Amendment to the Real Estate Acquisition Tax Act approved by the Senate

The Senate has approved the governmental amendment to the legislative measure on real estate acquisition tax, and the amendment has been signed by the president. According to the explanatory report, the main aim of the amendment is to eliminate the deficiencies in the legislation effective from 2014 concerning, for example, the ambiguity or inaccuracy of the legislation or possible undesirable tax optimisation in the field.

The most important change is the one stating that the tax payer will now always be the acquirer of the real estate, i.e. basically the purchaser. There will be no choice in whether the tax is paid by the purchaser or the seller. With respect to this, the principle of guaranteeing for payment of the tax will cease to exist, which was a certain complication for many subjects in real life.

The tax rate remains unchanged, although there was a proposal submitted together with the amendment that suggested a decrease from the current 4 per cent to 3 per cent. The proposal has not passed. The method for determining the tax base remains unchanged as well, with the exception of an exchange of real estate where determination of the tax base should be simplified.

The amendment stipulates unambiguously that the subject of the acquisition tax is also extension of the building right and defines more precisely the tax exemption regarding the first acquisition of newly constructed buildings where the exemption will only be applied to "finished or used buildings", not buildings under construction. The act now states that the transfer of real estate regarding transfer of assets to a partner will also be subject to the acquisition tax. Other changes of legal entities are tax exempt.

If the amendment is published in the Collection in August, the changes will be effective from 1 November 2016.