The Czech Republic has seen a substantial increase in property tax revenues, up 86% compared to last year. The Ministry of Finance released data revealing that individuals and companies had paid 14.6 billion koruna in property tax by the end of May. More payments are still coming in, and the total revenue from property tax this year is estimated to exceed 20 billion koruna. Last year, the municipalities collected 12.45 billion koruna from this tax.
The rise in property tax revenue was anticipated as the government increased the basic tax coefficient by 80% since January. This move was intended to compensate municipalities for reducing their share of shared taxes, such as value-added and income taxes for individuals and legal entities. The adjustment of the so-called budget determination of taxes was undertaken by the government to consolidate public finances.
If the property tax collection continues to grow at the current rate for the rest of the year, payments for this tax will reach 23.2 billion koruna. The Financial Administration had previously stated that it expects an increase in property tax collection by approximately ten billion koruna this year.
However, some property owners have seen their assessed tax increase by over 80%. This has been caused by the current decision of some municipalities to increase their local coefficient. According to January statistics from the Financial Administration, this year, 67 more municipalities have taken advantage of the opportunity to increase tax revenues through the local coefficient than last year.
The local coefficient is used by approximately 1,100 municipalities, roughly one-fifth to one-sixth. Property tax consists of land tax and tax from buildings and units, the rates of which depend on the nature of the property. The tax is then multiplied by a coefficient determined by the municipality’s size and potentially by a local coefficient, the height of which is decided by the municipality itself.