Spain Proposes 100% Tax on Real Estate Purchases by Non-EU Buyers

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Residency by Investment
Published Date: 16.01.2025

Spain has announced a controversial plan to impose a 100% tax on real estate purchases by non-EU residents. Prime Minister Pedro Sánchez argues that wealthy foreign investors are worsening Spain’s housing crisis by driving up property prices. The measure aims to limit purchases by individuals who do not reside in Spain for at least 183 days per year.

Foreign buyers already make up a small portion of Spain’s property market—only 5% of sales in 2023 involved non-EU residents. Despite this, the government believes restricting their purchases will help stabilize housing prices. The tax proposal comes as Spain prepares to close its Investor Visa program in April 2025, making it even harder for non-EU investors to acquire property.

Spain: Housing Crisis and Foreign Investor Restrictions

Spain’s real estate market has seen a 48% increase in property prices over the past decade, significantly outpacing income growth. As homeownership becomes increasingly unaffordable for locals, the government is targeting foreign investors as part of a broader strategy to combat rising housing costs.

Pedro Sánchez argues that many non-EU investors purchase Spanish properties not as homes, but as financial assets, making it harder for residents to compete. The government believes this speculative investment is creating a two-tier housing system, where wealthy investors dominate the market, leaving ordinary citizens struggling with inflated prices.

By introducing a 100% tax on non-EU property purchases, Spain hopes to disincentivize foreign buyers and free up more housing for residents. Similar measures have been implemented in Canada and Denmark, where heavy taxes on foreign property investments aim to curb speculation and stabilize prices. However, critics argue that these taxes do little to increase housing supply and may instead push investors into unregulated rental markets.

The End of Spain Investor Visa Program: What It Means for Non-EU Investors

Spain has also announced the closure of its Investor Visa program (Golden Visa), which currently allows non-EU investors to obtain residency by purchasing real estate worth at least €500,000. The program will officially end on April 3, 2025, making it harder for foreign investors to secure residency in Spain.

With this visa option disappearing, non-EU investors will need to explore alternative residency pathways, such as the Non-Lucrative Visa (NLV). However, the NLV comes with strict conditions—it requires applicants to reside in Spain for at least six months per year and demonstrate financial self-sufficiency.

The 100% property tax will make homeownership significantly more expensive for NLV applicants, potentially forcing many to rent rather than buy. This could lead to increased demand in Spain’s already tight rental market, raising concerns that rental prices could also skyrocket as a result.

Impact of Spain on Investors and the European Real Estate Market

Spain’s move to restrict foreign property investment is part of a broader trend across Europe. Governments are increasing taxes, tightening real estate regulations, and limiting residency-by-investment programs. Portugal, for example, has recently scrapped its Golden Visa for real estate investments and canceled its Non-Habitual Resident (NHR) tax regime, making it less attractive for foreign investors.

Jeremy Savory, CEO of Savory & Partners, warns that these increasing restrictions are driving investors toward emerging markets, where lower taxes and higher rental yields offer better returns. He points out that many investors are shifting their focus to markets where they can charge rent in strong currencies (like USD) while paying expenses in weaker local currencies, maximizing profits.

Savory himself has liquidated all his European real estate investments in Portugal, Greece, and Poland, citing the tightening fiscal policies as a deterrent. He believes that as European governments impose stricter property regulations, investors will continue to seek out more favorable jurisdictions with better tax incentives and fewer restrictions.

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Conclusion

Spain’s proposed 100% tax on non-EU property purchases is a significant shift in its approach to foreign investment. Combined with the upcoming closure of the Investor Visa program, these measures signal a clear effort to prioritize local homebuyers over international investors.

However, the move raises serious concerns about its long-term effects. While it may help curb speculation, it could also drive up rental demand, making affordability even worse for residents. Investors seeking European real estate opportunities may now look elsewhere, potentially shifting capital to emerging markets with fewer restrictions.

As Spain moves forward with this proposal, global investors will be watching closely to see how it impacts the housing market, residency pathways, and the overall economy.

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