Mark StücklinSpain’s Socialist Party wants to slap a 100% tax on non-EU foreign buyers—mainly Brits and Americans—in a destructive move that still looks more like political posturing than housing policy, but it’s getting harder to tell.
Spain’s Socialist Party (PSOE), the senior partner in the governing coalition, has submitted a draft law that proposes a punitive new tax targeting non-EU, non-resident foreign buyers of property in Spain—mainly British and American nationals. The proposal, if approved, would impose a 100% surcharge on top of existing property transfer taxes, and could have severe consequences for coastal housing markets that rely heavily on foreign demand.
It’s not law yet. For the time being, this is just a proposición de ley—a proposal lodged in parliament by the PSOE party. But it sends an unmistakable signal: foreign non-resident buyers from outside the EU are in the political firing line, blamed for Spain’s housing crisis in a move that looks more like political theatre than evidence-based policymaking.
This isn’t the first time this idea has surfaced. Back in January, at a housing conference, Spain’s Socialist Prime Minister Pedro Sánchez floated a radical plan to deter non-EU property buyers by hitting them with punitive taxes. Later that same month, Sánchez went a step further and announced his government’s intention to propose an outright ban on non-resident buyers from outside the EU. Justifying the move with anti-speculation rhetoric, he stated:
“It also means, comrades, that in the year 2023, to give us an idea—this is the latest data we have—23,000 houses and apartments were sold to non-resident, non-EU foreigners. So, not people from the European Union, but from outside. We are also going to propose a ban on these non-resident, non-EU foreigners, who don’t live here or their families, from being able to buy these houses and apartments in our country, as they are solely speculating with these properties.”
Key features of the PSOE’s proposed tax
The measure is set out in Article 4 of the draft law and would create a new State Complementary Tax on the Transfer of Real Estate to Non-EU Non-Residents. Highlights include:
- Who it targets: People and companies not resident in the EU who purchase property or acquire property rights in Spain (excluding mortgages).
- Tax rate: 100% of the taxable base, minus any amount already paid in regional property transfer tax (ITP/AJD).
- Tax base: The highest of the declared value, market value, or cadastral reference value.
- Scope: Nationwide, with exceptions for the Basque Country and Navarre.
- Exemptions: Business transactions subject to VAT (unless exempt from VAT) and certain transfers of business assets.
- Filing and payment: Handled by the buyer via self-assessment. The tax is managed centrally by the Spanish state.
Who would be affected?
According to data from the Spanish notaries’ association, non-EU foreign non-residents bought 18,800 homes in Spain in 2024. That represents:
- 32% of the foreign non-resident buyer market
- 14% of all foreign buyers (139,102 purchases)
- Just 3% of the total Spanish housing market (698,381 transactions)
The British are by far the biggest group, with 7,161 purchases—38% of the targeted segment—followed by Americans with 1,521 (8%). Together they account for nearly half of the market in question. Other non-EU nationals, such as Norwegians and Swiss (5% each), also feature but play a much smaller role.
Importantly, these buyers overwhelmingly purchase holiday homes on the coast—in regions like Andalusia, Murcia, Alicante, the Balearic Islands and the Canaries. They do not compete with locals for affordable housing in cities like Madrid, Barcelona, Valencia or Málaga, where the real housing pressures are most acute.
So what would this tax achieve? It wouldn’t help locals in strained housing markets. Instead, it would likely depress coastal and island housing markets, harm local economies, reduce municipal revenue, and undermine employment in areas that rely on foreign homebuyers.
VAT hike for tourist rentals in PSOE’s sights
The draft law also targets tourist rentals, which the PSOE blames for driving up housing costs in popular destinations. It proposes raising the VAT rate applied to holiday lets that offer hotel-like services—such as cleaning, linen changes, or check-in management.
Currently, many short-term lets benefit from favourable VAT treatment or operate in a legal grey zone. Under the PSOE’s proposal, the standard VAT rate of 21% would apply more broadly. “We need to level the playing field and ensure these businesses pay their fair share,” said party sources, citing the need to support access to long-term housing and better regulate the short-term rental market.
A solution in search of a problem
If you look at the numbers, it’s plainly obvious that this proposal will do nothing to solve Spain’s housing crisis and will only create new problems. Taxing non-EU, non-resident buyers out of existence won’t ease affordability in the cities, because these buyers don’t operate in that market. What it will do is undermine the holiday-home markets that help support local economies in much of coastal Spain.
It’s hard to believe the government will actually go through with such a damaging measure. This looks like political theatre and posturing on the left, with one eye on a possible early general election in 2026. The Socialists appear to be trying to boost their credentials with voters by going after foreign non-residents who can’t vote—accusing them of being speculators and blaming them for house price inflation, despite all evidence to the contrary.
It’s cynical politics, assuming voters won’t look at the numbers. It’s difficult to imagine the government will do something this stupid—but it’s also getting easier to imagine that they might.
Article 4. Creation of the State Complementary Tax on the Transfer of Real Estate to Non-Residents in the European Union
With effect from the entry into force of this law, the State Complementary Tax on the Transfer of Real Estate to Non-Residents in the European Union is established, with the characteristics and legal framework set out below:
First. Nature and purpose of the tax
This is an indirect tax that will apply to the onerous transfers of real estate located in Spanish territory, as well as the creation and transfer of real rights over such properties, excluding security interests, in favour of individuals and entities not resident in the European Union.
Second. Classification of acts or contracts, goods, and concurrence of conventions
The rules contained in the consolidated text of the Property Transfer Tax and Stamp Duty Law (approved by Royal Legislative Decree 1/1993 of 24 September) shall apply to the classification of acts and contracts, assets and rights, and in cases where conventions overlap.
Third. Encumbrance of the transferred assets
The provisions concerning the encumbrance of transferred assets contained in the aforementioned law shall apply to this tax.
Fourth. Territorial scope of application
1. The tax will be levied on onerous transfers of real estate located in Spain, as well as on the creation and transfer of real rights over such property, excluding security interests.
2. This article is without prejudice to the special tax regimes of the Basque Country and Navarre, and to the provisions of any international treaties or agreements forming part of Spanish domestic law.
Fifth. Taxable event
1. The taxable event is the transfer of real estate and the creation or transfer of real rights over such property, excluding security interests, in favour of individuals and entities not resident in the European Union.
2. These transactions will not be subject to this tax when the transferors are entrepreneurs or professionals acting in the course of their business activity, and the transaction is subject to VAT. However, such transactions will be subject to this tax if they are exempt from VAT. Also subject are transfers of properties included in the transfer of a business, when the circumstances mean the transaction is not subject to VAT.
Sixth. Exemptions
The subjective and objective exemptions set out in the consolidated text of the Property Transfer Tax and Stamp Duty Law will apply.
Seventh. Taxpayers
The taxable persons (contribuyentes) are individuals and entities not resident in the European Union who acquire real estate located in Spain or acquire or transfer real rights over it (excluding security interests).
Eighth. Tax base
1. The tax base is the value of the property or right transferred or created. Charges that reduce the value of the property are deductible, but debts are not, even if secured by a mortgage or pledge. The market value is used unless the declared value or agreed price is higher, in which case the higher amount applies. Market value is defined as the most likely price the asset would achieve between independent parties, free of charges.
2. For real estate, the cadastral reference value (as per the Cadastre regulations) on the tax due date applies. If the declared value or agreed price is higher, the higher amount is used. If no reference value exists or cannot be certified, the highest of the declared value, agreed price, or market value will be used.
3. The reference value may only be challenged when appealing against the tax assessment or requesting a correction of self-assessment, under the procedures in the General Tax Law (Law 58/2003 of 17 December).
4. In such challenges, the Tax Administration must obtain a binding report from the Directorate General for the Cadastre, confirming or correcting the reference value, based on the evidence submitted.
5. Specific valuation rules apply to:
a) Temporary usufructs: valued at 2% of the full property value per year, up to a maximum of 70%.
Lifetime usufructs: 70% of full value if the holder is under 20 years old, decreasing by 1% per year of age down to a minimum of 10%.
Legal persons’ usufructs over 30 years or of indefinite duration are treated as full ownership transfers.
Bare ownership is calculated as the difference between the usufruct and full value.
b) Use and habitation rights: valued at 75% of the property value, using the usufruct rules above.
Ninth. Special rules
1. When full ownership is consolidated, the bare owner pays tax on the value gained.
2. Options and promises are taxed like the actual contract, with a minimum base of 5% of the contract’s base value if no special price is agreed.
3. In transfers with repurchase options, the declared price is used if equal to or greater than two-thirds of the verified value. The right to repurchase is valued at one-third, unless the declared price is higher. If repurchase is exercised, the base is two-thirds of the verified value.
Tenth. Gross tax liability
The gross tax is calculated by applying the 100% rate to the tax base.
Eleventh. Net tax liability
The net tax is the result of deducting from the gross tax any amount paid under the Property Transfer Tax and Stamp Duty for the same transaction.
Twelfth. Accrual
1. The tax is due on the date the taxable act or contract takes place.
2. If a condition, term, trust, or other limitation delays effectiveness, the tax becomes due when that limitation ends.
Thirteenth. Administration
The Spanish State holds exclusive authority for managing, assessing, collecting, inspecting, and reviewing this tax.
Fourteenth. Self-assessment
1. Taxpayers must file a declaration, self-assess, and pay the tax within the time, place, and manner determined by the Minister of Finance.
2. Tax can be paid in kind by transferring items from Spain’s Cultural Heritage inventory, under the terms of Article 73 of Law 16/1985 of 25 June.
Fifteenth. Filing
Declarations must be made using the forms and within the deadlines set by the Minister of Finance, including all relevant supporting documents.
Sixteenth. Penalties
Any tax offences under this law will be classified and sanctioned according to the General Tax Law (Law 58/2003 of 17 December).
Seventeenth. Jurisdiction
Disputes are subject to the administrative courts, after exhausting the economic-administrative appeals process.
Eighteenth. Coordination with regional tax regimes
Adaptation of this tax to the Basque Country and Navarre’s special tax regimes will be agreed by their respective joint commissions.
Nineteenth. Budget law authorisation
The General State Budget Law may modify the tax rate and available deductions, under Article 134.7 of the Spanish Constitution.
