2023
Investigate Europe Team
The article discusses the significant impact of tax privileges provided by European governments to real estate investors and owners on housing prices. Despite the political differences across member states, a common practice has emerged where these tax benefits contribute to inflating housing prices, creating an overheated real estate market. Investigate Europe’s team conducted an analysis of various countries, revealing a concerning trend in how real estate investments are favored compared to other business ventures. The investigation highlights that numerous European nations, including Austria, Belgium, France, Germany, Greece, Hungary, Italy, Norway, Portugal, Spain, Sweden, and the UK, have tax regimes that disproportionately benefit real estate investments. These privileges often manifest in the form of full exemptions on capital gains, favorable tax conditions for funds, and lower taxation on rental income compared to other profits. This systematic under-taxation or untaxed status of real estate has been confirmed by insights from economists, tax experts, and legal professionals, who emphasize the detrimental effects on the economy. Furthermore, the article sheds light on various tax avoidance schemes employed by real estate investors, pointing out the lack of European regulation or oversight that complicates the identification of these patterns. The findings indicate a significant misallocation of capital, amounting to billions of Euros in countries like Germany, Italy, Portugal, and Belgium, all stemming from these tax exemptions. The implications of these practices raise serious concerns regarding housing affordability and market stability across Europe.
European governments give huge tax benefits to real estate investors and owners - a policy that is common in many member states despite all political differences. Over the past months, Investigate Europe’s team analysed the taxation and loopholes for real estate investments in several European countries. This lures billions of euros to the overheated real estate market . The investigation found that Austria, Belgium, France, Germany, Greece, Hungary, Italy, Norway, Portugal, Spain, Sweden and the UK all have tax regimes that favour certain kind of real estate investments more than other types of business or investments. The most common privileges include full exemptions on capital gains, special free-tax guarantees for funds, and rent income taxed lower than other types of profits. Economists, tax experts, lawyers and organisations interviewed by IE reporters arrive to a clear conclusion: real estate, both commercial and residential, is under-taxed or untaxed in most countries. The investigation reveals several examples of tax avoidance schemes by real estate investors. There is no European regulation nor oversight, so patterns are hard to prove. Still Investigate Europe’s research shows misallocation of capital in member states like Germany, Italy, Portugal or Belgium to the tune of billions of Euros due to these exemptions.