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Post by Julijana Zappia on Nov 10, 2008 22:33:13 GMT 1
Hoorah! Exactly 4 years from the day of purchase of our Istrian property, we have received the request for payment of the property transfer tax. However, I'm not sure how it has been calculated. We purchased the property for 100,000 euros and were expecting to pay 5% tax. In today's exchange rate the 5,000 euros would equate to 35,650 kunas. But, we are being asked to pay 42,187 kunas. This works out to just under 6%. Do you know why it is more than we were expecting? Are they working it out differently these days? Maybe they're working it out on the current value of the property?
Also I notice they ask for it to be paid in 5 days otherwise we will be charged interest. Do the Croatian authorities not know that these things take time to be organised and for bank transfers to be done from abroad, especially as they have taken 4 years to rubber stamp the documents. In fact I don't know how long the lawyers have been sitting on this before we had notification. 5 weeks and not 5 days would be a more manageable time to organise all this?
If anyone could enlighten me to the current rules they apply for calculating the tax it would be very helpful, and also if anyone else has had experience of paying after the 5 days timescale and being charged the interest.
Thank you Kind regards Julijana
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Post by Peter Ellis on Nov 12, 2008 1:47:01 GMT 1
Hi Julia
The 5% is technically on the value of the property. Normally it will be taken on the contract price, as they haven't the resources to value every property, but it is expressed this way to cover situations where they suspect that the contract price has been understated. It is supposed to be on the value of the property when it is purchased. Although sales are usually referring to Euro prices, the contract is always in Kunas and there will normally be a clause in the contract referring to middle rate at the National Bank to effect the Kuna value. I'm surprised that it is only 5days as it is usually 14 days from the date it is issued and that should be shortly after the property is entered into the land registry, although in practice it is often some weeks or months after. When did you go into the land registry? We normally recommend that clients deposit it in a Croatian account that someone local has signing rights on, as it needs to be transferred from a Croatian account as it has to be transferred in Kunas and this is difficult from the UK. Few Forex traders seem to have Kuna facilities. Doing it this way means someone locally, if you are not out here, can arrange the transfer quickly. They do charge the interest. If a buyer doesn't have an arrangement set up as above and can only do it the next time they are out here, it can mount up and can also be complicated by difficulty in establishing how much interest has to be paid, which can drag it out further.
Kindest regards
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Post by Peter Ellis on Nov 12, 2008 1:50:29 GMT 1
Incidentally, was the contract in the name of the vendor's company, or private name? If in the name of their company, the 5% should only be on the share (value of land divided by number of apartments) of the site value, not on the whole thing.
Kindest regards
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Post by Julijana Zappia on Dec 26, 2008 9:22:55 GMT 1
Hi Peter Seasons Greetings.
Well the Property Tax has all been sorted now. Basically we were asked to pay 5% not of the purchase price, but of what they deemed is the current value. Still this was far less than what we think the current value is. It amounted to an increase of approximately 10% over the 4 years that we have waited to pay the tax, yet we know that property values have increased more than this. However the current Sterling/Euro rate did not help!
Many thanks for your comments and advice. Kind regards Julijana
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