Prime Minister Pedro Sánchez announced yesterday in a press conference that his government aims to increase the “tax burden” on non-European residents purchasing property in Spain to 100% of the property’s value. While this measure ostensibly seeks to curb speculative investments and alleviate housing shortages for locals, it raises more questions than it answers. There is no clarity on how the surcharge will be implemented, monitored, or justified. The measures are yet to be brought before, discussed, and approved in Parliament. In any case, such ambiguity not only undermines confidence in the proposal but also creates uncertainty for prospective buyers and investors (including those who simply want to move to Spain to live and pay taxes here!).
Critics from across the political spectrum have pointed out that this punitive tax risks further destabilising the property market. Foreign buyers, particularly those from non-European countries, contribute significantly to Spain’s real estate sector and the broader economy. Penalising non-EU residents seems more like a populist gesture than a pragmatic solution.
Other Measures Targeting Non-European Residents
The proposed 100% tax surcharge is just one of several measures that disproportionately affect non-European residents in Spain. For instance, non-residents who own rental properties in Spain are already subject to a 24% tax on rental income, with no opportunity to deduct expenses such as maintenance costs or mortgage interest. This contrasts with the treatment of European residents, who can deduct such expenses and are subject to a 19% tax. The result is a glaring inequity that places additional financial strain on non-European property owners and discourages participation in the rental market, potentially reducing the availability of rental housing.
Another contentious measure is the elimination of the so-called “golden visa” programme, which allowed non-European investors to obtain residency by purchasing property worth at least 500,000€. This scheme has been a crucial driver of foreign investment, particularly in regions like the Costa del Sol, Valencia, and Barcelona. Scrapping the golden visa without a viable alternative risk alienating high-net-worth individuals and undermining Spain’s competitive edge in attracting global talent and capital.
