Real estate taxes in Salaspils and Mārupe are under examination by the prosecutor
In a recent development, the Ombudsman's Office in Latvia has taken action against the municipalities of Mārupe and Salaspils, alleging that they have unlawfully and unjustifiably applied an increased real estate tax rate of 3%.
The dispute revolves around the interpretation of the total duration of construction works as defined in regulatory enactments. According to the law, the total duration is calculated by adding the initial maximum duration (from the initial building permit) and the extended period (from the extended building permit).
The Ombudsman's Office believes that buildings with construction exceeding the specified total duration in regulatory enactments may be subject to the 3% real estate tax rate. This stance is in line with the Ombudsman's focus on ensuring compliance with the law on real estate tax.
In 2022, the Ministry of Finance and the Ministry of Economics sent an informative letter to all Latvian municipalities, urging a uniform interpretation of the provision regarding the increased real estate tax rate. Most local governments have since brought their practice of applying the increased tax into line.
However, the Ombudsman's Office has noted that Mārupe and Salaspils municipalities continue to apply the increased tax rate contrary to the law. As a result, the Ombudsman has requested the Prosecutor General's Office to evaluate the legality and validity of actions and decisions made by both municipalities.
This is not the first time the Ombudsman has addressed this issue. Previously, the Ombudsman had called on local governments to correctly apply the increased real estate tax rate, emphasising the importance of adhering to the law.
The interpretation of the total duration of construction works has been a point of contention, and the outcome of this case could set a precedent for future cases involving the application of the increased real estate tax rate. The Ombudsman's Office is yet to provide an update on the current status of the dispute.
- The Government, through its Ministries of Finance and Economics, has previously urged all Latvian municipalities to interpret the increased real-estate tax rate uniformly, emphasizing the significance of adhering to the law, especially in respect to the real-estate sector.
- The ongoing dispute between the Ombudsman's Office and the municipalities of Mārupe and Salaspils, regarding the unlawful application of an increased real-estate tax rate, has raised concerns over investing in Latvian real-estate, potentially impacting the overall financial health of the country.
