Spain Proposes 100% Tax on Property Purchases by Non-EU Foreigners

Spain is tightening the screws on foreign real estate investors. On May 22, 2025, the Spanish government submitted a draft bill to parliament proposing a new tax of up to 100% on property purchases by non-EU, non-resident individuals. This measure is part of a broader housing reform plan aimed at curbing property speculation and restoring affordability for local residents, as reported by Spain English.

What the Law Proposes

The new “Supplementary State Tax on Property Transfers by Non-Resident Third-Country Nationals” introduces a levy equal to the full value of the property for individuals who:

Are not citizens of the EU,

Are not tax residents in Spain,

And do not reside in Spain for at least 183 days annually.

Long-term residents and those with Spanish tax residency are exempt.

This measure follows earlier statements by Prime Minister Pedro Sánchez criticizing speculative purchases by foreign investors, especially in Spain's coastal and tourist-heavy regions. In 2023, citizens from outside the EU acquired more than 27,000 properties in Spain, prompting political pressure to act.

“Spain must not become a society where some own multiple homes and others rent for life,” Sánchez stated.

Broader Real Estate Clampdown

The draft law is not limited to foreign purchase taxes. It also proposes:

Raising VAT on short-term tourist rentals to 21%, double the rate for hotels;

Fines for empty homes and idle properties;

A freeze on new short-term rental licenses in cities like Barcelona, Madrid, and Málaga;

Expansion of public housing construction and limitations on investor bulk-buying.

Authorities argue that short-term rentals are draining long-term housing supply. According to Reuters, these rentals account for much of the price pressure in central neighborhoods.

Who’s Buying and Who’s Affected?

Non-EU buyers represent around 5–15% of Spain's housing market, depending on the region. Popular groups include citizens from the UK, USA, China, and UAE, especially in Valencia, Andalusia, and the Balearic Islands. Critics argue that these purchases, though relatively few in number, heavily distort prices in local hotspots.

The opposition People’s Party (PP) has called the bill “discriminatory,” warning of capital flight and construction slowdown. Regional leaders in Andalusia and the Balearics have also raised objections.

Legal experts from My Lawyer in Spain suggest the law could violate Spain’s international commitments on investment protections and non-discrimination. Lawsuits may follow if the bill passes in its current form.

Political and Economic Stakes

Although the coalition government lacks an outright majority, the bill’s fate depends on support from regional parties. Even if approved, its implementation could face delays due to legal challenges.

Meanwhile, Spain continues to experience mounting social pressure over housing. A recent wave of protests has underlined the urgency of reform. The government insists the new tax is part of a comprehensive affordability strategy, but concerns remain that it may deter legitimate foreign buyers and harm Spain’s international image as a safe investment destination.