Spain plans to significantly increase property taxes for non-EU citizens without legal residency, aiming to limit foreign buying and prioritize housing for residents. The proposal, facing parliamentary scrutiny, comes amid rising housing costs and concerns over rental affordability.
British individuals seeking to acquire properties in Spain might encounter hefty tax burdens amounting to the full property value under proposed reforms. The Spanish Prime Minister aims to curtail the number of homes sold to foreigners by substantially increasing their tax liabilities. Under the proposed amendments, non-EU citizens lacking legal residency in Spain would be obligated to pay taxes equivalent to 100% of the property's value.
Official statistics reveal an increase in the number of British residents registered in Spain, rising from 276,089 in 2017 to 284,037 in 2023. In 2023, 12,470 Spanish property transactions involved British buyers, representing a 16.5% decline compared to the previous year. Pedro Sánchez, the Spanish Prime Minister, unveiled the proposal in Madrid on Monday, stating: 'The tax rate that non-Europeans who do not reside in our country must pay when buying a home in Spain will be increased to 100 per cent, prioritizing that the available homes are for residents.' One in five homes sold in Spain is purchased by foreigners, many of whom are non-residents. 'We are going to limit the purchase of houses by non-resident non-EU foreigners. Non-residents bought 27,000 houses last year, mainly for speculation,' added Sánchez.The proposal will now proceed to parliament, where Sánchez's minority government often faces challenges in enacting legislation. This announcement coincides with growing concerns regarding escalating house prices, particularly in Madrid. To address rental anxieties, Sánchez has announced plans to endorse state-guaranteed leases and allocate thousands of government properties through a newly established housing entity. Additionally, he intends to raise taxes on holiday rentals to ensure they contribute 'like a business.' 'It isn’t fair that those who have three, four or five apartments as short-term rentals pay less tax than hotels or workers,' Sánchez emphasized. His approach aligns with a recent EU policy requiring VAT imposition on online marketplaces; currently, Spanish hostels benefit from a lower 10% VAT tariff, which is integrated into the legislation. The shift occurs amidst mounting concerns over how soaring rents are fueling urban gentrification, prompting landlords to opt for more lucrative short-stay tourist accommodations, primarily in urban and coastal areas. Recently, investigations have scrutinized Airbnb for failing to remove numerous deceptive listings from its website. In a significant move to mitigate this issue, property owners in regions with high rents will receive a full tax exemption for their income, provided it aligns with the government's rental index. Fostering social housing development is also a priority, along with granting approximately 500 acres of residential land to the newly formed state housing agency. However, these proposals by the Socialist Party face criticism from the right for excessive regulation and from the left flank for alleged leniency towards property owners. The national bank previously highlighted the need for intervention in the rental market, noting an imbalance in household disposable income dedicated to rent. Struggling to pay rent — which is among the highest in the EU — could lead to 'adverse economic and social effects'
Politics Spain TAXES FOREIGNERS SPAIN HOUSING PROPERTY REFORMS LEGISLATION EU RENTALS
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