Spain Plans to Introduce New Tax on Non-EU Property Buyers
Spain plans to implement a tax of up to 100% on properties purchased by non-residents from countries outside the EU, such as the UK and US. Prime Minister Pedro Sánchez, announcing the proposal, described it as an “unprecedented” step to address Spain’s housing crisis.
“The West faces a decisive challenge: to avoid becoming a society divided into two classes—the rich landlords and poor tenants,” Sánchez said.
It was not exactly clear how much the tax will be, or how it will levied, but the Financial Times reported that Spain’s housing ministry said the new measure would be introduced by modifying stamp duty or via a special tax.
It is believed, however, that the tax will not apply to non-EU nationals purchasing properties to establish residency in Spain; such as retirees.
Background
Non-EU residents purchased approximately 27,000 properties in Spain in 2023, Sánchez noted during an economic forum in Madrid. He claimed many of these purchases were speculative rather than for personal use, exacerbating the country’s housing scarcity.
However, Sánchez omitted mentioning a 2002 study, The Economic Impact of Residential Tourism in Spain (conducted by PricewaterhouseCoopers for the Spanish Association of Developers and Builders), which highlighted the positive impact of foreign property ownership. That year, second-home buyers contributed €6.35 billion to Spain’s GDP and supported over 105,000 jobs in the tourism sector.
Not a New Concept
Proposals to limit property purchases by non-resident, third-country nationals have surfaced before, especially in regions like the Canary Islands and Balearic Islands, where limited housing stock has been strained by high demand from foreign buyers.
However, outright bans face legal hurdles due to EU regulations. The free movement of capital within the EU allows citizens of EU member states—and, by extension, certain third-country nationals—to purchase property in any member state with minimal restrictions.
A Window of Opportunity
The new law is not expected to come into effect for several months, providing prospective buyers some time to act. Those prepared to purchase now can take advantage of the broad inventory of available properties, and off-plan options may offer flexibility for buyers who need additional time to secure funds. Off-plan purchases typically require a 30% deposit upfront, with the remaining 70% payable upon property completion, which can range from late 2024 to 2027.
Scrapping the Golden Visa Scheme
This announcement follows Spain’s decision to end its golden visa scheme, effective April. Since its introduction, the scheme has allowed non-EU nationals to gain Spanish residency by purchasing homes worth at least €500,000. However, the program’s impact on Spain’s real estate market has been minimal. Between 2013 and 2022, fewer than 5,000 golden visas were granted—accounting for less than 0.1% of the 4.5 million homes sold during that period.
Critics argue that Spain’s housing crisis is driven by insufficient supply and surging demand, not golden visas or second-home purchases. For instance, a report by the Metropolitan Observatory of Barcelona Housing (O-HB) revealed that in Barcelona, 36.1% of rental properties are owned by “grans tenidors” (large-scale landlords with ten or more properties), even though they represent only 2.1% of property owners. In contrast, public administrations own just 4.4% of rental apartments.
A Popularist Approach?
Many in the real estate sector view these measures as populist. They argue that international buyers—who contribute significantly to Spain’s economy—are being unfairly targeted, while wealthier Spanish and International landlords, who dominate the rental market and drive up prices, remain largely untouched.
If Spain’s government genuinely aims to address the housing shortage, industry professionals suggest focusing on policies to encourage new housing developments and regulate large-scale (rich) landlords referred to in the proposals, rather than targeting non-EU buyers. However, such measures could challenge influential domestic interests, making them less politically appealing.
Many solicitors feel such a law could not be passed as it will violate Spanish and EU laws and the announcement is just a tactic to spook non-EU buyers and put them off buying a home in Spain.