Spain to introduce 100% property tax
Britain and other non-EU nations face unprecedented Spanish property taxation
The Spanish government has unveiled sweeping plans to implement a revolutionary 100% tax on property purchases made by non-EU residents, a move that would significantly impact British citizens seeking to purchase homes in the Mediterranean nation.
In a landmark announcement that has sent shockwaves through the international property market, Spanish Prime Minister Pedro Sánchez outlined this extraordinary measure as part of a comprehensive strategy to address what he terms a “housing emergency” in Spain. Speaking at an economic forum in Madrid, Sánchez articulated his concerns about the growing divide in Western society, emphasising the risks of creating “a society divided into two classes, the rich landlords and poor tenants.”
The statistics underpinning this dramatic policy shift are striking: throughout 2023, non-EU residents acquired approximately 27,000 properties in Spain. According to Sánchez, these purchases were predominantly motivated by investment purposes rather than residential needs, a trend he views as unsustainable given the current housing shortage.
The Spanish premier’s office has provided additional context, describing the initiative as a targeted measure to curtail property acquisition by “non-resident non-EU foreigners.” Under Spanish law, individuals spending fewer than 183 days per year in the country are classified as non-residents. The government has indicated that this approach aligns with similar policies implemented in Denmark and Canada, though specific details regarding the tax’s implementation and parliamentary timeline remain forthcoming.
Current market analysis reveals that foreign buyers, including those from within the EU, represent approximately 15% of Spain’s housing market. In concrete terms, this amounts to 87,000 transactions out of a total of 583,000 property sales recorded in 2023, according to the Spanish property registry.
Industry professionals have expressed significant concerns about the proposal. Simon Creed, who has spent over two decades at Azahar Properties selling homes in the Valencia region to British, American, and other non-EU citizens, reports that the announcement has dominated discussions among property professionals. He notes that current property taxation in Valencia stands at 10% for all buyers, regardless of residency status, though rates vary by region.
“The prospect of paying 100% purchase tax for acquiring property here naturally raises serious concerns,” Creed remarked. “British buyers have historically been a crucial market segment in Spain, and this policy appears to unfairly advantage EU citizens such as Germans, French, and Belgians whilst isolating non-EU purchasers.”
The proposal has already begun influencing British buyers’ decisions. Michele Hayes, a Manchester resident who recently conducted property viewings near Alicante, expressed reservations about her retirement plans. “While we could theoretically complete a purchase before the tax’s implementation, future uncertainties remain concerning potential property disposal, particularly for holiday homes in tourist-oriented areas,” she explained.
Martin Craven, a Londoner who had been planning to invest in Spanish property this year, has already shifted his focus to alternative markets: “Cyprus now appears more attractive,” the 62-year-old stated. Similarly, Julian, 54, from Surrey, who had prioritised Spain for a holiday home purchase, now perceives increased risk compared to other destinations.
The tax proposal forms part of a broader package of housing reforms announced by Sánchez. Additional measures include tax exemptions for landlords providing affordable housing, the transfer of over 3,000 properties to a new public housing body, and enhanced regulation of tourist accommodation. The government has taken particular aim at short-term rentals, with Sánchez arguing that current tax arrangements unfairly favour multiple property owners over traditional hospitality businesses.
Notably, these changes coincide with the planned abolition of Spain’s “golden visa” scheme in April. This programme, which previously offered expedited Spanish residency to individuals investing €500,000 or more in property (approximately £428,000), will be discontinued as part of the government’s comprehensive housing market reforms.
Antonio de la Fuente, managing director at Colliers International Spain, has expressed scepticism about the tax’s effectiveness in addressing housing shortages. He suggests that while housing supply challenges exist, particularly in major urban centres like Madrid, Valencia, and Malaga, the proposed tax might represent a relatively minor intervention in the broader context of Spain’s housing market dynamics.
The Spanish government has indicated that the final details of the proposal will be determined “after careful study,” though questions remain about Sánchez’s ability to secure sufficient parliamentary support for the measure, given his historical challenges in passing legislation.