1. Success Factors for a System for Property Taxation
World Bank Conference on Land and Poverty
Washington
March 20th – March 24th, 2017
Ruud M. Kathmann
The Netherlands
March 22th, 2017
Land and Poverty Conference Washington

2. Land and Poverty Conference Washington
Netherlands
The Netherlands
12 provinces
388 municipalities
22 polderboards
March 22th, 2017
Land and Poverty Conference Washington

3. Land and Poverty Conference Washington
Netherlands
16,7 million inhabitants
Capital Amsterdam ( inhabitants)
Smallest municipality (1.000 inhabitants)
Area: 41,526 km²
7,6 million residential properties
sales per year
1,0 million non-residential properties
Total value: € billion (€ )
€ 10 billion tax revenues based on the assessed value
Total costs for appraisal and assessment: € 150 million
March 22th, 2017
Land and Poverty Conference Washington

4. Land and Poverty Conference Washington
Netherlands
Real estate taxes based on market value
Decentralised execution of the valuation
Central supervision of the quality
Annual valuation of market value
Computer assisted mass appraisal
Standardised working processes
Use of available data sources where possible
Uniform and comprehensive standards
Adequate information for and interaction with taxpayers
March 22th, 2017
Land and Poverty Conference Washington

5. Land and Poverty Conference Washington
Success factor 1
Choosing an appropriate base for taxation
Market value, the international definition (IVS and EVS)
Special act for real estate assessment (since 1995)
Based on full ownership and ready for use
Highest and best use (allowed by zoning regulations)
No seperation between land and buildings
Sales comparison for residential, capitalization of rent for commercial
Reproduction costs for non marketable properties
Risks
Expensive data collection
Collapse of market has influence on revenues
Transparant market needed
March 22th, 2017
Land and Poverty Conference Washington

6. International valuation Standard (IVS)
Market value
The estimated amount for which a property should exchange on the date of valuation between and willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeable, prudently, and without compulsion.
March 22th, 2017
Land and Poverty Conference Washington

7. Land and Poverty Conference Washington
Success factor 2
Choosing an appropriate update frequency
Annual revaluations (market reference date one year before)
Annual revaluations since 2007
Efficient working procedures (but not at the start)
No large value differences between revaluations
Recent value usable for a larger number of purposes
Risks
No time in schedule to overcome problems
Assessed value will influence the market
March 22th, 2017
Land and Poverty Conference Washington

8. Land and Poverty Conference Washington
Annual valuation
March 22th, 2017
Land and Poverty Conference Washington

9. Land and Poverty Conference Washington
Annual valuation
March 22th, 2017
Land and Poverty Conference Washington

10. Land and Poverty Conference Washington
Success factor 3
Choosing an appropriate layer of government
Municipalities are responsible for valuation/assessment
All layers can levy taxes
Advantages municipalities
Data about real estate because of building permits, zoning
Closest to the properties (for physical inspections)
Closest to the public
Smaller municipalities organize shared service centers
Risks
Insufficient quality and/or lack of uniformity
Slow in implementing improvements
March 22th, 2017
Land and Poverty Conference Washington

11. Land and Poverty Conference Washington
Quality control
Council for Real Estate Assessment
Set out guidelines
administration
valuation
quality control procedures
Perform audits
Publish results
March 22th, 2017
Land and Poverty Conference Washington

12. Land and Poverty Conference Washington
Success factor 4
Choosing appropriate sources of data
Available base registers and special data collection
Minimal data for property tax
Properties (parcel/buildings) /taxpayers (owners/users)
Data depending on base for taxation chosen (value)
Detailed property data (also quality, maintenance, etc.)
Market data (sales prices, transparant market)
Risks
Poor data quality leads to low trust in taxation
Maintenance of data (quality) is essential
Data is available and accepted by taxpayer
March 22th, 2017
Land and Poverty Conference Washington

13. Data used for valuation
Cadastral information
ownership
plot size
Registration of buildings
residential or not, size and building year
building activities
Data collection for valuation
type of building, quality of materials, maintenance situation, garages, etc.
March 22th, 2017
Land and Poverty Conference Washington

14. Land and Poverty Conference Washington
Observations
A system of taxation is never finished
Adapt to changes in society and market
Trust of taxpayers is important
fair, understandable, transparant and influence
Property tax based on market value is considered fair
Annual valuation of market value has many advantages, but you have to grow into the system
Access of data (property and market) is important
Continuous improvements based on benchmarking
March 22th, 2017
Land and Poverty Conference Washington

15. Questions and discussion
Any questions
Now, or:
March 22th, 2017
Land and Poverty Conference Washington