Spanish Goverment Reduces Tax on New Properties
The Spanish Government has approved a law to speed up deficit reduction measures with a temporary cut in VAT from 8% to 4% on the purchase of new housing, the partial reform of income tax and reducing pharmaceutical expenditure through increased use of generic drugs. All these measures seek savings of 5,000 million euros this year.
The cut in VAT for the purchase of new housing will last only four months, until 31 December and aims at reducing the 'stock' , as explained by government spokesman and Minister, José Blanco, and Vice President for Economic Affairs, Elena Salgado.
This will mean that for a home purchased at 200,000 euros, the price will be reduced by about 8,000 euros, half of what is currently paid in VAT.
"With this measure we intend to dispose of the housing'stock' and revive the construction sector, explained Blanco.
Asked about the impact these cuts will have on tax collection from VAT, Salgado stated that he "expects a positive outcome".
There are indeed more positive signs that the government is now being more pro-active to help aid the recovery of the property and construction sectors.
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