area. The municipality or city prescribes the amount of tax on holiday homes, depending on location, age and state of infrastructure and other relevant circumstances.

The tax on holiday homes is not to be paid on:

- holiday home that cannot be used because of war destruction and natural disasters (flood, earthquake, fire), age and fragility; - holiday home while it accommodates displaced persons and

refugees;

- resort owned by local and regional self-government units that accommodate children under 15 years of age;

- municipality and the city may prescribe other exemptions from tax on holiday homes regarding economic and social reasons.

c) Concluding remarks

The Hungarian regulation entitles the local self-governments to introduce property tax and building tax as wealth tax. The self- government may choose how to determine the tax base of these types of taxes: either according to the net floor space of the real estate expressed in square meters, or the adjusted market value thereof. The decision, however, shall be made uniformly together for both types of tax. Both of them are annual taxes, therefore the taxpayer shall remain the same, even in case of change of ownership during the tax year, that is

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connected to the title and ownership as per the first day of the tax year. Tourism tax is a community tax in the Hungarian system, one form of which – tax levied on holiday building located at the territory of the self- government – shows conformity with the tax on Croatian holiday homes. Thus the regulation of tax on holiday homes is part of the tax system of both countries, although with different names, but with the same content. The object and subject of tax, as well as the tax base are completely the same in both statutes. The only difference is that the Hungarian provisions determine the upper limit on the one hand, and the Croatian act determines a frame including a lower limit as well on the other hand, also includes broad exemptions, which are entirely lacking from the Hungarian system.