2023
Investigate Europe
The investigation titled "Untaxed" by Investigate Europe highlights the significant tax benefits provided by European governments to real estate investors and owners. Despite political differences, this common policy across several member states has led to a surge in capital flowing into the already overheated real estate market, exacerbating the housing crisis. The study meticulously examined the tax regimes in countries such as Austria, Germany, and Spain, revealing a troubling trend where real estate investments are often favored over other business types. The findings indicate that many countries offer substantial privileges, including exemptions on capital gains and lower tax rates on rental income. Experts consulted during the investigation unanimously concluded that real estate, both commercial and residential, remains under-taxed or entirely untaxed in most European nations. The lack of European regulation further complicates efforts to address these issues, resulting in significant capital misallocation amounting to billions of euros in countries like Germany and Italy. As a result of these tax exemptions, housing prices have soared, significantly outpacing inflation and wage growth since 2010. In cities like Prague and Paris, it can take more than two decades of average wages to purchase a flat. The investigation also sheds light on the human stories behind these statistics, revealing the real impact of tax privileges on individuals and families affected by the housing crisis, while challenging national governments to confront the social costs of their policies.
About the investigation project “untaxed”
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 our 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. This has direct social consequences: capital is lured into real estate, drives up prices, and by this contributes to the escalating housing crisis in many European countries. Statistics show that in all other EU countries apart from Italy and Malta, house prices rose from 2010 at rates that were higher than inflation or average wage growth. This is also true for Norway and UK as Investigate Europe’s findings show. In European cities like Prague, Bratislava and Paris, it will take more than 20 years of average wages to buy a flat. Investigate Europe spoke to people behind the figures and victims of the housing crisis in many European countries. The reporters also confronted national governments with the tax privileges and their social costs. Read those findings, human stories and political answers in our new investigation.