In Europe, property tax rates vary widely from one country to another, shaped by local economic frameworks, fiscal strategies, and government priorities. For real estate investors, understanding these differences is crucial—especially when assessing long-term holding costs and net returns on investment.
As of 2025, the property tax revenue as a percentage of private capital stock reveals the effective tax burden placed on real estate in each nation. The table below illustrates how each country compares:
| Country | Property Tax (2025) |
|---|---|
| Austria | 0.10% |
| Belgium | 0.62% |
| Czech Republic | 0.10% |
| Denmark | 0.75% |
| Estonia | 0.11% |
| Finland | 0.38% |
| France | 0.98% |
| Germany | 0.21% |
| Greece | 1.13% |
| Hungary | 0.25% |
| Iceland | 1.18% |
| Ireland | 0.29% |
| Italy | 0.62% |
| Latvia | 0.41% |
| Liechtenstein | 0.00% (No recurrent property tax) |
| Lithuania | 0.25% |
| Luxembourg | 0.05% |
| Malta | 0.00% (No recurrent property tax) |
| Netherlands | 0.51% |
| Norway | 0.21% |
| Poland | 0.95% |
| Portugal | 0.41% |
| Slovak Republic | 0.28% |
| Slovenia | 0.29% |
| Spain | 0.58% |
| Sweden | 0.35% |
| Switzerland | 0.08% |
| Turkey | 0.15% |
| United Kingdom | 1.94% (Highest in Europe) |
| Cyprus | 0.00% (Abolished in 2017) |
The United Kingdom currently ranks highest in property tax burden, with 1.94% of its private capital stock attributed to real estate tax revenue. This far exceeds the European average and signals a more aggressive approach to property taxation.
Iceland and Greece follow closely behind, with 1.18% and 1.13%, respectively—figures that reflect their governments’ heavier reliance on property as a taxable base.
At the other end of the spectrum, Luxembourg (0.05%), Switzerland (0.08%), and Austria (0.10%) maintain minimal property tax exposure. These jurisdictions often appeal to investors prioritizing tax efficiency over short-term yield.
Meanwhile, both Liechtenstein and Malta continue to stand apart, as neither country imposes a recurrent property tax at all—making them unique in the European context.
In many jurisdictions, property taxes are deductible from corporate income tax for business owners, providing a strategic advantage when structuring investment portfolios. However, this is not universally applicable; Greece and Slovenia, for instance, do not permit such deductions, impacting overall tax planning.
Table of Contents
Differences in Property Tax Systems across Europe
While every country in Europe imposes some form of property tax, the structure, calculation method, and rates vary significantly. These differences impact not only how much tax property owners pay but also how real estate is valued, declared, and reported.
Here’s what sets the systems apart in 2025:
- Digitalization and Reforms: Several EU states—including Germany, Ireland, and Italy—have updated or are reforming their cadastral systems to align property valuations with market prices, which could lead to increased tax bills in the coming years.
- Tax Base – Market vs. Cadastral Value: Some countries (e.g., France, Italy) base property tax on cadastral values—official property assessments that are often below market value. Others (like the UK and parts of Germany) use estimated rental income or actual market value.
- National vs. Local Administration: In countries like Germany, Spain, and Belgium, property taxes are managed locally, which means tax rates can differ between cities and municipalities. In contrast, Portugal and Ireland apply a unified national rate structure.
- Fixed vs. Progressive Rates: Property tax can be a fixed percentage of value (as in Portugal or Greece) or progressive, with higher rates for more valuable properties (common in France and the UK).
- Ownership vs. Transfer Taxes: Some systems (e.g., Italy) focus more heavily on transfer taxes at purchase, while others (like Sweden) rely on annual property taxes as the primary real estate levy.
- Incentives and Exemptions: Many countries offer property tax reductions or exemptions for:
- Primary residences
- Properties in rural or economically underdeveloped areas
- Green-certified buildings or energy-efficient renovations
- Pensioners, veterans, or large families
Property Taxes in Cyprus
In 2025, Cyprus continues to offer one of the most favorable property tax environments in Europe, especially for foreign investors, retirees, and non-domiciled residents. The country abolished its annual immovable property tax (IPT) in 2017, meaning there is currently no recurring national property tax on owned real estate.
However, property owners are still subject to several transactional and municipal taxes, particularly at the time of purchase and through annual municipal levies based on property value or square meters.
| Tax Type | Rate | Details |
|---|---|---|
| Annual Property Tax | ❌ None | Abolished in 2017; no recurring national tax on owned property. |
| Municipal Tax (Local Authority) | 0.1% – 0.2% of property value or fixed € rates | Varies by municipality; charged annually based on location and size. |
| Sewerage Tax | ~€85–€300 per year | Levied by sewerage boards; amount depends on size and location of property. |
| Transfer Fees | 3%–8% | Paid by buyer unless VAT applies. Tiered structure based on property value. |
| VAT on New Properties | 5% (primary residence) or 19% | Applies to new builds; reduced VAT for qualifying first-time buyers. |
| Capital Gains Tax | 20% | Applies to net gain on sale; exemptions for primary residence and inflation indexing. |
Transfer Fee Rates (If VAT Does Not Apply)
| Property Value (€) | Transfer Fee Rate |
|---|---|
| Up to €85,000 | 3% |
| €85,001–€170,000 | 5% |
| Over €170,000 | 8% |
Note: If the property is purchased jointly (e.g., by two spouses), the value is split between buyers, reducing the effective fee.
Key Tax Exemptions
- No inheritance tax in Cyprus
- Primary residence capital gains exemption up to €85,430
- Reduced VAT (5%) for first-time buyers on homes up to 200 m²
- Transfer fee exemption when VAT is paid on the purchase
Cyprus offers one of the lowest property tax burdens in Europe, with no annual tax, low municipal rates, and significant exemptions for primary homes and new buyers.
Property Taxes in Greece
In 2025, property taxes in Greece are applied at both the national and municipal level. The core tax on owned real estate is the ENFIA (Uniform Real Estate Property Tax), which includes a base tax per square meter and a supplementary tax for high-value properties.
Additional costs such as transfer taxes, municipal levies, and VAT on new properties may also apply depending on the transaction type and asset value.
Greece uses an “objective value” system—based on official zone pricing and property characteristics—to calculate tax instead of market prices. This system remains in place for all residential, commercial, and undeveloped property.
| Tax Type | Rate | Details |
|---|---|---|
| Annual Property Tax (ENFIA) | €2.5–€16.25/m² + 0.15%–1.15% supplementary | Calculated based on size, age, zone, and additional features (e.g., floor level). |
| Municipal Tax (TAP) | 0.025% – 0.035% of objective value | Added to electricity bills; varies by municipality. |
| Transfer Tax | 3.09% | Applies to property purchases where VAT is not charged. |
| VAT on New Properties | 24% (suspended through Dec 2024) | Applied to new buildings; suspension may be extended into 2025. |
| Capital Gains Tax | 15% (currently suspended) | Tax on net profit from resale; suspension likely to continue in 2025. |
ENFIA Supplementary Tax Rates (2025)
| Total Property Value (€) | Supplementary Tax Rate |
|---|---|
| €0 – €250,000 | 0% |
| €250,001 – €300,000 | 0.15% |
| €300,001 – €400,000 | 0.30% |
| €400,001 – €500,000 | 0.50% |
| €500,001 – €600,000 | 0.60% |
| €600,001 – €700,000 | 0.80% |
| €700,001 – €800,000 | 0.90% |
| €800,001 – €900,000 | 1.00% |
| €900,001 – €1,000,000 | 1.05% |
| Over €1,000,000 | 1.15% |
Note: The supplementary ENFIA tax only applies to properties exceeding €250,000 in total objective value.
Key Tax Exemptions
- Primary residence exemption from ENFIA for low-income families (subject to income and size criteria)
- 50%–90% ENFIA discounts for large families, low-income retirees, and disabled individuals
- Capital gains tax remains suspended, reducing cost of resale
- Reduced VAT or full exemption on qualifying first-time primary residences
- No wealth tax or inheritance tax on most residential properties
Greece’s property tax system in 2025 is progressive and zone-based, offering substantial benefits for primary residences and low-value holdings while maintaining transparency for high-end real estate investors.
Property Taxes in Germany
In 2025, property taxes in Germany are levied primarily through the Grundsteuer (real property tax), which is assessed annually by municipalities.
While Germany does not impose a national annual property tax rate, recent reforms in the German Real Estate Tax Law (effective from 2025) have updated how the tax base is calculated—moving closer to actual property value rather than outdated cadastral data.
In addition to the Grundsteuer, buyers are subject to property transfer tax (Grunderwerbsteuer), which varies by federal state. Germany does not levy capital gains tax on sales of owner-occupied homes held for more than two years or investment properties held longer than 10 years.
| Tax Type | Rate | Details |
|---|---|---|
| Annual Property Tax (Grundsteuer) | 0.26% – 1% of assessed property value | Based on municipal multiplier (Hebesatz); updated valuations apply in 2025. |
| Transfer Tax | 3.5% – 6.5% (state-dependent) | Paid by buyer; rates vary by Bundesland (state). |
| Capital Gains Tax | 25% + solidarity surcharge (if applicable) | Exempt if property is owner-occupied or held for 10+ years. |
| Municipal Fees | €200–€600/year | May include garbage collection, sewerage, and local maintenance. |
| VAT on New Properties | 19% | Only applies to commercial real estate or optional VAT-based transactions. |
Transfer Tax Rates by German State (2025)
| State | Transfer Tax Rate |
|---|---|
| Bavaria, Saxony | 3.5% |
| Berlin, Hamburg | 6.0% |
| Brandenburg, Thuringia | 6.5% |
| NRW, Hesse, Saarland | 6.5% |
Note: Transfer tax is typically paid by the buyer unless negotiated otherwise.
Key Tax Exemptions
- No capital gains tax on primary residences sold after 2 years
- Exemption after 10 years of ownership for investment properties
- Inheritance and gift tax exemptions for close relatives (up to €400,000 per child)
- No annual wealth tax on real estate
- New Grundsteuer reform reduces distortions and aligns values with actual market data
Germany’s updated system in 2025 offers greater fairness in valuations and remains investor-friendly for long-term holders and primary residents, especially in high-demand markets like Berlin, Munich, and Frankfurt.
Property Taxes in France
In 2025, property taxes in France are primarily municipal and include two main annual taxes: the Taxe Foncière (land tax) and the Taxe d’Habitation (residence tax), although the latter is now largely phased out for primary residences.
Property owners must also pay notary and transfer duties upon acquisition, and in some cases, capital gains tax upon resale.
France uses cadastral rental value (valeur locative cadastrale) as the tax base, which is adjusted annually and differs by commune. Recent reforms are aimed at modernizing valuation systems and increasing fairness across regions.
| Tax Type | Rate | Details |
|---|---|---|
| Taxe Foncière (Land Tax) | 0.5%–1.5% of cadastral rental value | Paid annually by property owners; rates vary by commune. |
| Taxe d’Habitation | ❌ Exempt for primary residences | Still applies to second homes and high-income households. |
| Transfer Tax (Droits de Mutation) | 5.8% (standard) | Paid on property purchase; includes notarial and departmental fees. |
| Capital Gains Tax | 19% + 17.2% social contributions | Exempt after 22 years (CGT) or 30 years (social charges). |
| Wealth Tax (IFI) | 0.5%–1.5% on net real estate > €1.3M | Applies only to net real estate assets exceeding €1.3 million. |
Capital Gains Tax Exemption Timeline (2025)
| Years of Ownership | CGT Exemption | Social Contributions Exemption |
|---|---|---|
| 0–5 Years | ❌ None | ❌ None |
| 6–21 Years | Partial Relief | ❌ None |
| 22+ Years | ✅ Full Exemption | ❌ None |
| 30+ Years | ✅ Full Exemption | ✅ Full Exemption |
Note: Primary residences are fully exempt from capital gains tax upon sale.
Key Tax Exemptions
- Full CGT exemption on primary residences
- Taxe d’Habitation abolished for all main residences
- Reduced transfer duties for new-builds and VEFA (off-plan) purchases
- Wealth tax exemptions for non-residents on non-French property
- Long ownership periods lead to full capital gains relief after 30 years
France’s property tax regime in 2025 remains progressive and location-sensitive, with higher taxes on secondary residences and luxury properties, but generous exemptions for long-term ownership and primary homes.
Property Taxes in the United Kingdom
Property taxes in the UK are imposed through a mix of annual local taxes and transactional duties. The key recurring charge is Council Tax, which varies by local authority and property valuation band.
Property buyers are subject to Stamp Duty Land Tax (SDLT) in England and Northern Ireland, while Scotland and Wales have separate systems (LBTT and LTT, respectively).
The UK does not have a nationwide annual property tax based on property value (unlike many EU countries), but its stamp duty system is progressive, with higher rates for second homes and non-residents.
| Tax Type | Rate | Details |
|---|---|---|
| Council Tax | £1,200–£4,000/year (band-based) | Annual tax based on 1991 property values; varies by local authority. |
| Stamp Duty (SDLT) | 0%–12% (progressive bands) | Paid by buyer; higher rates for additional properties and non-residents. |
| Capital Gains Tax (CGT) | 18% or 28% | Applies on sale of second homes or investment properties. |
| Inheritance Tax | 40% (threshold £325,000) | Applies to estates; main residence allowance up to £500,000. |
| Annual Tax on Enveloped Dwellings (ATED) | £4,400–£269,450/year | Applies to corporate-owned UK residential properties valued >£500,000. |
Stamp Duty Rates in England (2025)
| Property Value (£) | Standard Rate | Additional Property | Non-Resident Buyer |
|---|---|---|---|
| Up to £250,000 | 0% | 3% | 5% |
| £250,001 – £925,000 | 5% | 8% | 10% |
| £925,001 – £1.5 million | 10% | 13% | 15% |
| Over £1.5 million | 12% | 15% | 17% |
Note: First-time buyers benefit from relief on purchases up to £625,000.
Key Tax Exemptions
- Council tax discounts for single occupants and low-income households
- No CGT on primary residence sales
- First-time buyer SDLT relief on properties up to £625,000
- Principal private residence relief reduces CGT for lived-in homes
- Inheritance tax exemptions for spouses and charitable transfers
In 2025, the UK property tax system remains complex but highly structured, offering generous exemptions for primary homeowners but higher transaction costs for foreign investors, second homes, and high-value assets.
Property Taxes in the Netherlands
In 2025, property taxes in the Netherlands are primarily levied at the municipal level and vary by city. The core real estate tax is the Onroerendezaakbelasting (OZB), an annual charge based on the property’s WOZ value (government-assessed market value).
Additional taxes include transfer tax, income tax on rental income, and VAT for new builds or commercial use.
The Dutch system is considered transparent and investor-friendly, especially for long-term property holders, although rental income and capital appreciation can trigger personal income tax under specific “boxes” in the tax code.
| Tax Type | Rate | Details |
|---|---|---|
| Annual Property Tax (OZB) | 0.05%–0.3% of WOZ value | Set by local municipalities; varies by use (owner vs. user). |
| Transfer Tax | 2% (residential), 10.4% (commercial/2nd home) | Paid by buyer at purchase; higher rate for investment properties. |
| Capital Gains Tax | ❌ None (private owners) | Exempt unless property is part of a business or speculative resale. |
| Rental Income Tax | Box 3: ~1.8% (wealth tax on net assets) | Rental income not taxed directly but wealth is taxed annually. |
| VAT on New Builds | 21% | Applies to commercial property and optional new residential sales. |
OZB Example (2025)
| WOZ Property Value (€) | Estimated OZB (0.1%) |
|---|---|
| €250,000 | €250/year |
| €500,000 | €500/year |
| €750,000 | €750/year |
Note: OZB rates vary depending on municipality and whether the property is owner-occupied or rented.
Key Tax Exemptions
- No capital gains tax for private individuals
- Primary residences are not subject to wealth tax (Box 3)
- Reduced transfer tax (2%) for owner-occupied homes
- Rental income from private lettings is not directly taxed
- No inheritance tax on spouse/partner transfers under defined thresholds
The Netherlands in 2025 offers a stable, clearly defined property tax framework, with low annual taxes for homeowners and targeted incentives for investors using properties as long-term residences or rentals.
Property Taxes in Spain
In 2025, property taxes in Spain are levied at both the national and municipal levels. The primary annual tax is the Impuesto sobre Bienes Inmuebles (IBI), which is charged by local governments based on the cadastral value of the property.
Additional property-related taxes include capital gains tax, and wealth tax on high-value holdings. There is also a property transfer tax (Impuesto sobre Transmisiones Patrimoniales – ITP) payable when buying a property in Spain.
Spain’s tax system varies significantly by region (Comunidad Autónoma), and property buyers and owners must understand both local and national obligations.
| Tax Type | Rate | Details |
|---|---|---|
| Annual Property Tax (IBI) | 0.4%–1.1% of cadastral value | Set by each municipality; based on official property valuation. |
| Transfer Tax (ITP) | 6%–11% (varies by region) | Paid by buyer; applies to resale properties (not new builds). |
| VAT on New Properties | 10% (residential), 21% (commercial) | Applies to first sale of new builds by developers. |
| Capital Gains Tax | 19%–28% | Applies to net profit; rates based on income bracket. |
| Wealth Tax (Patrimonio) | 0.2%–3.5% (regional thresholds vary) | Applies to net assets over €700,000 (€500,000 in some regions). |
Capital Gains Tax Rates (2025)
| Gain Amount (€) | CGT Rate |
|---|---|
| Up to €6,000 | 19% |
| €6,001 – €50,000 | 21% |
| €50,001 – €200,000 | 23% |
| Over €200,000 | 28% |
Note: CGT exemptions apply to primary residences under reinvestment or for residents over 65 years old.
Key Tax Exemptions
- IBI discounts for energy-efficient buildings or protected historical properties
- No CGT on primary residence sales if proceeds are reinvested in a new home
- VAT exemptions on second-hand residential purchases
- Transfer tax reductions for first-time buyers and large families (region-specific)
- Wealth tax exemptions for foreign residents under Beckham Law (temporary residency)
Spain’s property tax regime in 2025 remains regionally nuanced but clearly defined, offering incentives for owner-occupiers and energy-efficient upgrades, while investors should be aware of wealth and resale taxation.
Property Taxes in Sweden
Property taxes in Sweden are straightforward, with most homeowners subject to a national real estate tax known as Fastighetsavgift or Fastighetsskatt, depending on the type of property. Municipalities do not levy their own separate annual property taxes.
However, buyers must also account for stamp duty and capital gains tax when acquiring or selling real estate.
Sweden’s tax model is considered transparent and consistent, with clearly capped annual liabilities and long-term tax efficiency for owner-occupiers.
| Tax Type | Rate | Details |
|---|---|---|
| Annual Property Tax | 0.75% (residential), 1% (commercial) | Capped at SEK 9,287 (~€825) for residential buildings. |
| Stamp Duty (Lagfart) | 1.5% (individuals), 4.25% (legal entities) | Paid on property purchases based on purchase price or assessed value. |
| Capital Gains Tax | 22% | On net profit from sale; standard across all property types. |
| Wealth Tax | ❌ None | Sweden abolished its wealth tax in 2007. |
| VAT on New Properties | ❌ Typically not applicable | VAT generally applies only to commercial new builds or major renovations. |
Annual Tax Cap for Homes (2025)
| Property Type | Max Annual Tax (SEK) | Approx. in EUR (€) |
|---|---|---|
| Residential Property | SEK 9,287 | ~€825 |
| Apartment Blocks | 0.3% of tax-assessed value | No upper cap |
| Commercial Buildings | 1.0% of tax-assessed value | No upper cap |
Note: Tax caps are adjusted annually by the Swedish Tax Agency based on inflation.
Key Tax Exemptions
- Primary residences benefit from capped annual tax rates
- No wealth tax on property or assets
- Stamp duty exemption for certain interspousal transfers or inheritance
- Deferral options for capital gains if reinvested in another primary residence
- No VAT on typical residential property sales
Sweden’s property tax system in 2025 remains stable, capped, and investor-friendly, especially for those holding properties long-term or using them as primary residences.
The absence of wealth tax further enhances its appeal for high-net-worth individuals.
Property Taxes in Ireland
In 2025, property taxes in Ireland primarily consist of the Local Property Tax (LPT), paid annually by residential property owners.
The system is centralized and based on self-assessed market value bands, with rates determined by the Revenue Commissioners. Buyers are also liable for Stamp Duty on purchases, and Capital Gains Tax (CGT) may apply upon the sale of non-primary residences.
Ireland’s property tax regime is considered transparent and predictable, especially for first-time buyers and long-term owner-occupiers.
| Tax Type | Rate | Details |
|---|---|---|
| Annual Property Tax (LPT) | 0.10%–0.25% (based on valuation band) | Applied to market value bands; adjusted every 4 years. |
| Stamp Duty | 1% (up to €1M), 2% (above €1M) | Paid by buyer at purchase; applies to all residential property transfers. |
| Capital Gains Tax (CGT) | 33% | Applies to gains from sale of investment or second homes. |
| Inheritance/ Gift Tax | 33% (after thresholds) | Lifetime thresholds apply based on relationship to donor. |
| Wealth Tax | ❌ None | No annual tax on net property value beyond LPT. |
Local Property Tax
| Valuation band € | LPT Charge basic rate € |
|---|---|
| 0 – 200,000 | 90 |
| 200,001 – 262,500 | 225 |
| 262,501 – 350,000 | 315 |
| 350,001 – 437,500 | 405 |
| 437,501 – 525,000 | 495 |
| 525,001 – 612,500 | 585 |
| 612,501 – 700,000 | 675 |
| 700,001 – 787,500 | 765 |
| 787,501 – 875,000 | 855 |
| 875,001 – 962,500 | 945 |
| 962,501 – 1,050,000 | 1,035 |
| 1,050,001 – 1,137,500 | 1,189 |
| 1,137,501 – 1,225,000 | 1,408 |
| 1,225,001 – 1,312,500 | 1,627 |
| 1,312,501 – 1,400,000 | 1,846 |
| 1,400,001 – 1,487,500 | 2,064 |
| 1,487,501 – 1,575,000 | 2,283 |
| 1,575,001 – 1,662,500 | 2,502 |
| 1,662,501 – 1,750,000 | 2,721 |
Note: Properties valued over €1.75 million are assessed individually, not by band.
Key Tax Exemptions
- LPT exemption for properties vacated due to disability or severe structural issues
- No CGT on sale of a primary residence (principal private residence relief)
- First-time buyers benefit from additional stamp duty relief under certain schemes
- No wealth tax on real estate holdings
- Inheritance thresholds for close family members up to €335,000 (Group A)
Ireland’s 2025 property tax system remains straightforward and valuation-driven, favoring owner-occupiers and first-time homebuyers, while maintaining a progressive CGT framework for investors.
Property Taxes in Belgium
Property taxes in Belgium are largely driven by regional and local governments. The core annual tax is the Précompte Immobilier / Onroerende Voorheffing (property withholding tax), which is calculated based on the cadastral income (CI) assigned to each property.
Additional costs include registration tax on purchases, as well as capital gains tax in certain cases—particularly for short-term resales.
Belgium’s real estate tax burden can vary significantly by region (Flanders, Wallonia, Brussels), making location a key factor in tax liability.
| Tax Type | Rate | Details |
|---|---|---|
| Annual Property Tax | ~25%–50% of indexed cadastral income (CI) | Final rate depends on municipality and region; recalculated annually. |
| Registration Tax (Transfer Duty) | 12.5% (Wallonia & Brussels), 3%–12% (Flanders) | Paid by buyer on resale property transactions. |
| Capital Gains Tax | 16.5% (within 5 years) | Applies if property is sold within 5 years of acquisition (private ownership). |
| Wealth Tax | ❌ None | No national wealth tax on property. |
| VAT on New Builds | 21% | Applies to new constructions and first-time sales by developers. |
Registration Tax (2025)
| Region | Standard Rate | First-Time Buyer Reduction |
|---|---|---|
| Flanders | 12% | 3% for primary residences |
| Brussels | 12.5% | Abatement up to €200,000 |
| Wallonia | 12.5% | Abatement up to €20,000 |
Note: Reduced registration duties in Flanders apply only to owner-occupied homes.
Key Tax Exemptions
- Primary residence relief on registration tax for first-time buyers
- No CGT if property held longer than 5 years (or used as primary home)
- Cadastral income rebates available for low-income households or energy upgrades
- No annual wealth tax on real estate
- Inheritance tax reductions for direct family transfers (region-specific)
Belgium’s property tax system in 2025 is regionally tiered and transaction-heavy, making it essential to understand local incentives and timelines—especially for short-term investors and primary homeowners.
Property Taxes in Italy
In 2025, property taxes in Italy are split across several recurring and transactional levies. The most important annual taxes are IMU (Imposta Municipale Unica) and TASI (Tax for Indivisible Services)—though primary residences are generally exempt.
Buyers also pay registration taxes or VAT, depending on the type of property and the seller.
Italy uses a cadastral value system for calculating taxes, often significantly lower than actual market prices. Tax rates and exemptions vary based on residency status, property type, and usage (primary residence vs. investment).
| Tax Type | Rate | Details |
|---|---|---|
| IMU (Municipal Tax) | 0.46%–1.06% of cadastral value | Applies to second homes and luxury properties; exempt for most primary residences. |
| TASI (Service Tax) | 0.1%–0.25% (usually merged with IMU) | Funds public services like road maintenance; varies by municipality. |
| Registration Tax | 2% (primary home), 9% (second home) | Applies to purchases from private sellers. |
| VAT on New Properties | 4% (primary), 10% (standard), 22% (luxury) | Paid when buying new property directly from a developer. |
| Capital Gains Tax | 26% | Applied on resale within 5 years (unless used as primary residence). |
IMU Payment Example (2025)
| Cadastral Value (€) | IMU Rate (0.86%) | Annual IMU Tax |
|---|---|---|
| €80,000 | 0.86% | €688 |
| €120,000 | 0.86% | €1,032 |
| €200,000 | 0.86% | €1,720 |
Note: IMU does not apply to most primary residences unless classified as luxury.
Key Tax Exemptions
- Primary residence exemption from IMU and TASI (non-luxury homes)
- Reduced VAT (4%) for first-home buyers meeting specific criteria
- Capital gains tax exemption if property is held for more than 5 years
- Reduced registration tax (2%) on owner-occupied homes
- Inheritance tax exemptions up to €1M for spouses and children
Italy’s 2025 real estate tax system remains buyer-friendly for primary homeowners, while maintaining higher taxation on second homes and luxury properties, particularly in cities and coastal areas popular with international investors.
Property Taxes in Portugal
In 2025 Portugal has the most transparent and predictable property taxes in Europe. The core recurring tax is the IMI (Imposto Municipal sobre Imóveis), an annual municipal property tax based on the taxable value (VPT) of the property.
Buyers are also liable for IMT (transfer tax) and, in some cases, stamp duty and wealth tax (AIMI) on high-value real estate holdings.
Portugal uses a centralized cadastral system to calculate values, but IMI rates are set locally, creating slight variations across municipalities.
| Tax Type | Rate | Details |
|---|---|---|
| IMI (Annual Property Tax) | 0.3%–0.45% of VPT (urban) / 0.8% (rural) | Varies by municipality; paid annually by owners of urban and rural property. |
| AIMI (Wealth Tax) | 0.7%–1.5% | Applies to total residential real estate holdings over €600,000. |
| IMT (Transfer Tax) | 1%–7.5% | Progressive rates based on purchase value; higher for second homes. |
| Stamp Duty | 0.8% | Applies to all property transactions (in addition to IMT). |
| Capital Gains Tax | 28% (individuals), 25% (corporate) | Applies on sale; reductions apply for reinvestment or long-term ownership. |
IMT Progressive Rates (2025 – Urban Residential)
| Property Value (€) | Marginal Rate | Effective Rate |
|---|---|---|
| Up to €92,407 | 1%–2% | ~1.5% |
| €92,408 – €550,836 | 5%–7% | ~6% |
| Over €550,837 | 7.5% | ~6.7%–7.2% |
Note: First-time buyers of primary residences benefit from partial or full IMT exemptions under defined thresholds.
Key Tax Exemptions
- IMI exemption for first-time buyers earning below income thresholds
- Primary residence AIMI exclusion up to €600,000 per individual
- Capital gains tax relief if proceeds are reinvested in another primary home
- Reduced IMT for properties used as main residence and priced below €92,407
- No inheritance or gift tax between spouses, children, or parents
Portugal’s property tax framework in 2025 is structured to favor residents and long-term owners, with targeted exemptions, moderate annual costs, and high transparency for foreign buyers.
Benefits and drawbacks of Property Taxes in Europe
Property taxes in Europe have both benefits and drawbacks. Let’s explore three of each:
Benefits of Property Taxes in Europe:
- Revenue for Public Services: Property taxes serve as a significant revenue source for local governments, enabling them to fund public services such as infrastructure development, education, and healthcare.
- Wealth Redistribution: Property taxes can contribute to wealth redistribution by taxing higher-value properties at higher rates. This can help reduce wealth inequality and promote a more equitable society.
- Incentives for Sustainable Development: Some European countries offer tax incentives to promote sustainable development. These incentives encourage property owners to invest in energy-efficient buildings or historical preservation, contributing to environmental conservation and cultural heritage preservation.
Drawbacks of Property Taxes in Europe:
- Lack of Uniformity: The lack of uniformity in property tax systems across Europe can make it challenging to compare tax liabilities or understand the implications of property ownership in different countries.
- Potential for Volatility: Property taxes can be subject to changes in tax policies, regulations, and economic conditions. This volatility can create uncertainty for property owners and potentially impact their financial planning.
FAQ
Does Europe have property tax?
Yes, every European country imposes some form of property tax, either at the national or municipal level. These taxes vary by country and may include annual levies, transfer duties, and capital gains tax.
Which European country has the lowest property taxes in 2025?
Cyprus has the lowest overall property tax burden in Europe, with no annual property tax and low transaction costs. Other low-tax countries include Malta, Monaco, and certain regions in Portugal.
What is the cadastral tax in Europe?
Cadastral tax refers to property taxes based on a property’s assessed (not market) value—used in countries like Italy, France, and Spain. It helps calculate annual property taxes and transfer fees.
Do foreign property owners pay higher taxes in Europe?
Not necessarily. Most European countries apply the same tax rules to foreign and domestic property owners, but some may add surcharges or limit exemptions for non-residents.
Is there capital gains tax on property in Europe?
Yes, many countries charge capital gains tax on real estate sales—typically only if the property is sold within a few years. Exemptions often apply to primary residences and long-term ownership.
Which country in Europe is best for real estate investment in 2025?
Portugal, Greece, and Spain remain top picks due to tax-friendly regimes, strong rental yields, and accessible residency programs like Golden Visas.
Are property taxes higher on second homes in Europe?
Yes. Many countries impose higher annual taxes or transfer fees on second homes or investment properties—especially in France, the UK, and Belgium.
Can property tax be deducted in Europe?
In some countries (like Germany and the Netherlands), property-related expenses may be deductible against rental income for tax purposes. This depends on whether the property is for personal or investment use.
