European Property Taxes: Economic Impact, Revenue Streams, and Policy Debates

Property taxation serves as a cornerstone of public finance across European economies; however, its contribution to national wealth and government revenues varies significantly throughout the continent. While some nations heavily rely on these levies to fund public services, others derive only a minor portion of their fiscal intake from real estate. This disparity is currently underscored by Spain’s consideration of a 100% tax on homes purchased by non-EU citizens, a measure intended to alleviate housing pressures but which also highlights the complex role of property taxes in broader economic stability and policy efficacy.

• Property tax contributions to GDP exhibit a wide range across Europe, from 0.3% in Czechia to 3.7% in France and the UK.
• The UK and France lead in absolute property tax revenue, generating approximately €115 billion and €104.5 billion respectively in 2023.
• Property taxes constitute a varying share of total tax revenue, ranging from 0.8% in Estonia to 8.4% in France, with an EU average of 4.7%.
• Property transfer taxes represent a significant revenue stream, reflecting real estate market activity, with Italy, Belgium, Portugal, and Spain showing high shares relative to GDP.
• Ongoing policy debates, such as Spain’s proposed tax on non-EU buyers, highlight the need for consistent and coordinated housing tax policies to ensure effectiveness and address affordability.

Property Tax’s Economic Footprint

The economic footprint of property taxes, measured as a share of Gross Domestic Product (GDP), reveals a wide spectrum across Europe. In 2023, the European Commission reported that property tax contributions to GDP ranged from a low of 0.3% in Czechia and Estonia to a high of 3.7% in France. When considering European Free Trade Association (EFTA) countries, the UK, and Turkey, the United Kingdom also registered around 3.7%, slightly surpassing France. Belgium followed closely at 3.2%, while Spain and Greece contributed 2.5% and 2.7% respectively. Other nations with property tax shares exceeding 2% of GDP included Iceland, Luxembourg, Denmark, Switzerland, Italy, and Portugal.

Conversely, nearly half of the 32 countries examined showed property tax contributions below 1% of GDP, notably in Eastern Europe and the Baltics, where Slovakia, Lithuania, Estonia, and Czechia all reported figures below 0.5%. Among Europe’s largest economies, Germany’s 1% share was notably lower than its counterparts, with Italy at 2.1%. This geographical distribution indicates that Northwestern European countries generally collect a higher percentage of their GDP through property taxes compared to Eastern Europe and the Baltics, while Southern Europe presents a more mixed, often higher, picture.

Revenue Streams and Fiscal Contributions

In terms of absolute revenue, property taxes generate substantial funds for European governments. In 2023, the UK led with approximately €115 billion (£100bn) in property tax revenue, followed by France at €104.5 billion. These two nations significantly outpaced others, with third-place Italy collecting €45.3 billion. Germany and Spain rounded out the top five, with €41.4 billion and €36.8 billion, respectively. The total property tax collected across the EU reached €318.8 billion. Belgium (€18.8 billion), Switzerland (€17.9 billion), the Netherlands (€14.4 billion), and Poland (€10.7 billion) also collected over €10 billion.

Beyond the direct contribution to GDP, property taxes constitute varying proportions of a nation’s total tax revenue. In 2023, this share ranged from 0.8% in Estonia and Czechia to 8.4% in France, with the EU average at 4.7%. Alongside France, seven other EU countries saw property tax shares exceed 5% of total taxation: Belgium (7.4%), Greece (7%), Spain (6.7%), Portugal (5.9%), Luxembourg (5.7%), Italy (5.1%), and Denmark (5.1%). Germany, in contrast, sourced only 2.5% of its total taxation from property levies.

The Role of Property Transfer Taxes

An additional significant revenue stream derives from property transfer taxes, which reflect the economic activity within real estate markets. These taxes, applied to financial and capital transactions primarily involving buying, selling, and stamp duties, indicate the importance of real estate sales as a government revenue source. In 2023, this share as a percentage of GDP was highest in Italy at 1%, followed by Belgium, Portugal, and Spain, all at 0.8%. France recorded 0.7%, the UK 0.6%, and Germany 0.3%.

Policy Debates and Efficiency

The ongoing debate surrounding Spain’s proposed 100% tax on non-EU property buyers underscores fundamental questions about housing tax policies. As highlighted by José García Montalvo, Professor of Economics at Pompeu Fabra University, during European Parliament hearings in May 2025, constant policy changes and a lack of coordination between tax policy and housing supply measures can undermine the effectiveness of housing tax regimes. Such inconsistencies can lead to unpredictable market outcomes and persistent affordability issues. Diana Hourani from the OECD’s Personal and Property Taxes Unit further noted that many housing taxes in OECD countries possess significant untapped potential for enhanced efficiency, equity, and revenue generation. Improving these taxation mechanisms can also play a crucial role in mitigating upward pressure on housing prices, contributing to broader economic stability and market accessibility.