Immovable property tax in Lithuania: changes and concerning problems

Abstract

Modern immovable property market is an integral part of the national economy has also an impact on other economic factors. Tax revenue is the main national budget source, which constitutes a significant proportion of the national budget. The immovable property tax is a common measure in a civilized world to fund the expenditure of the state (governments), which also allows choosing how much, what kind and at what rate a local community may get public services. The Parliament of the Republic of Lithuania has passed some substantial changes into the Law on Immovable Property Tax that came into force since January 1, 2012 and at once caused a lot of discussions regarding the made changes. If previously, individuals had to pay immovable property tax only in respect of immovable property owned, if they used it for commercial purposes, after the changes individuals must pay immovable property tax on the property owned, if its value exceeds LTL 1 000 000. Also the tariff has changed. So in the questions concerning with the mentioned substantial changes the reasons for such changes and potential problems caused by it are being analyzed and to discussed.