Spain’s socialist-led coalition government officially submitted a draft bill to the Spanish Congress on Thursday, marking a significant step toward implementing a 100% tax on property purchases by non-resident, non-EU nationals — a measure first proposed by Prime Minister Pedro Sánchez in January. ALSO READ: Sánchez announces new housing measures, including limiting non-residents from buying property.
The proposed legislation is part of a broader strategy designed to tackle real estate speculation, and includes provisions to cap the number of tourist apartments, boost the public housing supply, encourage more affordable rental prices, and – most notably – restrict property acquisitions by non-EU buyers who are not residents of Spain.
The government is also seeking parliamentary approval for a new 21% VAT on short-term tourism rentals – double the tax paid for hotel rooms. The maximum tax rate would apply to all rentals under 30 days and affect around a third of the 94 million annual visitors to Spain last year who opted to rent a home over a hotel room. At present there is no VAT on short-term rentals in mainland Spain, while hotel visitors pay a 10% tax on rooms.
This week, the consumer affairs ministry also ordered accommodation website Airbnb to remove more than 65,000 holiday homes from the platform as part of a crackdown on illegal listings. ALSO READ: Spain orders Airbnb to remove over 65,000 ‘illegal’ holiday rental listings.
When Sánchez initially revealed his government’s intention to introduce the 100% tax on non-resident, non-EU buyers of property in Spain, many observers dismissed it as political posturing. However, the submission of the bill this week indicates that the government is very serious about advancing the proposal, although it still needs to secure parliamentary approval.
The proposed law has been branded ‘xenophobic’ by opposition politicians in Spain. The spokesman for the right-wing People’s Party (PP), the main opposition group, has said his party was ‘not going to facilitate a xenophobic measure’.
The draft law, officially titled the ‘Complementary State Tax on the Transfer of Real Estate to Non-EU Residents’, stipulates that the new levy ‘will be obtained by applying a 100% tax rate to the taxable base’, meaning the market value of the property.
Therefore, a non-EU non-resident purchasing a €200,000 property would end up paying €400,000 in total — the property price plus an equal amount in tax. This sharply contrasts with Spain’s current standard property transfer tax (ITP), which stands at approximately 8% of the property’s value.
‘We’re going to ban non-EU foreigners who don’t live in our country from speculating with the housing our country’s families need,’ Sánchez said in January. ALSO READ: Spanish government now proposes to ban home purchases by non-EU buyers.
Sánchez has defended the plan by pointing to the pressures that wealthy non-resident buyers place on Spain’s housing market, driving up prices and worsening the affordability crisis. However, available data indicates that this particular demographic accounts for just 1.6 to 3% of all property transactions in the country. ALSO READ: Lack of affordable housing and threat of mass tenants’ strike puts pressure on Spanish government.
The move has drawn considerable international attention, particularly from the United Kingdom. Britons continue to be the largest group of foreign property buyers in Spain, but following Brexit, UK nationals no longer benefit from EU privileges. As a result, British non-residents would fall under the scope of this new tax, effectively doubling the cost of buying a second home in Spain.
Previous efforts to curb foreign real estate ownership through legislation have failed. Regional governments in the Canary and Balearic Islands – regions especially impacted by foreign demand – have made repeated but unsuccessful appeals to the EU for support and proposed restrictions on non-residents at the national level.
In a related development in March, the Catalan pro-independence party Esquerra Republicana (ERC) proposed a separate bill that would require foreign residents who have lived in Spain for fewer than five years to seek approval before buying property. That initiative was also rejected.
However, now that the national government is leading the charge, the chances of such restrictions being implemented are higher. This follows last month’s termination of Spain’s golden visa programme, which had allowed wealthy non-EU citizens to gain residency by investing in real estate – a move the government had committed to a year earlier.
Sánchez has even floated the idea of an outright ban on property purchases by non-EU non-residents who lack any meaningful connection to Spain. But for now, the administration’s primary focus appears to be advancing what has become known as the ‘supertax’.
Subscribe to the Weekly Newsletter from Spain in English.
Click here to get your business activity or services listed on our DIRECTORY.
