|Daniel Futej||Dalimir Jančovič|
The new act on local development fees came into force in Slovakia on November 1 2016. Under the act, a fee will be charged for certain construction activities that take place in municipalities and cities. The act is a response to the extensive development in towns and municipalities that need new infrastructure but do not have the finances to fund the building. Investors pay the fee, and local governments should use the revenue to build technical and social infrastructure.
There is no requirement to charge the fee; it is for the town and municipal councils to decide whether to implement it. The fee can range from €10 to €35 ($10.77 to $37.68) per square metre of above ground floor. Municipalities can set the rate in a by-law once at the start of each year.
The basis for calculating the fee is the size of the above ground floor area in square metres, determined by adding up the area of all the rooms on the above ground levels of the structure. Calculations are made using the project documentation annexed to the application for a building permit.
The fee only applies to construction for which a valid building permit was issued after November 1 2016, but it cannot be applied before the municipality sets the fee in a by-law. The fee will apply to construction for which the building permit becomes effective on or after January 1 2017, provided that the municipal by-law that sets the fee is effective beginning January 1 2017.
Municipalities can decide to implement the fee throughout their entire territory, or only in certain sections. They can also divide buildings into the categories provided by the act (such as residential, agricultural production or industrial buildings) and set different fees for the different categories.
One flaw in the act is its ambiguity as to whether the fee must be paid for building renovations and restorations.
The act sets out the building categories that are exempt from the fee. Examples include minor construction; social infrastructure; healthcare facilities; schools or buildings that serve schools; buildings used for religious purposes or for national defence; museums; libraries; galleries; and community centres.
In a surprise move, the legislature also exempted single family homes under 150 square metres from the fee, despite the fact that these homes are the greatest cause of the need for new infrastructure. Interestingly, the fee applies to single family homes over 150 square metres, and not just to the area exceeding the 150 square metre threshold but to the entire floor area of the home.
The fee is paid by the applicant to whom a valid building permit was issued. Municipalities, self-governing regions and the state are all exempt. The fee is levied by a decision of the municipality. It is payable within 15 days after the decision becomes final, regardless of whether construction work has already started. This becomes a financial burden on the investor shortly after the building permit is issued. Therefore, it may be advisable for investors to postpone filing the application for a building permit until they have all the finances at hand for construction.
The fee can be paid in one or more instalments based on a decision of municipality. If there is a change in the size of the floor area during construction, the municipality will issue a new decision and levy any additional fee as necessary.
If construction does not begin and the building permit expires (typically two years after the issue date), the holder of the building permit must notify the municipality within 60 days of the expiry date and the municipality will refund the fee. Otherwise, the holder of the building permit forfeits the right to the refund.
Daniel Futej and Dalimir Jančovič