Deborah Cater
The Spanish government has proposed a housing tax aimed at non-resident buyers, sparking intense debate across the real estate sector and international community. Introduced as part of a broader strategy to tackle Spain’s growing housing crisis, the tax could impose a surcharge of up to 100% of the resale property’s value, effectively doubling the cost of purchase for affected buyers.
The measure, introduced by the ruling PSOE party in May 2025, specifically targets resale properties bought by individuals or companies outside the European Union and not resident in Spain. It does not apply to newly built homes that are subject to VAT.
The proposed levy would be calculated as an additional tax, equal to 100% of either the cadastral or purchase value of the home, whichever is higher. This comes on top of Spain’s existing Transfer Tax (Impuesto de Transmisiones Patrimoniales, or ITP). In practical terms, a €1 million resale home could incur an additional €1 million in tax under the new law.
Those who spend fewer than 183 days per year in Spain would be considered non-resident, regardless of whether they own property or conduct business in the country.
Government’s justification
As we reported in May, the Spanish property market saw its busiest quarter since 2007, with 183,140 homes sold in the first three months of 2025. Furthermore, 21,525 home sales involved foreign buyers – the highest Q1 figure on record – according to Spanish Land Registrars.
The Registrars’ quarterly report features an analysis of the region of origin of foreign purchasers for the first time. Of those foreign buyers, the main nationalities were British (8.2%), Germans (6.4%), Dutch (6%), Moroccans (5.9%), French (5.1%), Romanians (4.8%), and Italians (4.8%). This translates as:
- 54.6% come from the European Union,
- 19.6% from the rest of Europe,
- 8.6% from Africa,
- 7.8% from Asia,
- 5% from South America,
- with the remainder each representing less than 5%.
These figures give fuel to Prime Minister Pedro Sánchez’s argument that the proposed measure is a necessary step to address Spain’s “housing emergency.” According to the government, many foreign home buyers use the properties for short-term rentals or as investment vehicles rather than permanent homes. This speculative activity inflates prices, restricts access to housing for locals, and contributes to the broader affordability crisis.
The proposed housing tax forms part of a wider package of 12 proposed reforms, including increased taxation on tourism-related rentals, incentives for landlords to offer affordable long-term lets, and the conversion of thousands of existing homes into social housing.
Legal and economic concerns
The proposed housing tax has triggered strong opposition from legal experts, real estate professionals, and EU institutions.
Critics argue the proposal could be unconstitutional, violating Article 14 of Spain’s Constitution, which guarantees equal treatment under the law, and Article 139, which protects the right to move and settle freely within Spanish territory. More significantly, it may conflict with EU law, particularly in areas related to non-discrimination, freedom of capital movement, and treaty obligations.
On 18 June 2025, the European Commission formally opened proceedings against Spain for potentially breaching EU rules by targeting foreign non-residents in this way.
From an economic standpoint, the tax may have limited impact on overall housing affordability. Whilst Q1 2025 sales soared for non-EU buyers, posting at around 12% of the total sales, in 2023 non-EU buyers accounted for only around 3% of property transactions in Spain. There are several factors which may have influenced the 2025 surge; these include the government’s proposal of the new tax in January driving potential purchasers to make the decision to buy immediately, and a jump in American purchasers which is thought to be a result of the Trump effect.
Many real estate analysts have described the measure as disproportionate, arguing it risks undermining confidence in the Spanish property market without meaningfully addressing the underlying housing issues.
Industry reaction and parliamentary outlook
The response from property professionals has been swift and critical. Industry groups and legal commentators have described the measure as “extreme,” “punitive,” and “counterproductive.” Rather than encouraging affordability, they argue, the tax could drive away legitimate investment, depress the high-end property market, and reduce revenue from related sectors.
Some have questioned whether the government is using the measure to score political points, deflecting attention from its failure to increase housing supply or implement lasting urban development reforms.
The proposed housing tax marks a dramatic attempt by the Spanish government to reshape the dynamics of property ownership in favour of local residents. While the intent may resonate with voters facing housing insecurity, the method is legally fraught and economically risky.
The bill’s future remains uncertain. Although the PSOE introduced the legislation, Sánchez’s coalition government does not hold a parliamentary majority. This means the bill will require support from other parties to pass, an outcome that looks unlikely in its current form.
Legal obstacles and political pressure, from home and the EU, are expected to result in significant revisions or an outright rejection of the proposal.
Would the 100% housing tax be effective?
Should the tax be passed into law, and that is not likely in its current form, a 100% tax on non-residents is unlikely to have the outcome suggested by the government. It would, however, likely have a dual effect. The high-end, second-hand property market would become depressed, and mid-range new builds will become more popular among international buyers. This in turn could lead to a reduced interest in rural properties.
Importantly, this last point could result in yet more depopulation of the interior, as international buyers flock to the coastal areas where new builds proliferate. Furthermore, the latest housing data shows that new builds are not only in higher demand but also significantly more expensive, with average prices reaching €2,467/m² compared to €2,153/m² for resale properties.
This continued price gap disproportionately affects lower-income Spaniards, further excluding them from home ownership in areas where international demand remains high. At the same time, cheaper rural properties in so-called “Empty Spain” may see little benefit; without infrastructure or jobs, these areas remain unattractive to both locals and foreigners.
In short, if passed unchallenged, the proposed tax may fail to curb foreign ownership while exacerbating existing regional imbalances and deepening housing inequality.
Also read: Four million empty homes in Spain won’t fix housing crisis