Local governments will decide real estate tax rate

On May 25, 2006, the Seimas amended the Law on Real Estate Tax. According to the amendment, the real estate tax rate variable from 0.3 to 1 percent (the local governments decide upon the particular real estate tax rate by June 1 of the current tax period) of the real estate tax value is established.

The tax rate will be applied in the territory of the appropriate municipality from the beginning of the following tax period. The amendment also grants the right to the local governments to set several particular tax rates and lays down the following criteria, which must be taken into consideration while differentiating certain tax rates:
- the purpose of the real estate;
- the condition of its technical maintenance;
- the category of taxpayers (the size or legal form, or social status);
- location of the real estate in the territory of the municipality. 

If the local government does not set any particular tax rates by June 1, then the tax rates of the previous tax period are applied during the following tax period.

The Law will come into force from January 1, 2007 (with exceptions). Until August 15, 2006, the local governments will set particular tax rates, which will be applied in their territories from January 1, 2007. If the particular rates are not set by this date, then a 0.3 percent tax rate will be applied in assessing tax during the 2007 tax period.