The Proposed 100% Tax on Property Purchases by Foreigners

Spain has recently sparked intense debate both domestically and abroad following the announcement of a controversial proposal: implementing a 100% tax on property purchases by non-European Union (non-EU) foreigners. This initiative, led by Prime Minister Pedro Sánchez and his Socialist Party, forms part of a broader 12-point plan targeting Spain’s chronic housing crisis, which has seen rent and property prices soar across major cities and tourist hotspots.

What Is the Proposal?
The draft bill—publicly announced in January 2025—would require non-EU, non-resident buyers to pay an amount equal to the property’s purchase price in taxes. In effect, buying a €300,000 holiday home would incur an additional €300,000 tax, doubling the total cost to €600,000.

Why Such a Drastic Measure?
The Spanish government argues that foreign investors, particularly non-resident non-EU nationals, are driving up prices, squeezing Spanish citizens out of the market, and aggravating affordability issues. In 2024, non-resident non-EU buyers accounted for a small segment of the market—about 2.7% of total transactions—but the government believes their influence is disproportionately large in high-demand regions.

Housing prices in Spain have risen by almost 50% over the past decade, far outpacing income growth and fueling protests against mass tourism and speculative investment. The government argues that drastic action is necessary to avoid creating a society divided between wealthy property owners and struggling renters.

Domestic and International Response
The proposal has ignited heated discussions:

Critics: Many experts view the measure as political posturing, unlikely to pass in its current form due to Spain’s fragmented parliament. Opponents claim it would damage the property sector, scare off investment, and could even raise legal issues with international treaties and bilateral agreements.

Supporters: Supporters say it’s a necessary step to control speculation, stabilize the housing market, and put Spanish families and residents first.

Currently, the proposal is awaiting parliamentary debate and approval. Most observers expect any final legislation to be watered down, potentially resulting in a more moderate tax rate of 10–20% instead of 100%.

What Should Potential Buyers Do?
No Immediate Effect: The tax is not yet law and would apply only to future acquisitions if approved. Existing property owners remain unaffected.

Monitor Legislative Developments: The timeline for approval and implementation remains uncertain, with debates in parliament expected later this year.

Expect Market Shifts: The uncertainty is already prompting negotiations and potentially lowering prices, as some buyers and sellers try to act before any new rules take effect.

Spain’s proposed 100% tax on property purchases by non-EU foreigners is one of the boldest attempts yet to address Europe’s housing affordability crisis. While it has stoked anxieties in international real estate circles and brought global attention to Spain’s property woes, whether such an extreme measure will become law remains to be seen. For now, foreign buyers should stay informed and consult specialized advisors before making decisions in the Spanish market.