On 13 January 2025, the President of the Government of Spain, Pedro Sánchez, announced twelve new measures to tackle the current housing crisis. One of these measures involves implementing a 100% tax on property purchases for citizens who are neither residents nor citizens of the EU. It is hoped that these measures will make housing more accessible and affordable for Spanish citizens.
According to data from the General Council of Notaries, non-resident, non-EU citizens account for between 25,000 and 27,000 property purchase transactions annually – less than 3% of the total number of sales. Many of these purchases are for ‘speculative’ purposes rather than residency. For example, non-EU citizens may purchase property in Spain as investments or as vacation homes.
Citizens of the UK and USA will be disproportionately affected by these tax changes, as they carry out the majority of property purchases by non-EU citizens. In the first six months of 2024, transactions by non-EU residents were as follows:
- UK citizens – 3,480 transactions
- US citizens – 695 transactions
- Ukrainian citizens – 480 transactions
- Swiss citizens – 416 transactions
In response to the proposed 100% property purchase tax on non-EU residents, the Association of Developers and Builders of Spain (APCESpaña) stated that “[non-EU residents] are not taking affordable housing away from the market, but they do provide great benefits to the economy and employment in certain areas of our country.”
The APCESpaña criticizes the government for not acknowledging that the type of housing that foreigners typically purchase is undesirable to Spanish citizens due to location or general condition. They argue that, as a result, the proposed tax changes won’t necessarily improve the housing crisis.
This news follows the announcement that ‘Golden Visas’ will no longer be available starting from April 2025. Previously, non-EU citizens could attain a residency permit for Spain if they purchased property worth over €500,000 or invested significantly in Spanish businesses. Despite the closure of the ‘Entrepreneurs’ Support Law,’ as the visa program is officially known, past applicants who currently have a residency permit through the program will be able to renew their residency going forward.
While the 100% property tax changes are yet to be announced officially, it is expected that Spain will try to implement them via changes to the existing Property Transfer Tax (ITP) or through a new tax policy. Any such changes must be approved by the Congress of Deputies before they can be implemented.
At the current time, no deadline has been provided for the official announcement or implementation of these tax policies.