Understanding the Implications of Spain's Proposed Property Tax Hike for British Buyers
“This proposed tax increase represents a challenge for British buyers, but with careful legal guidance and planning, it is still possible to invest securely in Spain.”
— Mr Isaac Abad Garrido, Winner of the Best Lawyer Award 2025 for Tax & Conveyancing Law
Spain’s Property Market: New Challenges for British Buyers
In a move that has caused widespread concern among potential property buyers, Spain’s Prime Minister, Pedro Sánchez of the PSOE party, recently announced a proposal to dramatically increase taxes on non-EU nationals purchasing property in Spain Source: El Mundo.
This proposed 100% tax hike has been widely reported in the British press, raising significant questions about its impact on British citizens looking to invest in homes in Spain.
In 2023, foreigners acquired approximately 15% of the homes sold in Spain, reaching a total of 87,340 transactions. The main non-EU nationalities buying were:
- British: 9.5% of purchases.
- Moroccans: 5.4% of purchases.
- Chinese: 2.0% of purchases.
- Russians: 1.5% of purchases.
- Ukrainians: 1.2% of purchases.
- Argentinians: 0.8% of purchases.
- Ecuadorians: 0.5% of purchases.
Infographic: Foreign Property Purchase in Spain (2024) – Click To Enlarge
As the largest group of non-resident foreign buyers, British citizens are at the centre of this debate Source: Daily Mail.
With Brexit already complicating the process of buying a home in Spain, this potential tax change introduces another layer of uncertainty. Here’s a breakdown of what this proposal entails, who will be impacted, and the steps buyers can take to protect themselves.
What Is the Proposed Tax Increase?
The Spanish government is proposing to increase the tax on property purchases by non-EU residents to 100% of the property’s value Source: Perfil. In essence, buyers would be required to pay double the price of the property — the purchase price plus the tax.
For those interested in understanding Spain’s other tax obligations for residents, we recommend reading our detailed guide on the 183-day tax rule in Spain.
Example: How the Tax Could Work in Practice
Let’s say a British buyer is looking to purchase a property in Murcia for €150,000.
- Current tax rate: Approximately 10-12%, meaning the buyer would pay around €15,000 to €18,000 in taxes, and as such, a total purchase price of around €165,000 to €168,000.
- Proposed tax rate: 100% of the property’s value, meaning the buyer would pay an additional €150,000 in taxes, bringing the total cost to €300,000.
This significant increase would make property purchases prohibitively expensive for most non-EU buyers, essentially doubling the cost of buying a home in Spain.
Why Is Spain Introducing This Measure?
The government’s justification for this proposal is to address Spain’s ongoing housing crisis, particularly in popular tourist areas like The Canary Islands, Alicante, the Balearic Islands, and the Costa del Sol. Prime Minister Sánchez has pointed to speculative purchases by foreign buyers as a key driver of rising property prices (Source: Última Hora.).
According to Sánchez:
“Only in 2023, non-residents from outside the EU purchased 27,000 homes in Spain. Many of these purchases were not made to live in the properties but to speculate and profit from them, something we cannot allow in the current context” Source: Perfil.
However, there are significant challenges to this proposal becoming law, as highlighted by Mr Isaac Abad Garrido from ABAD Abogados:
- Political Opposition: The government requires support from Catalan, Basque, and Canary Islands parties to pass this measure. These regions have significant real estate industries and are unlikely to approve such a drastic tax hike.
- Jurisdictional Complexity: The property transfer tax (Impuesto de Transmisiones Patrimoniales) is a regional tax managed by autonomous communities. Regions like Andalusia, Murcia, and Valencia, governed by the opposition party (PP), would likely refuse to implement this measure for resale properties.
- Technical Difficulties: Imposing the tax on new properties, which are subject to VAT, could be slightly more feasible. However, gaining the necessary parliamentary majority and complying with EU regulations would be highly complex.
- Potential for Evasion: Buyers could avoid the tax by purchasing properties through corporate entities, a practice already common among high-value property acquisitions.
Why Is Spain Introducing This Measure?
An additional obstacle to this proposal is its potential unconstitutionality. Several legal principles established by the Spanish Constitution could be violated by a tax that effectively doubles the cost of property transactions, according to Mr Isaac Abad Garrido:
1. Principle of Economic Capacity (Article 31.1 of the Spanish Constitution)
The tax system must be based on the taxpayer’s ability to pay.
- Imposing a 100% tax on a property’s value would eliminate the buyer’s economic capacity to benefit from the purchase.
- This could be deemed confiscatory, which is expressly prohibited by the same article.
2. Prohibition of Confiscatory Taxes (Article 31.1 of the Spanish Constitution)
- A 100% tax would deprive buyers of all economic benefits from the transaction.
- The Constitutional Court has previously ruled that a tax is confiscatory when it imposes an excessive burden on the taxpayer’s wealth or income.
3. Right to Private Property (Article 33 of the Spanish Constitution)
The Constitution guarantees the right to private property and its social function.
- Taxing 100% of a property’s value could infringe on this right by effectively preventing individuals from purchasing property.
- Such a measure would violate the principles of proportionality and effective access to fundamental rights.
4. Principle of Equality (Articles 14 and 31.1 of the Spanish Constitution)
The tax would need to account for the personal, economic, and social circumstances of taxpayers to comply with the principle of equality.
5. Practical Effects and Reasonableness
- A 100% tax would render real estate transactions unviable.
- The Constitutional Court requires that taxes be reasonable and not hinder fundamental rights or legitimate economic activities.
In conclusion, such a tax would likely be declared unconstitutional due to its disproportionate nature and infringement on fundamental rights.
Who Is Affected by the Proposed Tax?
This tax increase specifically targets:
- Non-EU citizens who do not have residency in Spain.
- It applies to both new and resale properties.
However, current property owners will not be impacted unless they sell and look to buy again. It’s also important to note that EU citizens and Spanish residents are exempt from this proposed tax.
How Can British Buyers Protect Themselves?
Buying property in Spain can still be a wise investment, but legal guidance is now more crucial than ever. Mr Isaac Abad Garrido, from ABAD Abogados, emphasises the importance of consulting an experienced solicitor to navigate this changing legal landscape.
“Navigating Spanish property laws can be complex, especially with recent proposed changes. Having a trusted legal partner ensures you are fully informed and protected throughout the process.”
British buyers should take proactive steps to safeguard their interests:
- Seek legal advice early in the process.
- Ensure they are up to date with tax changes.
- Act swiftly if considering a purchase before the law is enacted.
Frequently Asked Questions (FAQs)
Q: Does this tax increase apply to current property owners?
A: No, the tax is only applicable to new property purchases. However, if a current owner sells their property and buys another home in Spain, they will be subject to the new tax if they are non-EU residents.
Q: Does this tax apply to residents of Spain?
A: No, the proposed tax hike only affects non-EU citizens who do not have residency in Spain. British citizens with Spanish residency would not be subject to this new tax.
Q: Are there any exemptions to the tax?
A: Yes. The tax will not apply to EU citizens or those who hold Spanish residency. Additionally, Golden Visa holders may also be exempt, but this remains unclear and we will be updating this article when further information becomes available.
Q: What happens if I’ve already started the process of buying a property?
A: If you have already signed a contract or are in the process of completing a purchase, the current tax rates will apply. However, it’s important to consult a reputable conveyancing lawyer to ensure compliance with any new regulations.
Q: Will this tax increase definitely come into effect?
A: Not yet. The proposal still needs to pass through the Spanish Parliament. However, buyers should be prepared for the possibility of the law being enacted later this year.
Q: How does this compare to other countries?
A: Spain’s proposed tax is similar to policies in Denmark and Canada, where non-resident buyers face additional taxes to limit foreign investment in the property market.
What Should British Buyers Do Now?
Our Key Recommendations:
- Stay Informed: Bookmark this page for regular updates as more details are finalised.
- Consult Legal Experts: Work with a trusted law firm like ABAD Abogados, who can guide you through the legal process.
- Act Quickly: If you are considering a property purchase, complete your transaction before the new tax law is enacted.
If you require expert guidance on real estate transactions in Spain, including buying, selling, or navigating complex legal changes, our team at ABAD Abogados is here to assist. Contact us today for personalised legal support and ensure your property investments are secure and compliant.
Conclusion: What’s Next for British Property Buyers in Spain?
The proposed tax hike is unprecedented in Spain and is a clear signal from the government that foreign speculation will be curbed. While the policy is designed to protect Spanish residents, it will undoubtedly create challenges for non-EU buyers, especially British citizens.
With legal guidance and up-to-date information, British buyers can still make informed decisions and successfully navigate this changing landscape. We will continue to update this article as more information becomes available.
About Mr Isaac Abad Garrido
Mr Isaac Abad Garrido is the Senior Partner at ABAD & ASOCIADOS Lawyers & Accountants, with over 25 years of experience specialising in Real Estate Law, Tax Law, Corporate Law, Bankruptcy Law, Business Restructuring, and Community Administration.
He has been consistently recognised among The Best Lawyers in Spain™ from 2020 to 2025 for excellence in Tax Law, and in 2022, he was named “Lawyer of the Year” in Tax Law (Murcia, Spain).
A member of the International Bar Association, he is also an Associate Partner of the Spanish Royal Academy of Jurisprudence and Law. Additionally, he serves as a Professor at the University of Murcia, teaching Tax Law, and is a regular contributor to leading international tax law publications, including Newsweek.
Mr Abad Garrido holds degrees in Law, Business Administration, and Accounting, complemented by postgraduate studies at IE Business School. He is a Certified Auditor registered with the Official Registry of Auditors (ROAC).
For legal enquiries, visit abadabogados.com or connect with Mr Abad Garrido on LinkedIn.
