France, Greece and Portugal might additionally comply with Spain’s lead and probably make vital property tax modifications in an effort to deal with their respective housing crises and make actual property extra inexpensive to residents.
Following Spain’s just lately proposed 100% property tax on non-EU consumers, there have been rising considerations about different main European nations resembling Greece, France and Portugal probably doing the identical.
New analysis from relocation specialists at 1st Transfer Worldwide has warned that this state of affairs might probably have a serious impression on the EU’s property sector, making it particularly tough for UK consumers, amongst others, to purchase second properties overseas.
In 2024, in keeping with 1st Transfer Worldwide information, Portugal, Spain, France and Germany have been among the hottest locations for British consumers to relocate to. Nonetheless, tighter restrictions and hovering prices might probably result in different beneficial locations rising.
Mike Harvey, managing director at 1st Transfer Worldwide, stated in an electronic mail observe: “Spain’s determination to impose taxes on overseas property consumers has set a big precedent, with different high-tourist nations like France, Greece, and Portugal now contemplating comparable measures.
“Whereas these insurance policies purpose to handle housing shortages, they might have unintended penalties – impacting digital nomads, retirees, and worldwide consumers who contribute to native economies.”
How might a possible 100% property tax impression European economies?
International locations resembling France, Greece and Portugal are already coping with an escalating overtourism downside, which has pushed rental costs up, making it a lot tougher for locals to seek out inexpensive housing.
Spain has additionally introduced that its golden visa programme will likely be ending on 3 April 2025. Spain’s golden visa programme, in any other case generally known as the residency by funding programme, permits overseas residents to legally reside in Spain in change for an funding. This funding could be made in property, authorities bonds or firm shares.
The programme is principally ending to deal with Spain’s housing disaster, in addition to make actual property extra inexpensive for locals.
Equally, Greece, Portugal and France are additionally making strikes to deal with overtourism, resembling cracking down on short-term leases, focusing extra on sustainable tourism practices and selling much less standard and area of interest tourism locations.
Nonetheless, these nations nonetheless rely closely on tourism, in addition to overseas funding, particularly within the property sector, to spice up their economies. As such, a 100% property tax might have far reaching penalties for financial development, particularly if different earnings technology and funding streams usually are not developed concurrently.
Harvey stated: “A 100% tax on overseas consumers might damage Greece’s competitiveness and financial stability. The nation is already tackling housing pressures by banning new short-term rental licenses in key Athens areas. Additional modifications might cut back funding and have an effect on each the property market and the native financial system.
“France’s tourism contributes to round 9% of GDP, with $68.6 billion (€66.4bn) in 2023 tourism income – up 110% from 2020. Further taxes on overseas consumers might pressure the market, slowing property funding and tourism.
“Portugal’s tourism contributes to fifteen% of GDP, reaching €25.1bn in 2023 with a predicted income of €66.5bn by 2034. Nonetheless, with the introduction of latest property taxes on overseas consumers, this development could possibly be in danger. Portugal stays a prime vacation spot for Brits, however the introduction of those taxes might dampen that curiosity, affecting each the property market and the broader financial system.”
The place might British consumers transfer to subsequent?
With standard European locations for second properties now seeing elevated tax and value uncertainty, a number of British consumers are trying additional overseas to relocate.
In accordance with 1st Transfer Worldwide, between 2022 and 2024, the US, Australia, UAE, Canada and New Zealand have been the highest locations for Brits to maneuver to. Others included Cyprus, South Africa, Singapore, Saudi Arabia and the Cayman Islands.
Extra profitable profession and earnings alternatives, decrease taxes, a greater high quality of life and pure landscapes have been among the driving elements prompting Brits to maneuver. A decrease value of residing and no language barrier in a number of of those nations has additionally made them extra engaging.
Harvey identified: “Cyprus is turning into an more and more standard alternative for Brits seeking to relocate. Our inside information exhibits it was the sixth most sought-after vacation spot between 2022 and 2024. The island gives an important Mediterranean life-style, that includes sunny climate, inexpensive residing, and a welcoming setting.
“With English broadly spoken, expat-friendly tax perks, and a relaxed but energetic ambiance, it is clear why Cyprus is gaining traction as a prime vacation spot for these looking for a vibrant life-style overseas.”