Spain Plans 100% Tax on Non-EU Property Buyers

Spanish Prime Minister Pedro Sánchez has announced plans to impose a 100% tax on property transactions by non-European Union residents. The measure targets individuals residing in Spain for fewer than 183 days each year, a segment that accounts for a mere 5% of the country's total property sales.

Measures Aimed at Curbing Housing Costs

Government figures indicate that foreign buyers, which include EU residents, acquired roughly 87,000 properties out of 587,000 total sales in 2023. However, non-EU buyers accounted for only 27,000 sales.

Officials argue that these investors are intensifying the housing shortage by treating properties primarily as investments rather than homes. Prime Minister Sánchez highlighted the need to prevent the country from becoming divided into “rich landlords and poor tenants.”

New Visa Rules for Non-EU Investors

As part of a broader strategy to limit investment by wealthy foreign buyers, Spain will also end its Golden Visa program starting April 3, 2025. Future non-EU residents seeking to live in the country will have to explore other residency options, such as the non-lucrative visa, which mandates full-time residency and a verified accommodation.

Key points include:

• The proposed tax could eventually charge up to 100% of the property's value.
• Non-EU residents buying property for less than 183 days of residence in Spain will be subject to the tax.
• The measure mirrors policies in Denmark and Canada.
• Specifics on tax implementation and the parliamentary timeline remain pending.

Jeremy Savory, CEO of Savory & Partners, noted that the measure is part of a wider trend across Europe. Increasing layers of taxation, including notary fees, IMT, and broker fees, are prompting some investors to shift focus to emerging markets offering higher yields and favourable currency conditions.

Affected investors, particularly those who might miss out on the Golden Visa, may need to consider alternative EU jurisdictions offering similar residency privileges. As these changes unfold, the Spanish housing market and broader European investment landscape are expected to adjust to the evolving rules.