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Spain could introduce 100% property tax – what this means

Pedro Sánchez

Spain is set to implement an 100% tax on properties bought by non-EU residents, which could have a dramatic effect on Brits who commonly buy in Spain owing to its warm climate.

While details of how the tax will work are yet to be revealed, it’s thought it will be a buyer tax that would effectively double the cost of buying in the country.

Brits account for the most foreign buyers in Spain as it stands, while the country also attracts a number of Latin American buyers.

The policy comes from left-leaning Prime Minister Pedro Sánchez, who is looking to placate Spaniards frustrated at growing property prices in the country.

As it stands non-residents make up 5% of buyers in Spain, at 27,000 annually, so it’s unclear whether pushing them out of the market would damp down activity sufficiently.

Meanwhile it’s uncertain whether the plan will pass through Spanish parliament, as Sánchez would need eight other political parties to back the measure for it to go through.

The policy follows protectionist measures in counties like Canada, where non-Canadian residents are prohibited from buying property altogether until at least 2027.

Portugal could be the new Spain

Algarve, Portugal

If foreign buyers are denied the opportunity to buy in Spain they could look to other European countries with a warm climate.

The most obvious is the neighbouring Portugal, where there are no restrictions on foreign property ownership.

The downside is buying no longer provides a Portugese Golden Visa via property investment, meaning investors would also need to look at other options, like investing in venture capital or private equity funds.

Other popular destinations include the south of France, Dubai in the United Arab Emirates, Malta, Cyprus, Greece and Italy.

Critics of the plan

David Hannah, group chairman of Cornerstone Tax, argued that disincentivising foreign investment in housing undermines job opportunities and the local economy.

In Spain he said foreign investment has helped sustain local economies, particularly in popular regions like Barcelona, Marbella, and Ibiza.

If the UK was to adopt a similar policy to Spain, Hannah added, it would exacerbate housing shortages, making it more difficult for young people to secure jobs and affordable housing.

Valencia, Spain

End of Golden Visa programme

Alongside the announcement, Spain’s Golden Visa programme, which grants residency to non-EU citizens, will end from 3 April 2025.

Isobel Neilson, director at law firm and global immigration specialists Fragomen, said: “They [buyers] will now have to look to other passive routes to obtain residency such as the non-lucrative visa – this is unfortunately less flexible, does not allow the applicant to work, even remotely, in Spain and requires full time residency (6 months a year) to maintain the status.

“One of the requirements of this visa is that the applicant needs to evidence accommodation in Spain. This can either be through a lease or showing title deeds to a property in Spain.”

She added: “If the proposed 100% tax on home ownership for non-EU nationals were to be introduced our clients would most likely look to rent instead of buying or alternatively explore other more favourable EU jurisdictions offering similar status such as the D7 visa in Portugal or the elective residency permit in Italy.”

The whole of Spain, or just some areas?

Madrid, Spain

Seila Sanches Lucas, a UK and Spanish qualified lawyer at the international law firm Broadfield, speculated on how the tax will work.

She said: “It would be interesting to know whether this proposal would extend to the entire country or to particularly regions. UK nationals who have already retired and living in Spain will also want to know whether this tax could be levied retrospectively.

“It should be noted that some consider the Spanish Prime Minister is politically vulnerable and this may simply be a pre-election soundbite to boost his popularity. Even if adopted, the legislative process in Spain is tortiously slow and it is perhaps a little early for UK nationals to worry about this proposal.

“If adopted, there are many other jurisdictions looking to attract wealthy retirees and investors. For example, Dubai has been called the ‘New Marbella’.”

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