The Spanish government has announced to reduce the rate at which the sales tax is applied to the sale of new housing. The intention behind this reduction is to stimulate the country’s stagnant housing market and support the construction industry.
According to the most recent statistics, new house sales have declined by 26% year-on-year, with less than 25,000 homes sold during June 2011. To ensure that the industry does not go into a further decline, the government proposed the value-added tax (VAT) rate to be cut to 4%, from 8%, on the sale of newly developed housing.
According to a government spokesperson the measure are ‘temporary and exceptional’. The government has recently announced a number of rigorous measures and is expected to announce further tax changes on August 26 to encourage employment. To provide a short-term boost to the government’s cash flow, the Spanish authorities planned to bring forward corporate tax payments by large enterprises, until 2013. On the other hand, to compensate firms, it has increased the maximum number of years that tax credits can be carried forward to offset future losses from 15 years to 18 years.
