Property Sector in Danger? More Countries May Follow Spain's Tax Moves
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Loading... - Vittoria Marino
- 12 Feb 2025
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Spain's recent proposal to impose a 100% property tax on non-EU buyers has raised alarms about potential ripple effects across Europe, with countries like Greece, France, and Portugal possibly considering similar measures. This shift could significantly impact the EU's property sector, particularly making it more challenging for UK buyers and other foreign investors to purchase second homes abroad.
According to research from 1st Move International, Spain's decision to tax foreign property buyers sets a concerning precedent. Mike Harvey, managing director at 1st Move International, noted that while these policies aim to address housing shortages, they could inadvertently harm digital nomads, retirees, and international buyers who contribute to local economies. The tightening of property regulations could lead to a decline in foreign investment, which many European countries rely on to bolster their economies.
Countries like France, Greece, and Portugal are already grappling with issues related to overtourism, which has driven up rental prices and made affordable housing scarce for locals. Spain's announcement to end its golden visa program by April 3, 2025, further underscores its commitment to tackling the housing crisis and making real estate more accessible to residents.
The introduction of a 100% property tax on foreign buyers could have far-reaching consequences for the economies of affected countries. For instance, Greece is already facing housing pressures and has banned new short-term rental licenses in key areas of Athens. Additional taxes could deter investment, destabilizing the property market and the local economy.
In France, tourism contributes approximately 9% to the GDP, generating around $68.6 billion in revenue in 2023. New taxes on foreign buyers could strain the market, slowing property investment and tourism. Similarly, Portugal's tourism sector accounts for 15% of its GDP, with significant revenue growth projected. However, the introduction of property taxes could dampen interest from foreign buyers, impacting both the property market and the broader economy.
As uncertainty grows in popular European destinations, British buyers are increasingly looking further afield for relocation options. Between 2022 and 2024, the US, Australia, UAE, Canada, and New Zealand emerged as top destinations for British expatriates. Other attractive options include Cyprus, South Africa, Singapore, Saudi Arabia, and the Cayman Islands.
Factors driving this shift include more lucrative career opportunities, lower taxes, improved quality of life, and appealing natural landscapes. Countries like Cyprus are gaining traction due to their Mediterranean lifestyle, affordable living, and expat-friendly environment. With English widely spoken and favorable tax incentives, Cyprus is becoming an increasingly popular choice for those seeking a vibrant lifestyle abroad.
Spain's proposed property tax on non-EU buyers could set off a chain reaction across Europe, prompting other countries to consider similar measures. While aimed at addressing local housing issues, these policies may inadvertently hinder foreign investment and tourism, which are vital to many European economies. As British buyers explore new relocation options, countries outside of Europe may become more appealing, reshaping the landscape of international property investment.
