Spain Plans 100% Tax on Non-EU Property Buyers

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Facts

  • Spain's Prime Minister Pedro Sánchez on Monday announced plans to impose a tax of up to 100% on property purchases by non-EU residents, who reportedly bought approximately 27K properties in 2023. The move comes as part of a broader housing affordability initiative in the nation.[1][2]
  • The proposal is part of a 12-measure package that includes transferring 3.3K homes to a public housing body, increasing taxes on tourist rentals, and offering incentives for affordable housing rentals.[3]
  • It also comes after months of local protests against overtourism in Spain's tourist hotspots, including Barcelona. According to Spain's National Statistics Institute, Spain received 10.9M international tourists last August — a 7% year-on-year increase from the same month in 2023.[4][5]
  • British citizens — who represent the largest group of non-EU buyers at 8.5% of all foreign property transactions — face being significantly impacted by this measure, which would to add to the existing property purchase taxes of between 7% and 12%.[1]
  • Housing prices in Europe have surged 48% over the past decade, outpacing household income growth and creating what Sánchez has described as an "unbearable" situation for local residents.[6]
  • Spain maintains 2.5% of its accommodation as social housing, significantly lower than other European countries like France and the Netherlands. Approximately 3.8M properties in the country remain empty, representing 14% of Spain's housing stock.[7][8]

Sources: [1]Financial Times, [2]BBC News, [3]Catalan News, [4]CNBC, [5]The Diplomat Spain, [6]The Guardian, [7]The Telegraph and [8]Euractiv.

Narratives

  • Narrative A, as provided by Associated Press and The Journal. Spain's housing crisis demands immediate action. Speculation by foreign buyers has driven prices beyond locals' reach, while tourist rentals deplete available housing stock and create unsustainable market conditions in major cities. It must be made possible for residents to find affordable housing.
  • Narrative B, as provided by Bloomberg and Financial Times. This proposed tax would discourage foreign investment, potentially destabilize the property market, and represent just a drop in the ocean, given that non-EU purchases account for a small fraction of Spain's 26M homes. It will also create financial uncertainty that could harm the country's real estate sector, and therefore have knock on for Spain's economy.