As part of the continuing misinterpretation of legal provisions by the Tax Administration of Kosovo (TAK), another evident issue concerns the taxation of non-business individuals who provide their properties for construction in exchange for a portion of the completed buildings. There are numerous cases in which TAK has imposed liens on the properties of these individuals and compelled them to pay taxes, despite the absence of a legal basis for such treatment. These practices continue to cause injustice to citizens.
With the entry into force of Law No. 05/L-028 on Personal Income Tax on 1 September 2015, Article 7, paragraph 1.6, establishes that capital gains arising from the sale of movable and immovable property are taxable for individuals, whether residents or non-residents, as well as business entities. Furthermore, Article 31 of the law provides that a capital gain represents the difference between the selling price and the value of the capital asset, which includes the acquisition cost, improvements made, and depreciation. Pursuant to Article 31, paragraph 12, the treatment of capital gains and losses for non-business individuals was to be regulated by a sub-legal act, which has still not been adopted by the Minister of Finance since the law entered into force on 1 September 2015.
In this context, Administrative Instruction No. 01/2016, adopted for the implementation of Law No. 05/L-028, also does not contain any provision regulating the treatment of capital gains and losses for non-business individuals. Nevertheless, TAK continues to tax these individuals contrary to the law, applying arbitrary methodologies for the taxation of immovable property, particularly property acquired or inherited many years ago.
In such cases, the acquisition cost of the property is recognized at a low value, while the sale or exchange value of the property, which has increased several times over, serves as the basis for calculating the tax. This practice by TAK has created an unjustifiable burden on citizens, who have been compelled to pay substantial taxes and, in many cases, have faced compulsory tax collection measures, including the registration of tax liens, seizure of property, and sale through public auction.
Currently, a significant number of these cases are awaiting examination before the Basic Court of Prishtina, Department for Administrative Matters, while others have been referred to the Appeals Board within the Ministry of Finance, which is still not operational due to the failure to appoint its members.
Under these circumstances, non-business individuals are left with judicial protection as their only available remedy against TAK’s arbitrary actions and the imposition of personal income taxes without a legal basis.
In these complex tax matters, it is essential that landowners receive the necessary legal support!
Author: Florin Lata
