Added value · Tax
Spain's announced tax on non-EU buyers: what we know and what we do not
The announcement caused alarm abroad, but it is only a proposal at an early stage. This is a legal analysis of where things stood in January 2025.
SHORT ANSWER
On 13 January 2025 the Prime Minister announced a proposal to raise the tax on property purchases by non-EU buyers who do not reside in Spain, with a figure of up to 100% of the property's value. It is only a proposal: at least four of the twelve announced measures, this one included, must go through Congress, and a 100% tax would likely face constitutional challenge.
IN THIS ARTICLE
Analysis by Santiago Lapausa Gonzalez, Partner and Economist at JC&A Abogados. It reflects the situation at the time of writing, January 2025.
What did the Prime Minister announce?
On 13 January, Prime Minister Pedro Sánchez announced at an economic forum in Madrid a proposal to increase the tax on the purchase of properties by non-European Union buyers who do not reside in Spain. The information given was so scarce and confusing that it caused panic in many sectors and abroad. His words were: "We are going to limit the purchase of homes by non-resident non-EU foreigners by increasing the tax burden they will have to pay in case of purchase up to 100% of the property's value, something unprecedented in Spain but applied in other countries like Denmark or Canada."
Who would be affected?
Even the target buyer is unclear. We have to assume it refers to nationality, so non-EU nationals who reside, or will reside, in Spain upon the purchase would fall outside the scope of the measure.
How could the government apply it?
Without knowing the exact measures or what the Prime Minister meant, we have learnt that the government is exploring two options:
- Modifying the existing Transfer Tax. This tax is shifted to the regional governments, mostly governed by the Conservative Party, so the real effect of the measure is doubtful.
- Creating a new special tax aimed specifically at these purchases. In theory this is not possible when a tax already exists for the same taxable event. However, there is the precedent of the Solidarity Tax, a State-level complement to the regional Wealth Tax, which the Constitutional Court has admitted.
Could a 100% tax be constitutional?
The Spanish Constitution establishes that the tax system must not be confiscatory, meaning it must not exhaust the taxpayer's wealth. A 100% tax has been proposed for these purchases as an exceptional and specific measure, but a tax that eliminates the taxpayer's source of wealth is confiscatory. Generally, a 100% tax on the taxable base would be considered confiscatory and therefore unconstitutional in most cases.
Does it need the approval of Congress?
Of the twelve measures announced, at least four must go through the Congress of Deputies, and the tightening of the rules for home purchases by non-EU foreigners is one of them. This is only a proposal announced at a forum: we must wait for the formal proposal, and the government cannot develop the measure without the approval of Congress.
What happens if it is approved?
If the measure were finally approved and the law enacted, its constitutionality would likely be questioned. If it depended on the regional governments, it would be counteracted. And once published, we would have to study which alternatives apply, for example buying through a Spanish company.
This proposal is still in its early stages and will undergo thorough scrutiny and debate before any implementation.
Santiago Lapausa Gonzalez, JC&A Abogados
This analysis reflects the situation in January 2025 and is general information, not legal advice. Check the current position with your lawyer before taking any decision.
Frequently asked questions
Has Spain approved a 100% tax on non-EU buyers?
As of this analysis (January 2025) no. It was a proposal announced at an economic forum on 13 January, with no formal text, and it would need the approval of Congress.
Would non-EU buyers who live in Spain be affected?
The target buyer is not clear, but if the measure refers to nationality, non-EU nationals who reside or will reside in Spain upon purchase would fall outside its scope.
Could a 100% tax be legal in Spain?
It would likely be challenged. The Constitution says taxes must not be confiscatory, and a 100% tax on the taxable base would generally be considered confiscatory and therefore unconstitutional.
What could non-EU buyers do if it went ahead?
Once the final text is published, alternatives would have to be studied, for example buying through a Spanish company.
Every case is different: before you sign or decide, confirm your situation with your own lawyer, notary or tax adviser.
Sources: Santiago Lapausa Gonzalez, Partner and Economist, JC&A Abogados; statements by the Prime Minister on 13 January 2025. Last updated: 27 January 2025.
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