Unreasonably increased immovable property tax for abandoned buildings: client’s success story

The Ellex Valiunas real estate and environment practice lawyers defended the client’s interests in the case regarding the application of the increased immovable property tax rate. The immovable property held by the client was increased included in the list of abandoned or unattended buildings situated on the territory of one municipality. For the latter reason, the client’s immovable property was subjected to the increased immovable property tax rate.

The law firm’s lawyers representing the client questioned the practice of application of the increased immovable property tax rate carried out at the municipal level (the similar practice actually exists in most municipalities), where the municipality council establishes the criteria for determining if immovable property is abandoned or unattended, although such criteria do not comply with the higher-ranking requirements set out in the Law on Immovable Property Tax (“the LIPT”).

By upholding the client’s appeal, the Supreme Administrative Court of Lithuania (“the SACL”) has adopted a highly relevant and significant rule of interpretation of the law: it explained that although the municipality council has a certain discretion in establishing immovable property tax rates, nevertheless, in order to include immovable property in the list of abandoned or unattended immovable property, which would subject such property to the increased immovable property tax rate, the municipality council may not ignore the conditions that have already been established in the LIPT, i.e.:

• Hazard posed by the immovable property to health or life of people living, working or staying for other purposes in such immovable property or close to it, or to the environment;
• The immovable property was not repaired, reconstructed, or demolished within the term specified by a public administration entity.

The rule of interpretation of law adopted by the SACL indisputable situations has put an end to the application of the increased immovable property tax rate only due to the circumstance itself that the immovable property is abandoned if both conditions above arising from the LIPT are not fulfilled. The lawyers of the law firm think that the precedent of the SACL will create a higher legal certainty to immovable property owners holding immovable property abandoned but not posing a hazard to people, and at the same time will allow preventing the faulty practice of applying the increased immovable property tax tolerated in certain municipalities so far.

The client was consulted by the head of the real property and environment practice Audrius Petkevičius and senior associate Dominykas Užkurnys.