There are about 1,000,000 holiday homes in Europe owned by Brits. Could brexit result in holiday home taxes being introduced across Europe?
If you own a second home in the EU, what will the situation be after 23rd of June if we leave the EU.
UK citizens are likely to remain free to own property within the EU, as any other nationality is. For example, in France many US citizens own property there without any restrictions.
The main area of contention is how property inheritance and taxation laws would apply; at the moment the rules treat EU and non-EU citizens differently.
If you are considering buying a property then UK buyers may find it harder to get a home loan to buy a property in the EU. This is because European-based banks consider non-EU citizens to be a higher risk and therefore the amounts that can be borrowed would be lower, and the deposit required may be higher. Having said that if we vote to leave the EU then it is likely that property prices will fall even lower than they are now.
It should be remembered that back in 2011 Sarkozy proposed a tax on holiday homes This was to be a 20 per cent annual charge appling to a theoretical rental value – or “valeur locative cadastrale” (VLC) – which is fixed by the local tax office. VLC rates fluctuate widely in France, for no obvious reason, but are always a fraction of the “real” rental value of a house. This proposal was never enacted.
Then again Francoise Hollande proposed taxation on second holiday homes, His proposals were more draconian. The French government announced it was to increase taxes on foreign-owned second homes. Tax on rental income would rise from 20 per cent to 35.5 per cent, and capital gains tax on property sales would rise from 19 per cent to 34.5 per cent. The extra in each case is being labelled a “social charge”. See article
The tax was to be paid by foreigners, or non-resident French people, who use their second homes in France only for family holidays – or rent the properties out for a few weeks a year. Luckily the European court (often much maligned by Euro sceptics) decided that the proposals were illegal and the holiday home taxes have now been scrapped. See article
There is nothing to say that these taxes might not be resurrected and copied by other European countries like Spain, Portugal and Italy, especially if we leave the EU and that causes disruption to their economies, with concurrent lack of sympathy for rich Brits with holiday homes in their countries.
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