Tax Burden on Foreign Property Buyers in Spain: 2025 Outlook

A new draft bill submitted in May 2025 has sent shockwaves through the international real estate market. The Spanish government is considering a 100% property purchase tax for non-EU, non-resident buyers. This means that foreign investors from countries like the UK, US, Canada, and others outside the EU could be required to pay an amount equal to the property’s purchase price in taxes, effectively doubling their investment costs.

The proposal is part of a broader housing reform strategy aimed at addressing affordability and reducing speculative investment in high-demand regions. In this updated post, we break down what this new tax could mean for non-EU buyers, how it fits into the current Spanish tax framework, and what steps you can take to prepare.

100% Purchase Tax: A Radical Proposal for Non-EU Buyers

Under the proposed legislation, non-EU, non-resident individuals purchasing residential property in Spain would be subject to a 100% purchase tax. For example, buying a €300,000 property would incur an additional €300,000 in taxes—raising the total acquisition cost to €600,000.

This measure is designed to:

• Discourage speculative foreign investment
• Alleviate housing shortages in urban and tourist areas
• Prioritize affordability for local residents

The government has clarified that the measure targets buyers who do not intend to live in the property, and instead use it as a second home or rental investment.

Breakdown of Tax Burdens for Non-Resident Property Buyers

Even before the proposed 100% tax, non-EU buyers in Spain already face a high cumulative tax burden:

1. Property Transfer Tax (ITP) or VAT + AJD

• 6–10% ITP on resale homes
• 10% VAT + 1.5% Stamp Duty (AJD) on new developments

2. Non-Resident Imputed Income Tax

• Applied to unused properties
• Filed annually via Modelo 210
• 24% rate for non-EU nationals

3. Rental Income Tax (if rented)

• 24% for non-EU owners, calculated on gross income
• No deductions allowed

4. Wealth Tax

• Kicks in above €700,000 of Spanish assets per person
• Rates range from 0.2% to 3.5%, unless in exempt regions like Madrid

5. Capital Gains Tax (CGT)

• 24% for non-EU sellers
• 3% withheld at point of sale

6. Proposed 100% Property Purchase Tax (NEW)

• Would apply only to non-EU, non-resident buyers
• Effectively doubles property acquisition costs

Real Example: Impact of the Proposed Tax

Let’s say a US-based buyer plans to purchase a €500,000 holiday home in Marbella:

• Current Taxes: ~€50,000–€100,000 (ITP, wealth, CGT over time)
• New Tax Proposal: Additional €500,000
• Total Cost: €1 million for a €500,000 property

This would be the most severe property tax treatment in the EU for foreign buyers.

Reactions and Controversy

The proposal has sparked immediate backlash:

• Real estate experts warn of a collapse in foreign investment
• Legal scholars question its compatibility with EU free market principles
• Opposition politicians call the plan discriminatory and economically damaging

However, the Spanish government defends the move as necessary to combat real estate speculation and improve housing access for residents.

Should You Still Buy Property in Spain as a Foreigner?

Yes—but with caution. For EU buyers, the proposal doesn’t apply. For non-EU investors, the viability depends on the final version of the bill and how it’s implemented.

Smart strategies include:

• Exploring alternative investment structures (corporate or partnership)
• Choosing long-term rental models that may be exempt
• Seeking dual residency pathways that could change your tax status
• Waiting for final legal clarification and exemptions

How Taxadora Can Help Non-Resident Buyers

At Taxadora, we help international buyers stay informed and compliant. We offer:

• Strategic pre-purchase tax simulations
• Guidance on tax-efficient ownership models
• Ongoing filing of Modelo 210, CGT, and wealth tax
• Support navigating proposed reforms and legal updates

Final Thoughts

The proposed 100% tax on non-EU property buyers in Spain is a game-changer. If passed, it could drastically alter the landscape for international investors and second-home owners.

Before making any commitments, consult with a specialist to evaluate the risks and explore legal avenues to reduce your exposure. For up-to-date advice and expert tax guidance, visit our blog or contact Taxadora today.