Spain’s proposed 100% property tax – What you need to know.

In January 2025 Spain’s Prime Minister Pedro Sánchez and his Spanish Socialist Workers’ Party (PSOE) proposed a new law to impose “a 100% tax” on property purchases for non-European residents buying Spanish property.

There has been a lot of misleading and inaccurate information reported about this which has, understandably, caused concern amongst British, American and other non-Europeans planning to buy property in Spain.

If you are considering buying a property in Spain and are worried about this potential increased property purchase tax- here’s what you need to know:

1 . What the proposal says

The tax you currently pay when buying property is Spain is called property transfer tax (Impuesto de Transmisiones Patrimoniales or ITP).

This proposed tax law would be a new tax in addition to the (ITP). It would apply to for non-EU resident buyers of resale property in Spain (it would not apply to new build/ off plan properties). This tax would effectively double the cost of the property purchase (the 100% is based on the cadastral value or market price- whichever is highest).

It is understood that the ITP payment could be set off against the propsed new tax. The management and collection of the tax would be dealt with by Spain’s central government and not the regional governments and payment would be though self-assessment.

This tax is not in effect and so is not currently payable. It is currently just a proposal and not in force to date.

2. When will the Spanish 100% tax come into effect?

This law has not yet been passed and there is no guarantee that it will get passed.

PSOE’s reason for this proposed increase is to try to assist Spanish purchasers. They are perceived to be disadvantaged by the number of foreign property purchasers in Spain.

However, foreign property owners contribute significantly to Spain’s economy—particularly in coastal areas such as the Costa del Sol and Costa Blanca. Any laws or taxes that discourage investment could therefore seriously harm local economies.

Any potential pros to Spanish property buyers will need to be properly considered alongside the potential cons of alienating non-european purchasers before the law can be passed. Pedro Sanchez’s party has only a very small majority in his coalition government which makes passing laws difficult currently.

Even if the law does get passed, it is likely to take some time to come into effect.

3. What to do if you are planning to buy property in Spain

If you are already in the process of buying a property in Spain, and complete to purchase before it comes into effect (if it does), you will not be liable to pay the tax.

If you wish to become a resident of Spain, becoming a resident before completing the property purchase may be advisable.

For those wishing to purchase a holiday home/ rental, purchasing the property in the name of a Spanish company may be an option.

If buying an off-plan property you will not be affected.

If you are planning to purchase a property in Spain in the future, you should keep up to date with the development of this proposal and seek legal advise before proceeding with a purchase.

It is important to remember however that this is currently just a proposal and so the tax is not payable currently (and may never be).

The proposed tax would need to go through Spanish parliament to come into effect. The PSOE does not have a majority and so would need to be backed by other parliamentary groups to get the proposal through, before it can become law.

There are also concerns as to the potential economic impact of this proposed new tax and whether it could be deemed to be discriminatory and violate international law. In other countries (such a Portugal and France) attempts to impose similarly discriminatory higher taxes on non-EU residents have been quashed by the Court of Justice of the European Union. All these factors may provide a block to the materialisation of the proposed “100%” Spanish property tax.

If you are interested in buying a property in Spain and would like to speak with recommended English- speaking lawyer to advise you of your options or provide a free, no-obligation quotation to assist you with the purchase, please get in touch on 01244 470339 (UK) 00441244 470339 (outside of UK) or email info@worldwidelawyers.co.uk and our friendly team will be happy to help.