Spain is proposing a 100% sales tax for non-EU customers

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Spain plans to impose a 100 percent tax on buyers from non-EU countries such as the UK in a bid to improve housing affordability by curbing imports.

Prime Minister Pedro Sánchez has announced a punitive property tax policy, which will apply to non-EU citizens who are not citizens of the bloc, as part of measures aimed at solving the problem of “graveyards” of houses.

Spain It is one of many European countries where public anger is rising over the difficulty of finding affordable housing to buy or rent as property prices rise and new construction lags behind. a lot.

“The West is facing a decisive challenge: not to be a society divided into two groups, rich landlords and poor tenants,” said Sánchez as he unveiled a series of 12 measures.

Spain has long been a popular destination for holiday home buyers and people looking to move permanently to a sunny location, which has helped drive property values ​​up over the years.

The government’s proposals come as property prices from Madrid to Mallorca are boosted by a new wave of wealthy foreigners from the US, Mexico and Venezuela. They complement the Britons, who are the mainstay of the property market in some parts of the south coast and are no longer EU citizens because of Brexit.

The Socialist Sánchez-led government has said it will “curb” the purchase of goods by non-EU citizens who do not live in the bloc by ordering them to pay a tax of “up to 100% of property value”.

Property buyers in Spain may be subject to a number of taxes depending on whether they are buying a new property or an existing home.

Fees vary by location, but as a rough guide, real estate agents say the average tax can be anywhere between 7 to 12 percent of the property’s value. Spain’s housing ministry said the new measure would be introduced by changing stamp duty or a special tax.

The Prime Minister said that non-EU citizens buy 27,000 houses a year in Spain, adding that it is “mainly for speculation”.

The government said its proposal would only be finalized “after careful study”. For it to become law it will also need to be approved by the Spanish parliament, where Sánchez faces an uphill battle to muster the votes he needs to reach a majority.

Antonio de la Fuente, managing director of real estate group Colliers, said the proposal is unlikely to reduce the “contradictions” in the housing market, noting that the annual property price of 27,000 are non-EU citizens compared to Spain’s total of 26mn. “It’s a drop in the ocean,” he said.

He expressed doubts about whether the measure would ever become law, but predicted that the “uncertainty and noise” created by the proposal would cause individual property investors and of the unions turn their backs on Spain and look elsewhere.

In the third quarter of 2024, non-Hispanics including EU citizens bought 24,700 properties in Spain, accounting for 15 percent of real estate sales in the country.

The largest group of non-Spanish buyers was the British, accounting for 8.5 percent of all foreign deals. They were followed by the Germans, then the Moroccans, then the Poles and the Italians, according to data from the Spanish Registry Association.

Underscoring the scale of the continent’s housing crisis, Sánchez said house prices in Europe have risen by 48 percent in the past decade, almost doubling household incomes over the same period.

“We are facing a serious problem with major social and economic consequences, which requires a decisive response from society as a whole and leading civil society organizations.”

Other measures proposed by Sánchez include higher taxes on Airbnb-style vacation rentals; the transfer of 3,300 homes to a new public housing agency; a program to rehabilitate vacant homes; and social guarantees for landlords who have provided the “best value” rentals.