Tax Changes for Non-EU Property Buyers in Spain (Proposed)
In response to escalating housing affordability issues, on May 22, 2025, the Socialist Parliamentary Group (PSOE) officially submitted a draft bill to the Spanish Parliament — previously announced by the Prime Minister earlier this year — which introduces a range of tax measures that have already sparked concerns within the property sector. It is crucial to emphasize that this remains a draft proposal in the initial phases of the legislative process and has not yet received approval.
This initiative, announced by Prime Minister Pedro Sánchez, aims to impose a 100% tax on property purchases made by non-resident non-EU citizens. The proposal is part of a broader strategy to address the housing crisis affecting major cities and tourist regions across Spain.
Proposed Key Measures
- New 100% Tax on Property Purchases by Non-EU Individuals or Companies
One of the most debated initiatives is the establishment of the so-called “Complementary State Tax on the Transfer of Real Estate to Non-Residents in the European Union.”
This tax would apply to:
- The transfer of real estate located in Spanish territory (first sales of new-build properties subject to VAT would be excluded).
- The constitution or transfer of rights in rem over such real estate (excluding security rights such as mortgages).
The individuals or companies that are subject to taxation would be those not residing in the European Union. The taxable base would consist of the purchase price (or the reference value, if it is greater), with a tax rate of 100% applied.
For instance: Should this legislation be ratified, a non-EU individual acquiring a resale property in Andalusia for €1,000,000 would incur a Transfer Tax (ITP) of €70,000, in addition to a further €930,000 due to the newly implemented state tax — thereby effectively doubling the total purchase expense.
- VAT on Holiday Rentals
Currently, short-term holiday rentals are not subject to VAT, unless they offer additional services that are characteristic of the hotel industry.
According to the new proposal, all rentals lasting less than 30 nights in municipalities with a population of 10,000 or greater will be liable for a 21% VAT, irrespective of the provision of any additional services.
- Higher Tax on Imputed Income from Second Homes
Currently, second homes that are not leased are liable to an annual imputed income tax calculated as a percentage of the cadastral value, typically ranging from 1.1% to 2%.
The new bill introduces a progressive scale:
- Up to €100,000 cadastral value: 1.1%
- From €100,000 to €500,000: 1.5%
- From €500,000 to €1,000,000: 2%
- Over €1,000,000: 3%
The taxable base that results will be subject to a tax rate of 19% for residents of the EU, while non-EU residents will be taxed at a rate of 24%.
Example:
If an individual who is not a resident of the EU possesses two secondary residences in Spain that are not leased out:
- One with a cadastral value of €450,000
- Another with a cadastral value of €850,000
The combined cadastral value would be €1,300,000.
Applying the scale:
- First €100,000 → 1.1% = €1,100
- From €100,000 to €500,000 → 1.5% = €6,000
- From €500,000 to €1,000,000 → 2% = €10,000
- Above €1,000,000 (remaining €100,000) → 3% = €3,000
Total taxable base: €1,100 + €6,000 + €10,000 + €3,000 = €20,100.
As a non-EU resident, the applicable tax rate would be 24%, resulting in an annual tax of:
€20,100 × 24% = €4,824.
- Other Measures
The proposed legislation also encompasses tax incentives aimed at promoting long-term residential rentals.
Legal Considerations
It is crucial to emphasize that this is presently merely a draft bill — it has not yet received approval from Parliament or ratification from the Senate, and numerous experts contend that it is improbable to succeed in its existing format.
As noted in several legal assessments within the industry, the suggested 100% tax on property acquisitions by non-EU nationals may be viewed as unconstitutional, confiscatory, and discriminatory.
Conclusion
Spain’s proposed tax reform represents a bold attempt to address housing affordability by targeting non-EU property buyers. While the initiative aims to curb speculative investments and prioritize resident access to housing, it faces substantial legal and political challenges that may impede its implementation. The potential economic ramifications, particularly in regions dependent on foreign investment, further complicate the proposal’s prospects. As the debate continues, stakeholders await clarity on the policy’s future and its implications for Spain’s real estate market.
In 2024, over 15% of property buyers in Marbella were from UK, 5%% were Moroccans,..
While the ´100% tax proposal´ has made headlines, it is not yet a law, and foreign buyers are very welcome in Spain.
Spain remains a stable and attractive destination for property buyers worldwide, with a full range of visa and residency options available for expats – whether for investment, lifestyle, or retirement.
At LuxuryForSale.Properties, we will persist in closely observing this legislative process and will ensure that our clients are updated on any developments. For those considering buying property in Marbella area, now is the time to move forward and secure a strong investment in a desirable market.