The Catalan Government raises the tax on second-hand real estate sales to earn an additional €150 million
The Wealth Transfer Tax, which is levied on sales of second-hand housing units and any other used real estate, will be raised from 8% to 10% as from the 1st of August. The Catalan Government expects to earn an additional €50 million in 2013 and €150 million in 2014. The Catalan Finance Minister, Andreu Mas-Colell, argued that the rise in the tax rate is equivalent to the VAT charged on sales of new housing units and that both taxes should be “parallel”. He also added that other Autonomous Communities had previously raised this tax to similar levels.
Barcelona (ACN).- The Wealth Transfer Tax, which is levied on sales of second-hand housing units and any other used real state, will be raised from 8% to 10% in Catalonia as from the 1st of August. On Tuesday, the Catalan Government announced the new fiscal measure in order to earn an additional \u20AC50 million in 2013 and \u20AC150 million in 2014. The Catalan Finance Minister, Andreu Mas-Colell, argued that the rise in the tax rate has been adopted to increase revenue in order to reduce the public deficit. Mas-Colell explained that the taxation rise is equivalent to the VAT charged on sales of new housing units, which means it will be \u201Cparallel\u201D, he said. Mas-Colell also added that other Autonomous Communities had previously raised this tax to similar levels. In addition, he stated that no other fiscal measures would be adopted before the approval of the Catalan Government\u2019s budget for 2013, which has been delayed since November\u2019s elections as the Spanish Executive has not set a definitive deficit for Catalonia for the current year yet. The Catalan Government, which is run by the Centre-Right Catalan Nationalist Coalition (CiU), has been arguing over the last few months that they would rather wait to approve the budget than have to entirely modify it according to the deficit target set by Madrid. Mas-Colell added that the new budget will include further fiscal measures and tax increases. In fact, the rise in the Wealth Transfer Tax is part of the parliamentary agreement between the CiU and the Left-Wing Catalan Independence Party (ERC) to guarantee the approval of the main laws, including the Catalan Government\u2019s budget.
\u201CWe believe that in a very pressing case, very limited and very specific, it was worth modifying [the Wealth Transfer Tax] urgently in order to ensure revenue arrives more quickly\u201D, explained Mas-Colell in the press conference organised after the Catalan Government\u2019s weekly Cabinet meeting. The Catalan Finance Minister stated that they had not waited for the approval of the entire budget because of the revenue that could already be earned from the 1st of August. According to the Catalan Executive\u2019s calculation, between August and December, an additional \u20AC50 million will be earned. Furthermore, in 2014, the Catalan Government expects to earn another \u20AC150 million from the new tax rates.
Mas-Colell explained that the tax rate will increase from the current 8% to 10%. In addition, large families and people aged 32 or below will pay reduced rates (between 5% and 7% according to the particular case).
The Catalan Government will reduce the tax rate if the Spanish Executive lowers the VAT on new-build flats
The Catalan Finance Minister was asked about the consequences this tax increase might have on the real estate market, particularly on second-hand properties, which are those directly affected by the tax. Mas-Colell said that it is positive that both the tax on second-hand real estate and the VAT applicable to new-built housing will be \u201Cparallel\u201D, with similar tax rates, in order not to create \u201Cdistortions\u201D in the real estate market. Therefore, the Catalan Finance Minister explained that, the day the Spanish Government decrees the VAT applicable to new-build flats \u2013 which is currently set at 10% - the Catalan Executive \u201Cwill go in the same direction\u201D regarding the Wealth Transfer Tax.