Spain Considers 100% Property Tax for Non-EU Citizens: Addressing the Housing Crisis

The Spanish government is actively exploring a groundbreaking measure: a tax of up to 100% on real estate purchases made by non-European Union citizens. The proposal, confirmed by Prime Minister Pedro Sánchez, is a bold step aimed at tackling the country’s ongoing housing crisis. The announcement comes on the heels of Spain’s decision to terminate its "Golden Visa" program, a scheme that granted residency to foreign investors in exchange for property investments.

Key Details of the Proposed Tax

The tax proposal is designed to discourage speculative real estate purchases by non-EU citizens, a trend the government identifies as a major contributor to Spain’s housing affordability issues. According to Sánchez, non-EU citizens purchased 27,000 properties in Spain in 2023, primarily for profit rather than personal use.

"In the current housing crisis, we cannot allow homes to be treated as mere investment vehicles," Sánchez stated, as quoted by BBC.

While specific implementation details remain unclear, the Prime Minister’s office suggested that the proposed tax would mirror similar policies in countries like Denmark and Canada, where hefty taxes have been imposed on foreign property buyers to curb speculation. The government intends to finalize the proposal after further review and public consultations.

Termination of the "Golden Visa" Program

In tandem with the tax proposal, Spain has officially terminated its "Golden Visa" program, effective April 2025. This initiative, introduced in 2013, allowed foreign investors to obtain residency by investing in Spanish real estate, with a minimum threshold of €500,000.

The decision to scrap the program aligns with the government’s broader strategy to prioritize affordable housing for Spanish residents. Minister of Housing Isabel Rodríguez previously highlighted the adverse effects of the program, stating:

"This type of investment increases housing costs, burdens the market, and encourages speculation. Our priority is to end these practices and ensure affordable housing for all."

Despite the program’s impending closure, there was a surge in applications in late 2024 and early 2025, as investors rushed to take advantage of the scheme before its termination. Golden Partners, a consultancy firm for international property investors, reported that applications tripled following the government’s January 2025 publication of the program’s cessation in the Official State Gazette (BOE).

Why Spain is Taking Action

The housing crisis in Spain has reached a critical juncture. Escalating property prices, limited supply, and increasing demand have exacerbated affordability issues for Spanish residents. The government’s proposed tax and the termination of the "Golden Visa" program are seen as necessary steps to:

- Curb Speculation: Discourage speculative purchases that drive up property prices.
- Prioritize Residents: Ensure that available housing stock is accessible to locals.
- Align with EU Practices: Follow examples set by other European nations that have implemented similar policies.
- Potential Impacts and Challenges

While the government’s intentions are clear, the proposed tax raises several questions:
- Impact on Foreign Investment: Critics argue that such measures could deter legitimate investments, potentially affecting Spain’s economy and real estate market.
- Administrative Complexities: Implementing a 100% tax requires robust monitoring and enforcement mechanisms to prevent loopholes and evasion.
- Market Dynamics: Restricting foreign buyers might shift speculative practices to other regions or markets within Spain.

Spain’s ambitious proposal to levy a 100% tax on property purchases by non-EU citizens is a direct response to its pressing housing crisis. Combined with the termination of the "Golden Visa" program, the initiative underscores the government’s commitment to ensuring affordable housing for its residents. However, the policy’s success will depend on careful implementation and its ability to balance housing priorities with economic stability.

As Spain moves forward, the global community will watch closely to see if this approach becomes a model for other nations grappling with similar challenges in their housing markets.