Spain wants to introduce a 100% real estate tax for buyers from outside the EU

Spain plans to introduce a 100% real estate tax for buyers from outside the EU. This is due to the housing crisis in the country, as buying and renting is simply unaffordable for local residents.

100% property tax for non-EU buyers is part of Prime Minister’s plan

Prime Minister Pedro Sanchez’s plan includes several measures, and the 100% property tax for non-EU buyers is one of them.

The Spanish government is taking measures to address the housing crisis in Spain. Every year, renting and buying for local residents becomes unaffordable, the Financial Times wrote. Dissatisfaction with the unaffordability of housing is growing in Spain.

The Prime Minister said that EU non-residents buy 27,000 residential properties in Spain every year. And they do so mainly “for the purpose of speculation.”

“We are facing a serious problem with huge social and economic consequences that requires a decisive response,” said Pedro Sanchez.

Spain is among the European countries where public discontent is growing due to difficulties in finding affordable housing. This is happening against the backdrop of sharply rising prices and an insufficient number of new properties to meet demand.

Spanish opposition slams Socialist government plan

The Spanish right opposition has slammed the Socialist government plan. Luis de la Matta, director of communications of the People’s Party, stated that Pedro Sanchez’s proposed tax on property purchases by non-European Union residents was “xenophobic,” and they would not apply the levy in the regions where they govern, Euractiv reported.

“The problem is not that people want to live in Spain; the problem is that there is a lack of housing,” said Luis de la Matta.

On the local level, the People’s Party governs in most of the regions popular with British and Latin American buyers of second homes, such as Andalusia, Valencia, the Canary Islands, and the Balearic Islands.

Spanish real estate platform Fotocasa said the measure may discourage foreign investment. Given that non-EU residents only purchase 2% of Spanish homes, its effectiveness is questionable.

Current taxes for homebuyers in Spain

Real estate in Spain is in high demand among foreigners who buy homes for vacation or to move to a country with a warmer climate.

Homebuyers in Spain currently pay between 6% and 13% ITP tax, depending on the region.

Among the proposed measures is the transfer of more than 3,300 houses and about 200 hectares of land to a new state-owned company for the construction of social housing.

The government is also discussing tighter regulation of seasonal rentals, restoration of empty buildings, and provision of benefits to owners who rent out housing at affordable prices.

Interestingly, the largest group of foreign buyers was the British, accounting for 8.5% of all foreign transactions. The Germans came in second place, the Moroccans in third, followed by the Poles and Italians.