Property tax in Europe

Property tax is primarily levied on real estate, such as land and buildings, as well as on tangible personal property, such as vehicles and equipment. Property tax is the largest source of revenue for state and local governments in the U.S. and helps fund schools, roads, police, and other services.

Originally, property tax was introduced in feudal times and was mainly levied on land, which is why it was primarily paid by those who worked as farmers. Nowadays, property tax is also imposed on assets such as real estate. The tax is paid periodically on property owned by individuals or legal entities.

High property taxes, levied not only on land but also on buildings and structures, can deter investment because they place an additional burden on businesses to invest in infrastructure.

Nineteen out of the 27 covered countries allow businesses to deduct property tax or land tax from corporate income, which eases the tax burden and encourages businesses to invest. Luxembourg has the lowest property tax as a share of private capitalization at 0.05 percent. Switzerland ranks second with a share of 0.08 percent, followed by the Czech Republic and Austria, both at 0.09 percent.

The highest property taxes relative to private capitalization occur in the United Kingdom (1.93 percent), France (1.25 percent), and Greece (1.09 percent). Estonia is the only country on this map that taxes only land, making its property tax the most efficient.