Prime Minister’s Proposal: What Was Said?
During a press conference on January 13th, 2024, Spanish Prime Minister Pedro Sánchez made a statement that has sparked widespread discussion among real estate investors and foreign property buyers. He stated:
'We have decided that we are going to limit the purchase of real estate by non-EU foreign nationals who are not residents. And we will do so by increasing the tax burden on such purchases up to 100% of the value of the property.'
This statement led to interpretations suggesting that Spain could impose a tax equivalent to the property’s full value. For instance, under this assumption, a non-EU buyer purchasing a property for €2 million could be required to pay an additional €2 million in taxes.
However, further analysis of official government documentation suggests that the Prime Minister’s wording may have been misleading or imprecise.
Official Government Documentation: What Does It Really Say?
Unlike the Prime Minister’s press conference statement, the official government text presents a slightly different approach. The document states:
'The tax burden on European nationals who are not residents in our country when purchasing a home in Spain will be increased by up to 100%.'
This suggests that instead of imposing a tax equivalent to the entire property value, the proposal may refer to doubling existing property-related taxes such as:
✔️ Property Transfer Tax (ITP) – Potential increase from 7% to 14%
✔️ Value-Added Tax (VAT) on New Properties – Potential increase from 10% to 20%
This clarification significantly changes the potential impact on foreign buyers, making it less extreme than initially feared.
Will Property Taxes for Foreign Buyers Really Increase?
At this stage, this proposal is not yet law and faces several obstacles:
❌ Lack of Parliamentary Majority – The ruling party does not have enough votes to pass such a measure alone.
❌ Regional Tax Control – Property transfer taxes are managed by Spain’s autonomous regions, many of which are controlled by opposition parties that strongly oppose the measure.
❌ Business Purchases Unclear – There is no clarity on how this would apply to companies, particularly Spanish and EU-based SL (limited liability) firms.
What This Means for Property Investors
For now, no immediate changes have been made to property taxation for foreign buyers in Spain. While the government has proposed potential reforms, there are significant barriers to their approval. This means that, for the foreseeable future, tax rates on property purchases remain unchanged.
If you are considering buying property in Spain, it is advisable to monitor further developments and consult with real estate professionals and tax advisors.