Building tax

What it means

Building tax is the part of real estate tax paid on structures fixed to the ground by foundations, such as family houses, garages, cottages, industrial halls, warehouses or office buildings. Flats and non-residential units in apartment blocks are taxed separately under the tax on flats.

The tax base is the built-up area in square metres, meaning the building's footprint at the widest perimeter of the above-ground part. The number of floors does not matter, but for multi-storey buildings the municipality may add a surcharge for each additional floor.

The municipality sets the rate in a generally binding regulation, and it varies by the building's purpose: residential buildings usually have a lower rate, while buildings for business, industry and offices have a higher one. Together with land tax, it is one of the local taxes.

How it works in practice

Liability is generally based on the situation on 1 January. For a new building it arises from 1 January of the year after occupancy approval or the start of use, and the return must be filed by the end of January of that year.

The land under a building is not subject to land tax, so the same area is not taxed twice. When buying an existing building it is worth checking whether the previous owner declared the correct built-up area and purpose, and comparing the data with the land register.

For a company, building tax is a deductible expense. A building not yet approved for occupancy and recorded under assets under construction is usually not taxed while it is not in use. Using it before approval, however, does give rise to the tax.

What to watch out for

A change of use, for example when part of a family house starts being used as an office or workshop, may change the rate. Municipal regulations often specify how buildings with several uses are treated, and the change must be reported in a partial return.

Extensions, garages and outbuildings are often left undeclared, especially when self-built. The municipality may spot them by comparing aerial photographs or the land register and assess the tax retrospectively with a fine, so it is better to report the change on time.