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Post by Carol on Nov 4, 2010 10:58:32 GMT 1
There has been a case this week that I have first hand knowledge of where the tax office has started foreclosure proceedings against a foreign owner who has not paid their rett bill (which was issued in March 2010).
They will seize the property unless the owner pays the whole bill in the next few days.
The owner didn't even know the bill had been issued because the system has changed... previously the owner had to sign a receipt to say they have received the bill, but now the tax office just have to post it twice. If there is no one to collect the mail and it goes undiscovered, then the owner can find themselves in danger of losing their property.
These are the new rules and regulations and most estate agents/ accountants and lawyers are not aware of them (we only found out because we saw it in action). So if you aren't sure about your situation, then it would be a good idea to check.
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Post by crojoe on Nov 4, 2010 13:26:02 GMT 1
There has been a case this week that I have first hand knowledge of where the tax office has started foreclosure proceedings against a foreign owner who has not paid their rett bill (which was issued in March 2010). They will seize the property unless the owner pays the whole bill in the next few days. The owner didn't even know the bill had been issued because the system has changed... previously the owner had to sign a receipt to say they have received the bill, but now the tax office just have to post it twice. If there is no one to collect the mail and it goes undiscovered, then the owner can find themselves in danger of losing their property. These are the new rules and regulations and most estate agents/ accountants and lawyers are not aware of them (we only found out because we saw it in action). So if you aren't sure about your situation, then it would be a good idea to check. Tell us what happens in the end. I wonder how much money we talking about? Can the tax office just seize and sell a property over an unpaid bill or do they need to take it to court first and get in touch with the owner? As it is owned by a person outside Croatia, seems the owner could take it to the European Court. Since so many things have to go through the courts, I doubt they can just foreclose and seize a property.
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Post by riki on Nov 4, 2010 14:37:52 GMT 1
Sorry for ignorance but what is an rett bill?
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Post by Carol on Nov 4, 2010 15:27:19 GMT 1
rett = real estate transfer tax its the 5% tax you pay when you buy/ inherit a property
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Post by crojoe on Nov 4, 2010 17:01:24 GMT 1
I don't understand this one? A Croatian owner and a Foreign what? Are there two owners? Or, is it a case where the foreigner bought the property, gave the rett to the Croatian seller and he/she never paid it? If it's case where the foreigner had to pay the rett., and failed to do so, then such a move by any tax organisation would be legitimate (after a certain amount of time). The foreign owner (or seller) should have known about this basic of tax that needed to be paid. Ownership paperwork takes about 6 to 12 months I hear, so is this the case why the rett wasn’t paid? Sorry, just seems an odd situation.
I know about a foreign business man in Croatia who has a business and wound up owning a nice hunk of taxes (due in part to stupid business and none-paying customers). He didn’t file for bankruptcy, but when he went in for his working visa renewal, due to the tax owed, they said they would extend his permit. But then, they found themselves in a dilemma. If they deported him or refuse his visa to remain, then he wouldn’t be able to pay his Croatian companies tax owed. In the end they gave him the visa, and the tax office gave him 12 months to pay back the tax bill. (Just in case you need a new idea on how to get a work permit. HA!)
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Post by Carol on Nov 4, 2010 17:39:44 GMT 1
The company is croatian. The owner of the company is a foreigner. The company owns the property so the property owner is Croatian.
The owner knew RETT was due but it takes between 6 months and three years so they had no idea it had been done. They asked from time to time but not since this time last year. As you may imagine its not that easy to ask a question of the people in the tax office when you can't just pop in and pose your question in Croatian.
Unfortunately still waiting for the RETT bill is a very common situation and that's why i posted about it.
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Post by Madgolfer on Nov 4, 2010 17:58:42 GMT 1
Tax offices around Zagreb are getting the RETT bills out inside the 30 days. They need the money!
Its certainly one good reason why people should have all their post re directed to their accountant, bookkeeper or lawyer.
Keep us posted on this one please Carol.
K.
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Post by totalcroatia on Nov 4, 2010 18:23:16 GMT 1
Carol,
don't have an answer unfortunately but two bits of info to throw into the RETT mix, as well as a question.
1. We had a client who bought in 2005 through a local lawyer, then bought again in 2006, using a Zagreb lawyer, as she was less than happy with her first legal experience. She got her permission and was waiting for her tax bill, which never came. When she got permission for the second property, her Zagreb lawyer went to register it, to be told that there was an outstanding tax bill on the first property (no official paperwork had been sent out) and not only did she have to pay that, but interest as well.
She immediately paid the outstanding tax (over 10k) and went back to lawyer one who promised he would sort the local way. She heard nothing until 3 years later when she went to get an OIB, to be told she has an accruing interest bill of 1200 euro and no OIB would be issued until it was paid. Laywer one has promised to definitively solve this in the local way and claims today to have done so.
But the RETT snippet from this is quite strange (and I wonder if it applies to your case, Carol) - a lawyer friend told me that if a buyer buys more than one property, the tax demand is not issued, but has to be paid - the onus is on the buyer to know when. Sounds like a ridiculous scenario, but we are talking Croatian paperwork here.
2. A lesser known law (can try and find out the number if interest there) is of RETT not being applicable if it has not been issued within six years of purchase, not a likely scenario in zagreb reading MG's comments above, but there are many cases of unissued tax demands here in Dalmatia. I have a case of a friend fighting this at the moment (bought in early 2004) and looks like he might win.
My question - in the years of MFA approval, permission would come and then a tax bill would or would not follow. How does it work now (been out of Croatian property for a while) - is ownership guaranteed by teh contract, assuming lodged at the court and how does a buyer know when the tax is due? Imagine the rules vary from tax office to tax office.
Cheers Paul
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Post by Carol on Nov 4, 2010 18:41:51 GMT 1
would but it were so easy to get mail re-directed here in Dalmatia, madgolfer! I sometimes think our businesses are in different countries rather than different counties!
This same owner has been trying unsuccessfully for two years to get the hep bills into the company name and re-directed to the accountant (and that's with the help of someone who knows people and can usually get things done).
Thanks for the info, Paul. its good to know (maybe in the end you can put this all into a page on totalcroatia?). The company only has one property/ only one property ever.
I think that the tax office must have just got fed up with locals who know the system not being available to pick up letters sent by registered post (let's face it they are ALWAYS bad news...) and foreigners who have the audacity to not be on hand when Croatia's bureaucracy has a whim about contacting them.
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Post by crojoe on Nov 4, 2010 19:31:26 GMT 1
The company is croatian. The owner of the company is a foreigner. The company owns the property so the property owner is Croatian. The owner knew RETT was due but it takes between 6 months and three years so they had no idea it had been done. They asked from time to time but not since this time last year. As you may imagine its not that easy to ask a question of the people in the tax office when you can't just pop in and pose your question in Croatian. Unfortunately still waiting for the RETT bill is a very common situation and that's why i posted about it. Ok, I understand what you are saying. Same with my company. I am the foreign owner, although company is Croatian. Thus the only real reason one can get a work permit. I still think they have a chance. Just go to the office and talk to the people face to face, then if they just sit there like s, then ask to talk to their director, if that doesn’t work then take it to the person over them, then take it to court. They too will have to prove they sent out the letters requesting rett. No proof of paper signed then no real case.
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Post by Carol on Nov 4, 2010 19:49:55 GMT 1
unfortunately crojoe the procedure has changed its no longer about having those blue slips and the onus isn't on the tax inspector any more: its on the tax payer instead. All the tax office has to do is send the bill in the post twice. After that they can start applying late penalty charges. Then after a few months later they just send all the paperwork over to the regional foreclousre department and at that point you'll need an expensive lawyer to even contest the process. This tax bill was actually discovered 3 weeks ago and since then there have been at least 20 attempts to speak formally or informally with the tax office about it and to get the interest removed. The person dealing with the case has been on permanent leave but she came back on Tuesday, saw that it was going to be a hassle and so she immediately put the file over to the foreclosure dept for proceedings to start. Honestly, right now, there isn't a snow ball's chance in hell of getting this sorted out in what anyone might consider a fair way.
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Post by keepsmiling on Nov 4, 2010 20:07:01 GMT 1
When we took over the title of our property in Dubrovnik, we expected the RETT to be in anytime but as we didn't want it to come when we were not there, we opted to go to the tax office and arranged for them to send us the invoice within the next few days, which they promptly did (amazing how quickly they could work when they wished to). I know we don't generally like to pay our bills too quickly, but in this instance it paid to do so.
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Post by crojoe on Nov 4, 2010 21:49:53 GMT 1
Take it to the papers. Make a stink. You'd be amazed at what they might do when the media get involved. The owner should go to their embassy here. I mean, if they where going to foreclose on my house I wouldn't just be sitting around in another country hoping for the best. Drastic situations require desperate measures. Go to the Croatian papers and explain the story, call the TV, get them out to the house. Actually, make a press release, get it translated into Croatian and send it out to all the newspapers (include photos and paperwork to date). Either that, or have the owner fly over and pay the silly bill, plus interest. If you told them the owner wants to pay the bill I bet they would make it happen. If not, then tell them you will take it to the mass media. Actually, don’t tell them that, but go do it, and then take the media to their office. Just make sure the owner has their facts straight. If all else fails go apply for a protest permit and go stand outside parliament.
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Post by crojoe on Nov 5, 2010 11:48:59 GMT 1
This is a bazaar event, and since I am not the person in the thick of it I can't pass judgement, but since I live here I know there must be a way out. One just has to fight for it:
What’s wrong with inspection for a property? Ff there's nothing to hide and just bad luck or for the want of receiving a letter on time is should be able to be resolved. This person in question really just needs to hop on a plan or drive and get it sorted. I sure would. If the tax office is so tough and have absolutely no feelings then I would take it to the press and ring them out. As it will most likely need to go to court before they can repossess it, then you still have a fighting chance? Any civil person (even Croatian) would rather resolve the issue I think (especially since I gather the person can pay the tax and any interest) then go through years of court, media storm and so forth. This person really needs to get their side of the story down on paper, notarised then sent to this tax office recorded (in Croatian). It's better to do this then sit around. This will also show the person is pro-active and you have on record that you want to resolve the issue. Put in the paper that owner was abroad (logical), put that the tax office didn't bother to send out rett statement for so many years (even if the procedure changed with time), and state that you requested to pay the bill and staff at the tax office where uncommunicative, offered no way out, no compassion or understanding (especially since owner is a foreigner and isn't always up to date with all the law changes). The owner should state that they feel the staff at such and such an office portray an attitude of racism against foreigners and act inhuman.
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Post by totalcroatia on Nov 5, 2010 14:46:52 GMT 1
Carol,
I am with Crojoe on this one. Unless something proactive is done, then I think the owner could be in some trouble. The case is clearly absurd. Here is what I would do (what does the owner have to lose - at the moment it is the house?)...
Go and see the tax woman and explain that you were talking to a journalist friend about the case. He/she was amazed at the situation and wanted to know if the owners wanted to make the case public - the next day you are contacted by a strong local (eg Slobodna) paper and/or an international (FT?), who are interested in doing a story on the issues surrounding EU integration and foreign property ownership, and that this issue (and particular example) is a central part of the article.
They have obviously heard your side only and are keen to interview and quote the tax lady with references to the legal article which demonstrates this absurd situation, and so would it be ok to pass on her details?
My hunch is that they would shy away from the publicity, both the interview and the foreclosure, and that would buy your clients some time to get legal advice and some other solution.
Cheers Paul
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