Spain’s Proposed Tax for Non-European Property Buyers: What You Need to Know
Spain’s Prime Minister Pedro Sánchez recently announced a proposal that has sent concerned many in the Spanish real estate market—a 100% tax on property purchases for non-European buyers. If implemented, this could double the tax burden on international investors. But is this law actually going to pass? What could the tax be? And what does it mean for those looking to buy property in Spain?
Understanding the Proposed Tax
On January 13, 2025, Sánchez outlined a series of housing market reforms aimed at making homes more accessible to Spanish residents. His plan includes measures to incentivise landlords to rent to locals, but the most controversial proposal is the doubling of property taxes for non-European buyers.
While this may seem alarming, the law has not yet been passed. Given the current political climate—with a slim parliamentary majority—it is unclear whether the proposal will gain enough support to become law.
How Would This Impact Property Buyers?
Currently, property transfer tax (Impuesto de Transmisiones Patrimoniales or ITP) varies by region:
- Andalucía: 7%
- Murcia: 8%
- Valencia: 10%
- Catalonia & Madrid: 10%
- Canary Islands: 6.5%
If the proposed tax is approved, non-European buyers could see their tax rates double. For example, a British buyer in Andalucía might pay 14% instead of 7% on their property purchase.
Alex Radford speaks to Zoe Males of Olvera Properties about the potential affects of the proposed law.
Golden Visa vs. Digital Nomad Visa: Who is Affected?
It is important to distinguish between Spain’s different visa programs:
Golden Visa: Available to non-EU nationals investing €500,000 or more in Spanish property. Sánchez previously announced its abolition by April 3, 2025.
Digital Nomad Visa: Encourages remote workers to relocate to Spain. This visa remains available and could increase demand for rentals, impacting housing accessibility.
If you’re planning to buy property in Spain, you may be able to avoid extra taxes by applying for a non-lucrative visa before purchasing. This would allow buyers to become Spanish residents first, potentially bypassing any increased taxes.
Will the Tax Be Implemented Nationwide?
Spain has a regional tax system, meaning different areas set their own property taxes. Some regions lower tax rates to attract investment in rural areas. For instance:
Galicia offers lower transfer tax rates in certain rural zones.
Extremadura provides tax incentives for new businesses and rural homebuyers.
It’s unclear whether the proposed tax would apply equally across all provinces, or only in high-demand cities like Madrid, Barcelona and Málaga.
Could the Tax Be Challenged?
Legal experts suggest that the proposed tax could face legal challenges at both national and EU levels. Spain has previously been forced to repeal discriminatory tax laws, such as higher inheritance taxes for non-EU residents.
Given that foreign buyers contribute significantly to Spain’s economy—especially in tourism-heavy regions like Costa del Sol and Costa Blanca—introducing such a tax could deter investment and harm local economies.
What Should Property Buyers Do?
Since this law is still under discussion, buyers should:
– Stay informed about legislative updates.
– Consider applying for a non-lucrative visa before purchasing.
– Work with qualified legal professionals to navigate Spanish property law.
– Look at alternative investment options in regions with tax incentives.
Final Thoughts
The proposed 100% tax increase on non-European property buyers in Spain is still in early stages and may not be approved. However, it has created uncertainty in the market. If you are considering buying property in Spain, it’s crucial to get professional legal advice to understand your options.
For personalised legal guidance, contact My Lawyer in Spain, your legal team in Spain who speak your language.
