[size=55:383im4oa]novinite 20 October 2010

Bulgaria Levies Luxury Tax on Big Cars, Properties

Bulgaria will introduce as of next year higher levies on luxury properties and big cars to help fight the economic crisis and keep down the fiscal deficit, under amendments to the law on taxes, published on the site of the finance ministry.

Under the amendments the highest threshold for levying a tax on a property will increase from 2.5 permilles to 4.5 permilles of the property evaluation.

The tax for luxury properties, whose evaluations are above the average levels for the particular town, will be 30% higher.

Owners of cars, whose engines output power exceeds 200 horsepower, will also pay higher taxes.

The new tax was announced for the first time in March after an extraordinary cabinet meeting called to discuss anti-crisis measures. It is part of a package of new measures, which also include floating minority stakes in state-owned companies and a possible bond issue.

The center-right government focused its austerity measures on the wealthy, after its plans to raise the healthcare tax and cut benefits to civil servants triggered protests.

Mayors however have warned that the introduction of the new levy will enrich only the budgets of the bigger municipalities such as Sofia, Varna and Burgas.

According to them owners of luxury property are likely to try to evade taxes by transferring what they have onto companies.

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Tax on Powerful Jeeps Reaches 1,000 Levs
The taxes on luxurious cars and homes to be upped

A new tax will hit the owners of powerful jeeps. From next year, all owners of cars of over 200 horse powers will have to pay additional money. The additional tax will be between 3.69 levs and 7.38 levs for each kilowatt over 149. It is not excluded that the top limit be additionally raised, MPs states. This move would mean that the owners of jeeps and sports cars will have to pay over 1,000 levs taxes. For example, a BMW jeep of 408 horse powers will cost to its owner 1,400 levs of taxes.
Luxury tax will be implemented and for owners of expensive real estates. The size of this tax will be different for each city. The taxes for all homes may be upped by 80%. The concrete size of luxury tax will be defined by the local municipalities.

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Bulgarian Govt Discards Luxury Property Tax as Useless


Bulgaria will not not introduce higher levies on luxury properties, MP Menda Stoyanova, head of the budget and finance committee of the Bulgarian Parliament, declared.

"
The luxury tax will not be introduced, since it will not bring anything to the treasury"
, Menda Stoyanova said.

"
A mere BGN 6 M would be earned for the state budget be enforcing the measure. Only 5 700 real estate properties in Bulgaria are currently qualified as "
luxury"
, she explained

Owners of luxury cars are already taxed higher, according to Stoyanova

She clarified that the luxury properties, which in October were "
spied on"
by National Revenue Agency helicopters, do not fit the aim of the proposed new tax legislation, as they are illegal.

The proposition to introduce a luxury tax has already been dismissed on Tuesday's GERB parliamentary group meeting with the participation of experts from the Financial Ministry.Bulgarian Financial Minister Simeon Djankov has also declared he opposes the measure.

The proposed changes in the tax legislation were supposed to affect the owners of real estate property, estimated to be worth more than BGN 300 000. .

The luxury property tax measure was announced for the first time in March 2010 after an extraordinary cabinet meeting called to discuss anti-crisis measures. The centre-right government focused its austerity measures on the wealthy, after its plans to raise the healthcare tax and cut benefits to civil servants triggered protests.