Jan 16, 2025

Babiš Proposes 100% Tax on Real Estate Bought by Non-EU Foreigners

Andrej Babiš, leader of the ANO movement, told Echo24 that if he is elected to government, he intends to implement a 100% tax on real estate purchases by foreigners from non-EU countries who do not actively occupy the properties.

He cited Spain as a model for this policy. Babiš argued that the tax should apply not only to houses and apartments but also to land, as foreigners often buy property and land using dubious funds.

According to him, this move would ensure that non-EU buyers are discouraged from using Czech property as an investment tool without contributing to the local community.

The tax would affect nationals from countries such as the UK, Ukraine, Belarus, and Russia. Babiš emphasized that the goal of his proposed tax policy would be to collect taxes effectively and reduce them where possible. He criticized the current Czech government, led by Prime Minister Petr Fiala (ODS), for what he described as ineffective tax collection and increasing tax rates.

Spain has already introduced a similar proposal, with Prime Minister Pedro Sánchez announcing plans to impose a tax of up to 100% on real estate purchases made by non-EU citizens who do not plan to live in the country.

He argued that there is a growing problem of “too many Airbnbs and too little living space” in Europe, with foreign investors buying property purely for speculation rather than for residential purposes.

In 2023, non-EU nationals purchased 27,000 properties in Spain, according to Sánchez, contributing to the country’s housing shortage. “We cannot afford this situation,” he said, stressing that the move aims to make housing more affordable for those who genuinely want to live in Spain.

Tax Reform Priorities of the ANO Movement

Babiš also discussed his vision for tax reform under the ANO movement. He stated that his main goal is to collect taxes efficiently and reduce them where possible, in stark contrast to the current government’s approach, which he claims increases taxes without improving collection methods.

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Babiš also mentioned supporting Czech small businesses and pubs, including potentially restoring the reduced VAT rate on draft beer. However, he refrained from offering further details, stating that he wants to keep his plans confidential to avoid political opponents copying ANO’s proposals.

Challenges in the Czech Tax System

According to economist Pavel Skořepa, the Czech Republic’s tax rates are generally close to the European average. However, he pointed out that frequent and last-minute changes in tax legislation pose a significant challenge for local businesses. He also noted that the Czech state collects relatively little from personal income tax due to low wages compared to the European average.

Skořepa also highlighted the impact of numerous tax exemptions, such as those for self-employed individuals and the VAT exemption for small businesses.

He suggested that eliminating certain tax breaks could increase state revenues. One such reform could involve ending the excise duty exemption on still wine, which, while generating only a few billion crowns annually, has a negative impact on the fairness of the Czech tax system.

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