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Property tax since 2020. New wording and cadastral value.

Since 2020, there will be substantial changes in the law on property tax. Positive developments are:

— Elimination of the need to provide tax calculations on advance payments based on the results of reporting periods (Section 2, Art. 386 of the Tax Code is no longer valid). Taxpayers will report on property tax only at the end of the tax period
— Emergence of the possibility of providing a single declaration of property tax.


Thus, the taxpayer establishes the right to submit a single declaration to the tax authorities. We are talking about cases where a taxpayer is registered with several tax authorities of one constituent entity of the Russian Federation at the location of real estate, the tax base for which is defined as the average annual value. The taxpayer can choose the tax authority to which he will submit the declaration, but he is obliged to notify the tax authority of the constituent entity of the Russian Federation annually before March 1 of the tax period. The reporting submission procedure would be impossible to be changed throughout the year.

The submission of a single property tax return is a taxpayer’s right, not his duty. Therefore, the taxpayer may submit a property tax return to each tax authority in which he is registered at the location of the property.

In addition, it must not be forgotten that for some real estate objects taxpayers calculate the tax on cadastral value. At the moment, users of special regimes do not pay property tax for legal entities in a general way.

However, there are a number of objects for which the tax base is determined on the basis of the cadastral value. The property tax exemption does not apply to such objects.

The procedure for classifying a specific taxpayer real estate as such objects is rather complicated: a cadastral valuation of the property must be carried out, the property must comply with a certain type of property specified in the Tax Code of the Russian Federation (shopping centers, offices, etc.), this type of property must be confirmed by regional law as object of taxation.

The adoption of legislative amendments in this part is a premature step. According to the current edition, from January 1, 2020, Federal Law No. 325 of September 29, 2019 comes into force and eliminates this benefit for users of special regimes, changing the procedure of calculating property tax for everyone else.

Property tax at the cadastral value will be necessary to be charged on all real estate, if it has such a value. It will not matter if the property is mentioned in the regional list, what type this property is, etc. This will happen in connection with a change in paragraphs. 4 p. 1 Art. 378.2.

This situation creates certain conflicts. So, for example, it is not clear whether it will be necessary to tax property on the basis of the cadastral value of a shopping center that is not included in the regional list, because it will simultaneously fall not only under subparagraph 1 of paragraph 1 of Art. 378.2 of the Tax Code of the Russian Federation as a shopping center, but also under subparagraph 4 of paragraph 1 of Art. 378.2 of the Tax Code of the Russian Federation as “another building, structure, construction”, and for the latter type, inclusion in the regional list is not required.

The Ministry of Finance has already responded to the situation and has prepared amendments that will regulate this situation and the objects included in the regional list will be taxed at the cadastral value.

Shopping and business centers, offices (and premises in them) will be taxed at their cadastral value starting from 2020, taking into account new amendments developed by the Ministry of Finance. The list of such objects is annually approved by the subject of the Russian Federation). Moreover, the above types of real estate objects, subject to the provisions of Chapter 32 of the Tax Code, may include: residential buildings, apartments, rooms, garages, parking lots, single immovable complexes, construction in progress, as well as other buildings, structures, facilities, premises (for example, garden houses, farm buildings located in garden or household plots, buildings and structures of certain types, etc.).

Let’s hope that the amendments prepared by the Ministry of Finance will be taken in the short term. It is expected that a significant part of the regions may not have time to respond to changes in federal legislation. We recommend that all interested parties carefully monitor federal and regional legislation by the end of the year.