The government last year had introduced the measure as a way to incentivise property owners to reduce the rent burden for businesses struggling because of the pandemic. At the same time, it ensures that landlords don’t come into financial difficulty themselves because of the cash shortfall.
The finance ministry in April submitted a draft law to parliament to extend the measure until the end of this year and members of parliament on Monday began deliberations.
The State Council--a watchdog that checks whether laws are compliant with existing legislation and the constitution--gave the project the green light in principle. However, it said the government should consider drawing up a separate piece of legislation as the measure currently forms part of the 2021 budget.
The government estimates that the tax break could lead to revenue losses of between €5m and €10m in 2022 and 2023. “Since it is not possible to definitively determine the number of owners who will waive a fraction of the rents owed by tenants, the tax loss cannot be estimated precisely,” the ministry said in documents filed with parliament.
Because the effects will be felt beyond the 2021 budget, the State Council suggested lifting the measure out of the budget law and creating a separate text.
The tax break is only applicable to business properties and doesn’t apply to residential buildings.
The cost of the measure for 2020, when it first launched, has not yet been fully calculated, a representative of the finance ministry told MPs on 17 May, given that the deadline for tax declarations was pushed back from March to the end of June.
The law is unlikely to run into opposition but must be agreed upon by MPs in the finance and budget committee before it can come to a vote in the plenary.