Spain is the OECD country with the second highest rate of home ownership taxes: here's the full ranking.

One of the problems facing the housing market in Spain is the lack of supply in the face of high demand. This week, the Institute of Economic Studies (IEE) presented an opinion report that not only addresses the "complex situation" currently facing housing in Spain but also analyzes the taxation of this market.

The report notes that "housing and rental taxation in Spain is more burdensome than in most developed countries," meaning that taxes in Spain are higher than in other countries on matters related to the "acquisition, ownership, and disposal of housing," something that, they emphasize, "negatively affects the real estate market."

Housing-related taxation in Spain generates more than €52.2 billion in tax revenue annually, approximately 3.5% of GDP. Furthermore, Spain suffers from a "structural housing deficit" amounting to €2.2 million, and to address this, an investment of €380,000 is required.

The tax that collects the most revenue in the real estate market is the Property Tax (IBI), accounting for 30% of the total, followed by VAT and Personal Income Tax (IRPF).

The IEE explains that a key indicator in this market is the "effective tax burden" on real estate investment. In this regard, our country "is one of the countries with the highest effective taxation on home ownership in the OECD ," with an effective rate of 30.3% compared to the EU average of 6.5%. Buying a home in Spain is also subject to heavy taxation, with a rate of 11%, one of the highest in the EU.

Regarding this figure, the report concludes that Spain applies a high tax burden "compared to both other European Union and OECD countries." This 30.3% implies that for every euro of income before taxes, "an investor loses almost a third of their income due to the effect of taxes."

In this way, they highlight that Spain is the second least attractive country for investment, "or has the second least competitive tax system of the 40 countries analyzed ." Thus, investors are left with 69.7% of what they would have earned in a scenario without taxation, resulting in a much higher effective taxation on income compared to international standards.

The report criticizes the fact that, in addition to the already high tax burden, there are other factors such as overregulation and price controls, which, it asserts, create legal uncertainty and have a negative impact on housing investment.

It also points out that declaring "stressed zones" is an "ineffective and counterproductive measure, especially for the most vulnerable groups, as it reduces the rental market," something that Spain also imposes high taxes on, although in this case it falls to tenth place.

Another problem is the "significant regulatory differences" between regions, which increase the complexity of the market. "Beyond their desire to raise revenue, governments must introduce reforms to housing taxation aimed at promoting investment in this type of asset and encouraging homeownership and rentals, increasing the available supply and facilitating access," they emphasize.