Spain's Proposed 100% Tax on Non-EU Property Buyers: What It Could Mean

Spain has announced a bold new measure that could significantly impact future non-resident property buyers, particularly those from outside the European Union, including the UK. Prime Minister Pedro Sánchez revealed plans this January to impose a 100% tax on the value of properties purchased by non-residents from non-EU countries. This proposal aims to address the country’s housing problems, but it has raised questions and concerns for prospective homeowners.

Here’s everything you need to know about the proposed tax and what it could mean for non-resident buyers. 

What is the Proposed 100% Property Tax?

When you buy a property in Spain, you’ll need to pay ‘transfer tax’, similar to stamp duty in the UK. This rate varies depending on the region in which you’re buying, but it typically ranges from 6-10% of the property’s value. It can also vary as to whether the property is a resale or a new build. 

Under the new proposal announced this week, non-residents from outside the EU who purchase property in Spain could face a tax equivalent to 100% of the property’s value. The proposal is designed to discourage speculative property investments, where homes are bought and remain empty for long periods or used to generate rental income. 

It is important to mention that it is only in its announcement stage at present, and a formal proposal has not been developed. 

Why is Spain Introducing This Tax?

Spain is seeing rising property prices and a limited supply of affordable homes for residents. According to the Spanish government, in 2023 alone, non-EU residents purchased 27,000 properties in the country. 

Prime Minister Sánchez emphasised the need to address this imbalance, stating, “The West faces a decisive challenge: To not become a society divided into two classes, the rich landlords and poor tenants.” The proposal is part of a broader strategy to prioritise housing for residents.

Who Could Be Affected?

The proposed tax targets non-residents from outside the EU, including British citizens who became non-EU nationals following Brexit. Individuals who spend less than 183 days per year in Spain are classified as non-residents and could be subject to this tax if they purchase property. These measures will not affect house purchases made by EU citizens. 

This measure could impact:

• Prospective buyers looking for holiday homes or rental investments.
• Current homeowners who may face challenges reselling properties to non-residents.

Broader Housing Reforms in Spain

The proposed tax is just one part of a comprehensive plan to address Spain’s housing crisis. Other measures announced by the government include:

• Tax incentives for landlords who provide affordable housing.
• Increased regulation and taxes on short-term tourist rentals, ensuring they do not undercut hotels or contribute to housing shortages.
• Public housing initiatives, such as transferring over 3,000 homes to a new public housing body.

These reforms aim to create a more balanced housing market and address the growing divide between landlords and tenants.

What Should Non-Resident Homeowners Do?

It’s important to remember that this tax is simply only an announcement from Pedro Sánchez and has not been passed into law. Until it has been written into Spanish law, it is expected that current procedures will remain the same.

Staying informed and prepared is key to navigating these evolving regulations, so we will bring you any updates as and when they are announced. 

What Other Taxes Do Non-Resident Homeowners Pay in Spain?

In addition to the taxes associated with buying a home in Spain, there are a number of other taxes that non-resident homeowners in Spain must pay, these include: 

• Non-Resident Imputed Income Tax: This is paid annually for those who use their property personally, even if it remains empty all year.  
• Non-Resident Rental Income Tax: If you rent out your property, this tax will need to be paid annually based on the income generated.
• IBI: This is the annual municipal tax paid by all property owners in Spain, regardless of residency status. This is used by your local town hall to fund local services and infrastructure.
• Capital Gains Tax: If you sell your property in Spain, you’ll need to pay tax on any profit generated from the sale within four months of the sale date.
• Plusvalía Tax: This is a municipal tax applied to the increase in value on which your property is built if you sell your property. 

IberianTax: Helping Non-Resident Homeowners in Spain

At IberianTax, we specialise in assisting non-resident homeowners navigate the complexities of Spanish taxes. Here’s why we’re the perfect choice:

• Specialists in Non-Resident Taxes: Exclusive focus on non-resident homeowners in Spain and expertise in imputed income tax, rental income tax, capital gains tax, and more.
• Hassle-Free Process: Our streamlined system makes it easy for accurate tax filing. There’s no stress – just quick and efficient service. 
• Transparent and Affordable Pricing: Clear, competitive pricing with no hidden fees. Say goodbye to those expensive accountants!
• Fast and Clear Communication: Our team provide prompt responses to all your questions, as well as detailed, easy-to-understand guidance every step of the way.
• Save Time and Eliminate Worry: We handle all the administrative tasks for you, so there’s no need to deal with Spanish tax authorities directly. We’ll even send you reminders when your tax is due.
• Trusted by Hundreds of Homeowners: Reliable, accurate, and professional service. We have hundreds of positive reviews from satisfied clients!

Got questions about non-resident taxes in Spain? Contact us today and let us help you stay ahead of the changes.