Multi-year plans of Limburg cities and towns show that local governments will pass on the rising interest rates on their debts through commercial real estate.
The property tax – levied on buildings and land – remains one of the main sources of revenue for local authorities. Municipalities have fiscal autonomy to set the surcharges and may even differentiate them. This makes property tax a relatively straightforward instrument for generating additional income.
According to Voka Limburg, this differentiation allows rates to be determined based on, among other factors, surface area, cadastral income or the function of the property. Originally, this system was intended to stimulate economic activity and make certain areas more attractive for investment. In practice, however, it increasingly results in a higher tax burden for businesses, particularly for space-intensive companies. As a result, the instrument risks losing its incentive-based purpose and instead becoming a brake on entrepreneurship and investment.
Furthermore, the analysis shows that local business taxes are mainly levied on, among other things, business premises, masts and pylons, advertising installations, tourist activities and motive power. Tourist taxes in particular are gaining importance in the new multi-year plans. The traditional tax on motive power is gradually being phased out, although this is often accompanied by alternative levies such as higher surcharges or specific surface-based taxes targeting larger companies.
We have previously reported that rising interest costs on the debt burden of local authorities are no longer covered by standard taxation and that these authorities are increasingly shifting the burden onto businesses through taxes on commercial real estate. This is, of course, the easiest path, as real estate cannot relocate.
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Meerjarenplannen zorgen voor meer fiscale druk bij Limburgse ondernemingen
Antwerp municipalities increase property tax for businesses
Leuven raises property-tax surcharges on commercial real estate from 975 to 1,170 points
New surface tax for businesses in Tienen