3.3. Taxation of property and transfer of ownership of property
3.3.1. Taxation of property
Taxation of property in developed countries is based on two tax groups: taxes on the total value of property and taxes on certain types of property. Taxes on the total value of property, in turn, are subdivided into taxes on the personal status of individuals and taxes on property of legal entities.
Tax on personal wealth is levied on the value of the property of individuals, less the liabilities arising from the ownership of the property. Valuation of property is made on the basis of market, or cadastral, value, determined in accordance with the methods established by law. As a rule, furniture and other household utensils, works of art, patents, insurance policies, certain types of private collections (books, stamps), vehicles for personal use, as well as buildings, structures, land plots in those cases are exempt from personal property taxation , when they are subject to special taxes.
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The personal tax can be levied either at a flat rate or in accordance with the scale of progressive taxation. The single tax rate is applied in Germany, Belgium, Iceland and Luxembourg. The system of progressive taxation operates in Sweden, Finland, Norway, Spain and Switzerland. In other developed countries, this type of taxation is not applied.
An important feature of the tax on personal wealth is a sufficiently high initial amount, with which the tax begins. In addition, there are usually significant benefits provided to different categories of payers. In the structure of general tax revenues, the share of taxes on personal wealth rarely exceeds 0.5%. The only country where the share of this tax is significant is Switzerland. In the early 1990s. the share of taxes on personal wealth in the total tax revenue in this country was about 2.2%, which is explained by the specifics of the Swiss tax system.
With the tax on personal wealth, the system of annual taxation of property of legal entities is similar in principle. These taxes combine the object of taxation - the aggregate value of various types of property, less the obligations associated with possession or disposal, and other benefits provided. Income for this type of taxes in the total amount of tax revenues by the beginning of the 1990s. in Luxembourg - 2.93%, in Switzerland - 1.49, in Germany - 0.9, in Canada - 0.85, in Austria - 0.65, in Norway - 0.35, in Finland - 0, 02, in Sweden - 0,01%. In other OECD countries, the system of single taxation of property of legal entities does not apply.
Special taxes on certain types of property are extremely diverse. Most often these taxes are levied on residential buildings, structures, structures and installations, built-up and undeveloped land plots, vehicles (trucks and cars, motorcycles, motor boats, airplanes, etc.).
All property taxes relate to regional or local taxes, but often at the central (federal, federal) level, the general regulation of their collection is carried out. Special property taxes are historically the most established taxes. The share of revenues for these taxes in the total amount of tax revenues in developed countries varies widely. So, if in the UK this share is more than 10%, then in Belgium, Greece, Austria, Italy, Luxembourg, Turkey, Finland, Switzerland and Sweden, Spain it does not exceed 1%. Countries with a high share of income from taxes on certain types of property include the USA (over 9%), Canada (over 8%), New Zealand (about 6%), Australia (almost 5%), Ireland (2.5%), France (about 2%).
The largest share of income from property taxation belongs to taxes levied on real estate. When taxing buildings and structures, the conditions for taxation are usually differentiated depending on the material of the buildings, the method of attachment to the ground, the size and purpose. As a rule, the conditions for the taxation of residential buildings and industrial or other economic buildings are significantly different.
Taxation of land is different depending on the economic purpose. There are various systems for taxation of built-up land, land used in agriculture, and undeveloped land that is not used for agricultural purposes. The rates of these taxes are usually set as a percentage of the cadastral value of the land plot. From these taxes, objects that are in state ownership, in the ownership of local self-government bodies, as well as in the ownership of a number of organizations, whose list is established by law, can be exempted.
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From property taxes, it is necessary to distinguish taxes on income from the sale of property and taxes on income from possession or disposition of property. These tax groups have different taxation objects:
1) the object of taxation of property taxes - the value of the property (or its valuation);
2) taxes on income from the sale of property are subject to a difference between the selling and purchase prices;
3) objects of taxation on income from possession of property - as a rule, rental payments received by the owner from the leasing of property.
Taxation of incomes of the second and third types is carried out either within the general system of income taxation (personal income tax and corporation tax) or by introducing special (additional) taxes. Such special taxes include the capital gains tax levied on income from the sale of certain types of property (securities, built-up and undeveloped land plots, buildings, structures, structures). The income from possession and disposition of property, despite the fact that they are most often taxed within the general system of income taxation, have a certain specificity. These incomes are taxed not only taking into account the costs of acquiring and maintaining property: they are almost always subject to special regimes for determining the tax base, they are characterized by a relatively high non-taxable minimum, a system of various sorts of discounts and discounts.
The definition of the tax base for the imposition of income from sales and ownership of property is always carried out taking into account the inflation index applied to the purchase price and the costs of maintaining the property. In all developed countries, an official inflation index is published annually, the amount of which is adjusted (increased) the costs of acquiring and maintaining property or deducted from sales revenues or taken into account when determining tax liabilities on income in the form of rental payments. The indexing system can be used to recalculate the original (purchased, book) value of the property.
Taxation of property, especially its individual types, is often not related to income taxation. This is often done by different services. For example, specialists who make an appraisal of the value of real estate do not even have access to information about the incomes of taxpayers. Tax authorities of some states deal with property taxation, and income taxation is carried out by the federal body - the Internal Revenue Service. In addition, in the United States, the taxation of certain types of property can be attributed to the competence of local self-government bodies (municipalities, counties).
In the UK, on the contrary, there is a single tax levied on the total value of real estate. The tax base is the annual net asset value, which is revalued in accordance with the current methodology. The basis for determining the annual net asset value is the cost of hiring it in a free market, provided that the employer bears all costs associated with repair, maintenance and technical maintenance and insurance. Valuation of property for tax purposes is carried out by a special evaluation commission of the Internal Revenue Service.
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