Spanish Prime Minister Pedro Sánchez announced on 13 January that his government is planning to impose a tax of up to 100 percent on properties bought by non-European Union residents. The detail is vague on what this really means, and these policies still need to go through various stages of legislation within the Spanish parliament in order to meet approval, which will be no easy feat in the absence of a meaningful majority for the PM. The reason given for the change is to deal with the country’s housing emergency and prioritise available homes residents, not for investment.
We see it as a scare tactic to deflate the market and it is already spooking some potential buyers we are talking to.
Be careful what you wish for
The difficulty in making decisions based on this announcement is there is very little detail around the proposed policies. There has been a recent, targeted attack by the Socialist government on overseas wealth – the abolition of the Golden Visa and now proposing huge fiscal barriers to deter overseas investment. The government is under increasing pressure from Spaniards who are finding it harder to afford to buy or rent their own homes during this cost-of-living crisis. The scenario of rich foreigners buying up their country’s real estate does not sit well with this left-wing government’s ideals.
My view is there needs to a be a smarter balancing act rather than a severe knee-jerk reaction like this. After all, Spain needs to be careful what it wishes for, bearing in mind that tourism is its No. 1 export, and the country has attracted a huge amount of tax revenue from people who have relocated to Spain for a better quality of life.
For sure, they need to take care of their own, but they need to be careful they don’t alienate those foreigners who have helped create wealth for the everyday Spaniards now demanding change.
Targeting non-EU buyers
Another angle to note is the mention of non-EU buyers being targeted. Of course, as members of the EU bloc, there is very little Spain can do to deter buyers from Ireland or the Netherlands, for instance. It’s going to be the non-members of the club who stand to suffer, and that means predominantly the British, North Americans and Middle Eastern buyers.
It also seems it’s only the speculative purchasers who are being targeted, so I would expect any crackdown to be aimed solely at those non-EU buyers who have no intention of seeking permanent residence in Spain and who add very little everyday value to Spanish society (i.e., a property left vacant for 10 months of the year and only contributing negligible tax revenues).
How they intend to police this particular issue will be interesting.
The timing of this announcement comes just a few weeks after the government set the date of 3 April for the end of the Golden Visa scheme. This new proposal makes it difficult for buyers trying to make a quick decision to purchase a property to take advantage of the Golden Visa before it is too late and is once again causing concerns. However, it is unlikely any fiscal change will be brought in quickly. Therefore, if you want to benefit from the Golden Visa, you need make your property purchase in January so you have ample time to prepare the visa application.
Any applications for new Golden Visas must be submitted by 3 April 2025. After that date, no new visa applications will be accepted. However, applications which have been submitted but not approved will continue to be processed and existing Golden Visas will be renewed.
We hope to get some clarity about what this really means in practice so potential buyers can make an informed decision.
Sean Woolley is the founder and director of Cloud Nine Spain. With 20 years’ experience of helping clients buy and sell properties in Spain, he’s known as “The Property Doctor” and has contributed to a host of publications. He has recently written the book “From the Ground Up – The Insider’s Guide to Buying Spanish Property,” sharing his years of experience, real life stories, tips and tricks with buyers interested in investing in Spanish Real Estate.
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