Understanding the Latest Proposal About A Property Tax In Spain

By Borja Salas January 27th, 2025 · 4m. reading time

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At Drumelia, we strive to keep our clients informed about important legal and financial matters that could impact their property investments.

The recent announcement by the Prime Minister regarding potential tax changes for non-EU buyers has understandably raised concerns and questions. To provide clarity and address these uncertainties, we’ve asked our Legal and Finance Advisor, Borja Salas, to share his professional analysis of the situation. Transparency and reliable guidance are at the heart of what we do, and we hope this insight brings you more clarity as the discussion around this proposal unfolds.

“First of all, let me introduce myself. I am Borja Salas, an in-house legal counsel at DRUMELIA. In relation to the latest news regarding the tax referenced by our Prime Minister, I have been asked by various clients to provide clarity on the latest situation, and here are my observations.

The Prime Minister's statements on January 13th were somewhat unclear and open to interpretation compared to the actual wording of the published plan. Specifically, he said: "We have decided that we are going to limit the purchase of real estate by non-EU foreign nationals who are not residents. And we will do so by increasing the tax burden on such purchases up to 100% of the value of the property."

Based on these remarks, it does indeed seem, as many may think, that the government intends to impose a tax equivalent to the property's value. For instance, if a non-resident buyer from outside the European Union were to purchase a property for €2 million, they would have to pay an additional €2 million in taxes. This interpretation has been widely reported by the general press but is, in my opinion, incorrect for the reasons I will outline below.

First, the official text approved by the government (and which the Prime Minister was referencing) is slightly different from the statement made during the press conference. Specifically, the official document states: "The tax burden on European nationals who are not residents in our country when purchasing a home in Spain will be increased by up to 100%."

This wording is fundamentally different from the information presented by the Prime Minister, and seems to suggest that the intention is to increase the taxes payable by the buyer when acquiring a property by up to 100%. In other words, this could mean doubling the Property Transfer Tax (from 7% to 14%) or VAT (from 10% to 20%).

In any case, this proposal is merely an idea floated by the Prime Minister and is unlikely to materialize in the short term for several reasons:

1. The ruling party does not have the parliamentary majority required to pass such a measure.
2. If the aim is to increase the Property Transfer Tax, this is a tax delegated to Spanish regions, most of which are governed by the opposition party that strongly opposes such a measure.

It is also worth noting that nothing has been disclosed about how this potential new tax would affect companies. At first glance, it seems unlikely that purchases made through a Spanish or European SL (limited liability company) could be subjected to such additional taxation.

Taking all of the above into account, I would like to emphasise that, in my opinion, this tax is far from becoming a reality: it is merely a hypothesis presented by the Prime Minister and has little chance of materialising. For the time being, and in the medium term, the taxation of property transactions in Spain will remain unchanged, regardless of the buyer’s nationality.”

If you’re considering purchasing a property in Spain and have any questions regarding taxes or associated costs, we’re here to help.

At Drumelia, we’re committed to ensuring you have all the information and support you need to make informed decisions about your investments.

Feel free to contact us today to receive expert legal advice from our in-house team.