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General financial framework of local governments

 

Country Albania
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Local tax on small business – 20,47%
2. Real estate transfer tax including tax on buildings and agricultural land – 12,4% Vehicles registration tax – 5,45% .
Shared Taxes 1. Personal income tax
2. Profit tax (Have not been applied yet)
Central Government Transfers 1. Unconditional transfers (grants and competitive funds)
2. Conditional transfers Transfers from the Regional Development Fund expenditures.
Expenditures Assignment
Exclusive to Local Governments 1. Management of the local road infrastructure
2. Water supply
3. Sewage, waste and pluvial water treatment
4. Public lighting
5. Sanitation/waste collection
6. Local public transportation
7. Social housing, houses for youth and social welfare
8. Urban planning
9. LED
Shared Local with Central Governments 1. Urban planning
2. Social services Environmental protection
Shared Region with Central Governments  



Country Bulgaria
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Waste taxes – 11,79%
2. Property tax – 9,53%
3. Property revenues – 4,64%
Shared Taxes 1. Personal income tax – 50%
Central Government Transfers 1. General complementary subsidies (for financing delegated state competences)
2. General adjustment subsidies – equalization subsidy (for financing local activities) 3. Target subsidies (for financing capital investments)
Expenditures Assignment
Exclusive to Local Governments 1. Management of the local road infrastructure
2. Sewage, waste and pluvial water treatment
3. Public lighting
4. Sanitation/waste collection
5. Local public transportation
Shared Local with Central Governments 1. Water supply
2. Social housing as well as houses for youth
Shared Region with Central Governments 1. District heating supply
2. Management of local interest airports



Country Croatia
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Income tax and surtax on income tax
2. Income from non-financial asset
3. Property tax
Shared Taxes 1. Income tax (34% until 2006; 52% as of 2007)
2. Profit tax (20% until 2006; 0% as of 2007)
3. Tax on real estate (60%)
Central Government Transfers 1. Transfers for decentralized functions – primary education; secondary education; health care; social welfare and fire protection
2. Equalization grants – for general purposes and for capital purposes
Expenditures Assignment
Exclusive to Local Governments 1. Management of the local road infrastructure
2. Water supply
3. Sewage, waste and pluvial water treatment
4. Public lighting
5. Sanitation/waste collection
6. Local public transportation
7. District heating supply
Shared Local with Central Governments 1. Energy saving projects
Shared Region with Central Governments 1. Social housing and houses for youth (exclusive competence of regional government)
2. Management of local interest airports (exclusive competence of regional government)



Country Macedonia
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Property tax – 6% 2. Real estate transfer tax – 17% 3. Communal fee – 29%
Shared Taxes 1. Local governments receive 3% of personal income tax (PIT)
Central Government Transfers 1. a general purpose transfer from VAT
2. earmarked/block grants for the areas of education, culture, social policy and child protection
3. capital grants, and 4) funds received for delegated competencies.
Expenditures Assignment
Exclusive to Local Governments 1. Management of the local road infrastructure
2. Water supply
3. Sewage, waste and pluvial water treatment
4. Public lighting
5. Sanitation/waste collection
6. Local public transportation
Shared Local with Central Governments 1. Social housing as well as houses for youth
Shared Region with Central Governments  



Country Moldova
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Real estate transfer tax
2. Tax on territory planning
3. Tax on natural resources
Shared Taxes 1. Tax on income of legal entities
2. Tax on income of physical persons
Central Government Transfers  
Expenditures Assignment
Exclusive to Local Governments 1. The management of the local road infrastructure
2. Water supply
3. Public lighting
4. Sanitation/waste collection
5. Local public transportation
6. District heating supply (Only for Chisinau and Balti)
7. Social housing
8. Management of local interest airports (Only for Chisinau and Balti)
Shared Local with Central Governments 1. Social housing and houses for youth
Shared Region with Central Governments 1. The management of the local road infrastructure



Country Montenegro
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Utility fees – 23%
2. Real estate tax (property tax) – 7.5%
3. Surtax on income tax – 5.5%
Shared Taxes 1. Personal income tax – 10%
2. Real estate transfer tax – 50%
3. Concessions and fees for using natural resources – 30%
Central Government Transfers 1. Equalization grants (comprise 11% of personal income tax and 20% of real estate transfer tax)
2. Conditional grants – for financing investment projects
Expenditures Assignment
Exclusive to Local Governments 1. Management of the local road infrastructure
2. Water supply
3. Sewage, waste and pluvial water treatment
4. Public lighting
5. Sanitation/waste collection
6. Local public transportation
7. Social housing – social welfare
Shared Local with Central Governments  
Shared Region with Central Governments  



Country Republika Srpska-BIH
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Property tax – up to 35%
2. Turnover tax – up to 20%
3. Rent – up to 15%
Shared Taxes  
Central Government Transfers  
Expenditures Assignment
Exclusive to Local Governments 1. Management of the local road infrastructure
2. Water supply
3. Sewage, waste and pluvial water treatment
4. Sanitation/waste collection
5. Local public transportation
Shared Local with Central Governments 1. Sewage, waste and pluvial treatment
2. Public lighting
3. District heating supply
4. Building of social houses as well as houses for youth
Shared Region with Central Governments  



Country Romania
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Property tax (building and land)
2. Motor Tax
3. Royalties and rents (In all, local taxes and fees make for 16%-18% of local budgets' revenues)
Shared Taxes 1. Income Tax (shared up to 77% in various degrees; and accounts for a third of all LG revenues)
Central Government Transfers 1. Earmarked recurrent transfers
2. Earmarked capital transfers
3. Block grants
4. General purpose grants (equalization) (Transferred to both counties and municipalities. Make for about half of all LGs)
Expenditures Assignment
Exclusive to Local Governments 1. The management of the local road infrastructure
2. Water supply 3. Sewage, waste and pluvial water treatment
4. Public lighting
5. Sanitation/waste collection
6. Local public transportation
7. Social housing
Shared Local with Central Governments 1. District heating supply – thermal retrofitting
2. Education (LGs maintain the infrastructure)
Shared Region with Central Governments 1. Education (LGs maintain the infrastructure)



Country Slovenia
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Fee on the use of construction land
2. Real estate transfer tax
3. Fee on the use of public space
Shared Taxes 1. Personal Income Tax – 50% assigned for municipalities from which 70% to each municipality and 30% shared through the solidarity fund for poorer LGs.
Central Government Transfers 1. General grants – assigned to municipalities by formula as the equalization grant
2. Earmarked grants – assigned for co-financing investment projects
3. Special grants – for co-financing minority rights
Expenditures Assignment
Exclusive to Local Governments 1. The management of the local road infrastructure
2. Water supply
3. Sewage, waste and pluvial water treatment
4. Public lighting
5. Sanitation/waste collection
6. Building of social houses
7. Management of local interest airports
8. Tourism
9. Primary healthcare and pharmacy services
10. Social care
11. Management of cultural and sport facilities
12. Fire protection
13. Public order and peace
Shared Local with Central Governments 1. Local public transportation
2. Subsidies to the economic and agriculture sector, primary schools
Shared Region with Central Governments  



Country Serbia
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Construction land development charge – 8%
2. Construction land use charge – 6%
3. Property tax – 5%
Shared Taxes 1. Income tax – 40% share
2. Tax on inheritance and gift – 100% share
3. Property transfer tax – 100% share
Central Government Transfers 1. Non-Earmarked transfers (equalization transfers; compensation transfers; transitional transfer1; general transfers)
2. Earmarked transfers (block transfers; categorical transfers in a narrow sense)
Expenditures Assignment
Exclusive to Local Governments 1. The management of the local road infrastructure
2. Water supply
3. Sewage, waste and pluvial water treatment
4. Public lighting
5. Sanitation/waste collection
6. Local public transportation
7. District heating supply
8. Pre-school education (all costs related)
9. Investment costs of primary schools and primary health care centres
Shared Local with Central Governments 1. Management of local interest airports
2. Building of social houses and houses for the youth
Shared Region with Central Governments N/A



Country Turkey
Local Government Revenues
Most important local taxes/fees and average share in the annual budget 1. Advertisement and Publicity tax 1-5%
2. Entertainment tax 1-5%
3. Fire insurance tax 1-5%
Shared Taxes 5% of all nation-wide taxes are allocated to Local Governments. The main taxes stem from VAT and Special Consumption Taxes. Shared taxes account approximately 50% of annual average income of municipalities.
Central Government Transfers All shares allocated from the tax income of the general budget are considered as Central Government Transfers. They are placed in the budgets of both Ministry of Finance and other ministries in purpose of Grants to Local Governments.
Expenditures Assignment
Exclusive to Local Governments 1. The management of the local road infrastructure
2. Water supply
3. Sewage, waste and pluvial water treatment
4. Public lighting
5. Sanitation/waste collection
6. Local public transportation
7. Geographical urban data systems
Shared Local with Central Governments 1. District heating supply
2. Building of social houses and houses for the youth
3. Disaster management expenses (i.e. earthquakes, floods)
Shared Region with Central Governments 1. Management of local interest airports

Source: authors analysis based on the questionnaire provided by local experts