Taxes on Housing in Europe: Where Buying a Property Costs the Most

Tax policy remains one of the most uneven elements of the European real estate market. The difference in fees when buying property is striking and directly affects the attractiveness of countries for buyers and investors, reports Idealista, citing a Financial Times study.

The publication assesses property transfer taxes, stamp duties, and additional levies that shape the final transaction cost. In some countries, these taxes are set at the national level, while in others, they are regulated by regions or federal states.

Spain

When purchasing a home in Spain, taxes range between 6% and 11% of the property price. With an average property costing around €300,000, that means more than €30,000 in taxes alone. Moreover, a parliamentary proposal aims to increase fees for foreign buyers by up to 100%. Recently, MP Alberto Ibañez from the Compromís-Sumar bloc proposed a 25% tax on resale profits if the property is sold within two years of purchase.

Belgium

In Belgium, the property tax reaches 12%, though several exemptions exist. In Brussels, the first €200,000 of a primary home purchase is tax-free, while in Flanders, the rate is reduced to 2% for first-time buyers.

United Kingdom

The UK applies a progressive stamp duty system ranging from 0% to 12%, depending on property value. Owners of second homes pay additional charges, and for properties above £1.5 million, the total tax burden can reach 17%.
First-time buyers are exempt if the price is below £300,000. However, the government is now considering a new tax on high-value buyers, accused of driving speculation — potentially as an alternative to raising income tax or VAT. Treasury estimates suggest this could bring in up to £40 billion in additional revenue.

Chancellor Rachel Reeves is also weighing removing the capital gains tax exemption on main residences worth over £1.5 million. Owners of such properties would pay 18% (basic rate) and 24% (higher rate).

Another proposal from think tank Onward suggests an annual levy on luxury homes — 0.54% on values above £500,000 and 0.81% above £1 million.

As of April 1, Stamp Duty Land Tax thresholds were reduced:
- For first-time buyers — from £425,000 to £300,000
- For others — from £250,000 to £125,000

These changes increased buyer expenses by around £34 million, with some London transactions now incurring taxes of up to £11,250.

From April 6, the non-domiciled tax regime was abolished. Foreign residents living in the UK for ten years or more must now pay inheritance tax on their global assets. Experts believe this makes the system fairer and more transparent — but also reduces the UK's appeal to international investors.

Portugal

In Portugal, the IMT property transfer tax ranges from 0% to 8%, with reduced rates for affordable housing. However, the government plans to raise the IMT rate for non-resident foreign buyers as part of a broader fiscal reform package.

Other measures include:
- Reducing VAT to 6% for construction projects valued up to €648,000
- Applying the same reduced VAT to new rental housing with monthly rates below €2,300
These limits are based on market conditions in Lisbon, Porto, and other municipalities with the largest housing shortages.

Other European Countries

Italy: ~5.5% purchase tax, plus notary and registration fees significantly increase total costs.

Germany: 5% property transfer tax, plus documentation and agent fees.

France: Up to 5% in taxes, but overall expenses rise due to agent commissions up to 8%, usually paid by the buyer.

Austria: Up to 4.5% in taxes.

Greece: Between 0.5% and 3.8%.

Switzerland: Unique system — in the Canton of Zurich, the property transfer tax was abolished in 2005 to stimulate real estate investment in one of Europe’s most expensive markets.

Market Impact

High taxes directly affect buyer and investor behavior. Many try to negotiate lower prices or offset taxes through rental income. Others shift transactions into private or corporate structures to reduce costs and avoid additional commissions. However, this trend reduces market transparency and slows activity, especially in countries with heavier fiscal burdens.