Spain’s 100% tax on homes bought by Non-EU Residents
Owning a holiday home in Spain has long been a dream for many UK residents. With our weather, who wouldn’t want to spend their summers in sunny Spain or retire in their own slice of Mediterranean paradise? However, recent announcements from the Spanish government will likely change the landscape for non-EU residents. If you’re considering buying a property in Spain, it could be a good idea to get help from our English-speaking solicitors and take action sooner rather than later – here’s why.
Spain is in a housing crisis
The Spanish government has come up with a new strategy to tackle the country’s ongoing housing crisis, with a large focus on creating more affordable housing for locals. Spanish Prime Minister Pedro Sánchez has announced that 27,000 properties were purchased by non-EU citizens in 2023 alone. He also pointed out that property prices across Europe have increased by 48% over the past decade, with Spain being no exception to that rule.
The Spanish government also wants to keep the number of short-term rentals and holiday lets in spots like Marbella, Barcelona, and Ibiza in check. Over recent years, popular tourist destinations such as these have seen a lot of foreign buyers coming in, driving up property prices and making it challenging for locals to find reasonably priced homes.
Some areas in Spain are already starting to limit short-term holiday lets. For instance, in Catalonia, officials have stopped giving out new permits. This means that once the current permits, which last five years, run out, property owners will need to rent their places to people looking for long-term homes instead of holidays.
What does this mean for non-EU property buyers?
The main focus of these measures is a new tax targeting non-EU residents, including UK buyers. Although the full details are yet to be confirmed, the government has mentioned that the tax could be as high as 100% of rental income or property value. It would be a heavy blow for foreign buyers, particularly those interested in renting out their properties as holiday homes. While the Spanish government is still working out the specifics, it’s already evident that this tax will likely have a significant impact on the property market. Even if it doesn’t end up being as high as 100%, the likelihood is that it will still end up being a significant increase.
What about stamp duty and other taxes?
Non-resident property owners in Spain currently pay a tax, regardless of whether their property is rented out. This tax is based on the fiscal value of the property and is generally set at 24%. Right now, it’s uncertain whether the Spanish government will raise stamp duty or other property taxes. These ideas are still in the early planning stages and need to be approved by parliament first. Spain’s political situation could also influence what happens in the end.
The PSOE, Spain’s Labour Party, formed a coalition government in 2023. This partnership includes several parties, but its weak position in parliament means the proposed measures are likely to face opposition. Political commentators believe the legislation may not pass as it is, which could lead to significant changes or delays.
Thinking about buying a Spanish home?
All this means that if you’re considering buying a holiday home in Spain, now might be the perfect time to act, as new tax laws are likely on the way. While the specifics of these laws are still being discussed, there is increasing pressure on the Spanish government to address housing affordability. This could lead to significant changes in property taxes and rental regulations sooner than we expect.
If you’re considering purchasing property in Spain, our English-speaking solicitors are here to help. We’ll guide you through the complex legal process, ensuring you understand any potential impacts from upcoming changes.
As the situation evolves, our expert team at Gascon Bernabeu will keep you updated. If you need guidance in navigating the Spanish property market, our English-speaking solicitors are here to help. To speak to a member of our team, you can reach out through the form on our website, email us at info@gbabogados.co.uk, message us on WhatsApp, or call us at +44 (0)20 3137 1320. We’re here to help you.