Source: Elli Touray¸ PKF Malta Researcher
During the past three months¸ a number of governments have proposed new or increased taxes on property. Above all¸ Europe has legalized a number of proposed changes to property taxation—especially in those European Union member states which are mired in the eurozone crisis.
The Greek Ministry of Finance announced in September 2011 that a special tax would be assessed to all properties in Greece¸ raising an estimated EUR 2-3 billion to qualify for the next bailout and avert default. The Greek government proposed to charge rates of up to EUR10 per square meter¸ depending on the property’s location.
Cyprus¸ like Greece¸ is a very popular location for second-home owners and expatriates (particularly from the United Kingdom). They have also been forced to change their property taxation in order to prevent the country from becoming the next victim of the eurozone crisis. In Cyprus¸ property tax is currently calculated on the home’s value as at 1980. In a heavily criticized move¸ the government has proposed a major restructuring of the real estate taxation system¸ with forthcoming property taxes based on today’s market values. Besides¸ the government plans changes to the immovable property tax thresholds in a bid to raise an additional EUR24 Million in revenue. The proposal was approved by the House of Representatives.
In the run up to the forthcoming elections in November¸ Alfredo Perez Rubalcaba¸ leading candidate for Spain’s Socialist Party¸ recently unveiled details of his election programme¸ containing plans to reintroduce wealth tax on property. The proposal was subsequently approved by the Spanish cabinet; it is thought that the measure will raise over EUR1 billion annually from around 160¸000 taxpayers.
The Austrian Finance Minister Maria Fekter has proposed that the right to levy property tax in Austria should be transferred from the central government to the federal states. The idea behind the proposal is that state governments would be given more fiscal autonomy¸ and would therefore be able to manipulate tax policy in order to attract additional local investment. However¸ currently the idea is fiercely opposed; it remains to be seen whether Fekter’s proposal will become a reality.
In the UK¸ the Conservative Party is studying proposals for an overhaul of property tax at a local level¸ and the introduction of a land tax which¸ they argue¸ would be a more progressive and therefore fairer¸ way to raise money for local government than the present system of council tax (based on a property’s value some 20 years ago). British property owners with holiday homes in France (of which there are many) were also no doubt greatly relieved to hear that plans for a tax on second residences were shelved this summer¸ after an outcry from the property industry and opposition in the French Senate. The levy was intended to contribute to the financing of the government’s wealth tax reform and was expected to generate revenues of around EUR 176 million on the basis of around 363.000 secondary residences in France.
There was also good news for property investors in Monaco (well¸ at least for the small band of Formula One drivers¸ Russian oligarchs and other super-rich individuals who can afford to buy in the principality!) in July this year¸ after a new law was passed amending the taxation on the transfer and purchase of real estate. The highlight of the new law is a significant reduction in the registr