Constitutional Court

KO177/23, applicant, Municipality of Prizren, constitutional review of Article 5 of Law No. 08/L-224 on Amending and Supplementing Law No. 06/L-005 on Immovable Property Tax

KO177/23, Judgment of 15 November 2023, published on 22 November 2023

The Constitutional Court of the Republic of Kosovo has published the Judgment in case KO 177/23, with respect to the constitutional review of article 5 of Law no. 08/L-224 on Amending and Supplementing Law no./L-005 on Immovable Property Tax, which entered into force on 16 August 2023. The Referral for the constitutional review of article 5 of the aforementioned Law was submitted to the Court by the Municipality of Prizren, based on the authorizations provided by paragraph 4 of article 113 [Jurisdiction and Authorized Parties] of the Constitution of the Republic of Kosovo.

The Court has decided that (i) the Referral is admissible;  (ii) article 5 of the contested Law is not in contradiction with paragraph 2 of article 12 [Local Government], paragraph 1 of article 123 [General Principles] and paragraphs 2 and 5 of article 124 [Local Self-Government Organization and Operation] of the Constitution; (iii) to repeal the Decision on Interim Measure of 1 September 2023, since the Court has already decided on the merits of the case; as well that (iv) the remaining fifteen (15) day deadline from the thirty (30) day deadline established in paragraph 2 of article 11/B (The amount of property tax amnesty for immovable property) of article 5 of the contested Law, begins to run from the day this Judgment enters into force.

The Judgment of the Court initially clarifies that based on paragraph 4 of article 113 [Jurisdiction and Authorized Parties] of the Constitution, the municipality is authorized to challenge the constitutionality of the laws of the Assembly or the acts of the Government, which infringe upon their responsibilities or diminish their revenues, in case the respective municipality is affected by the respective law or act. Based on this provision, the Applicant, namely the Municipality of Prizren, requested the constitutional review of article 5 of Law                no. 08/L-224 on Amending and Supplementing Law no. 06/L-005 on Immovable Property Tax. This article stipulates that (i) every taxpayer who is obliged to pay immovable property tax for the tax year 2023 qualifies for the tax amnesty; (ii) the amount of property tax amnesty for all taxpayers is allowed up to the amount of the property tax invoice for 2023, but not more than one hundred (100) euro; (iii) the decision on the property tax amnesty is issued by the municipal assembly of each municipality no later than thirty (30) days after the entry into force of this Law; (iv) in case the taxpayer has paid the property tax invoice for the year 2023, the amnestied amount is calculated as an advance payment for the following year; (v) the implementation of this provision remains the responsibility of each municipality responsible for management of the property tax process for immovable properties located within the territory of the municipality; and that (iv) the responsible Ministry for finance issues decisions that may be necessary for the implementation of this provision.

The Applicant claimed before the Court that the aforementioned provision infringes the municipal responsibilities and diminishes the revenues of the municipality contrary to (i) the constitutional guarantees established in paragraph 2 of article 12 [Local Government], paragraphs 1 and 3 of article 123 [General Principles] and paragraphs 2, 3 and 5 of article 124 [Local Self-Government Organization and Operation] of the Constitution; (ii)  the European Charter of Local Self-Government; and (iii) Law no. 03/L-040 on Local Self-Government, Law no. 03/L-049 on Local Government Finance and Law no. 06/L-005 on Immovable Property Tax, in essence and among others, because it interferes with the exercise of the municipality’s own competences in relation to revenues from immovable property tax and affects the municipal budget up to the value of three (3) million euros, whereas at the local government level in the Republic of Kosovo, up to the value of twenty-seven (27) million euros, according to the referenced data of the Association of Municipalities of Kosovo. The Applicant also requested the Court to issue an interim measure suspending the effects of the contested Law until a decision on the merits is issued regarding the assessment of the constitutionality of article 5 of the contested Law. Regarding the latter, on 1 September 2023, the Court decided to (i) approve the request for an interim measure, with duration until 30 November 2023; and (ii) suspend the implementation of article 5 of Law no. 08/L-224 on Amending and Supplementing Law no./L-005 on Immovable Property Tax and the implementation of the decisions issued on the basis of this article, until the aforementioned deadline.

In addressing the Applicant’s allegations, the Judgment first elaborates on the general principles related to local self-government according to the Constitution, the European Charter of Local Self-Government and the applicable laws of the Republic of Kosovo, as well as the case-law of the Constitutional Court.

In this context, the Judgment, based on articles 12 [Local Government], 123 [General Principles] and 124 [Local Self-Government Organization and Operation] of the Constitution, the European Charter of Local Self-Government as well as the relevant applicable laws, among others, emphasizes that it is not disputed that based on Law no. 03/L-040 on Local Self-Government, Law no. 03/L-049 on Local Government Finance and Law no. 06/L-005 on Immovable Property Tax, the issues related to the immovable property tax are under the exclusive competence of the municipalities and that they have the power to decide, assign, collect and spend the revenues deriving from the immovable property tax according to the provisions of the applicable law. The latter, based on the provisions of the Constitution, determines the limits of the separation of powers between the central and local government.

According to the clarifications given in the Judgment, the contested Law, (i) determines the legal basis according to which the immovable property tax can be amnestied for the tax year 2023, specifying the maximum level of the amnesty of this tax and the corresponding time limit within which the decision can be rendered for the amnesty of the immovable property tax; and (ii) determines that the competence for such decision-making lies with the respective municipal assemblies. In the interpretation of the contested provisions in their entirety and in the context of the guarantees defined by the Constitution related to the local self-government, the Judgment clarifies that the contested Law does not oblige the relevant municipal assemblies but provides for the legal basis according to which it enables them to decide in relation to the amnesty of the immovable property tax according to the provisions of the contested Law. As such, the latter does not infringe upon the municipal responsibilities or diminish the municipality’s revenues contrary to constitutional guarantees and applicable legislation in the context of the exercise of the municipality’s powers to assign, collect and spend the tax on immovable property within the territory of their municipality.

Further, the Judgment also states that based on paragraph 2 of article 123 [General Principles] of the Constitution, “local self-government is exercised by representative bodies elected through general elections” and that as a result, the members of the municipal assemblies are not subject to any binding mandate during decision-making in the exercise of their powers established by law. The implementation of article 5 of the challenged Law, regarding the possibility of decision-making on the immovable property tax amnesty according to the limitations and time limits specified therein, is at the full discretion and competence of the respective municipal assemblies.

Finally, the Judgment clarifies that (i) taking into account the fact that the challenged Law entered into force on 16 August 2023, whereas the thirty (30) day deadline established in paragraph 2 of article 11/B (The amount of property tax amnesty for immovable property) of the contested Law was suspended on 1 September 2023 with the imposition of an interim measure by the Court, which suspended the implementation of article 5 of the challenged Law until its decision on merits; (ii) the remaining part of the fifteen (15) day deadline specified in the above-mentioned article, begins to run from the day this Judgment enters into force, namely with its publication in the Official Gazette of the Republic of Kosovo, in which case the Decision on Interim Measure is also repealed.

The Judgment further clarifies that in the case of exercise of the discretion foreseen by article 5 of the challenged Law by the municipal assemblies regarding the amnesty of the immovable property tax for the tax year 2023, article 5 of the challenged Law itself determines the solution for citizens who have already paid the immovable property tax for the year 2023, specifying in paragraph 6 of article 11/B (The amount of property tax amnesty for immovable property) thereof, that “in case the taxpayer has paid the property tax invoice for the year 2023, the amnesty amount is calculated as an advance payment for the following year”.

This translation is unofficial and serves for informational purposes only.