A sharp rise in the number of French councils imposing a surtax on second-home owners makes Spain look more attractive as a holiday-home destination where council taxes do not discriminate against them.

The French property and lifestyle website France Insider reports that there has been a sharp increase this year in the number of French councils that apply a discretionary surtax on second-homes, known in France as the Taxe d’habitation sur les résidences secondaires (THRS).

The THRS gives local councils the power to charge an additional levy of between 5pc and 60pc of the basic rate of property tax, explains France Insider. The main objective of the THRS is to “put vacant housing or second homes back on the permanent housing market and thus limit the rise in prices and rents in these municipalities,” according to the French government.

Not all councils apply the surtax. “Many chose not to do so, as part of their tourism strategy. Others impose the tax due to the pressure on the housing market,” writes France Insider.

However, the number that do apply the THRS has risen dramatically this year. “New figures recently published by the government show that where in the past 25% of the councils imposed the surtax, for 2024 that percentage has risen to 40%. So, whilst in 2023 around 300 councils imposed the tax, now nearly 1,500 will do so. The number will vary from year to year, as the tax is decided on an annual basis by the councils.”

Council tax in Spain is the same for everyone

There has been some talk in the Spanish press of using council tax to discourage empty homes but not second-homes. As things stand there is no surcharge on the council tax of (IBI) second-homes in Spain, although you do have to pay income tax on the ‘imputed benefit’ of owning a second-home if you don’t rent it out at any time in the year. If you do rent it out you pay income tax on the rent. The ‘imputed benefit’ tax on second-homes in Spain is explained in the section on Spanish property taxes for non-residents.

Spain has been charging this imputed benefit tax on second-homes for as long as I can remember, and although it might have deterred some buyers over the years, it’s nothing new. In France, however, the second-home tax is spreading, which is a new consideration for potential buyers to ponder along with the implications of a hard Left or hard Right getting into government with plans to tax everything in sight, in the case of the radical left, who would also like to give squatters a free pass to occupy second-homes as they please.

Will this drive a significant number of people looking to buy a holiday-home in Europe away from France towards Spain? Probably not on its own, but looking at the current mess that France is in, it’s just another factor helping to make the competition look more attractive.