New property tax in Spain for non-EU foreigners. A realistic proposal or a move to appeal to the public?

The reasons why investors choose the Iberian Peninsula include a stable market and attractive property taxes. However, Spain may change its regulations and increase rates for foreign investors. What do these potential changes mean for people planning to buy property in Spain? Find out more in the article below.

According to data from the Spanish Association of Notaries, in 2023, foreign investors from outside the European Union purchased over 18,000 properties. In the case of EU citizens, this number was even higher, exceeding 87,000. In turn, in 2024, according to Registradores de España, Poles alone purchased 4,214 properties, most often choosing the primary market. Due to such high interest and the current situation in Spain, Prime Minister Pedro Sánchez has proposed to increase the tax on property purchases.

According to data from the Spanish Association of Notaries, in 2023, foreign investors from outside the European Union purchased over 18,000 properties. In the case of EU citizens, this number was even higher, exceeding 87,000. In turn, in 2024, according to Registradores de España, Poles alone purchased 4,214 properties, most often choosing the primary market. Due to such high interest and the current situation in Spain, Prime Minister Pedro Sánchez has proposed to increase the tax on property purchases.

Contents:

Contents:

Contents:

21.04.2025

The Spanish tax system differs from the Polish one. In the case of real estate, investors are subject to:
 

• VAT (applies to properties on the primary market),
• ITP, or Impuesto de Transmisión Patrimonial (applies to apartments and houses on the secondary market; varies depending on location),
• IBI, or property tax (Impuesto sobre Bienes Inmuebles).
   

Even if you are not a resident and spend only a few weeks or months a year on the Iberian Peninsula, you are required to pay property tax once a year. Spain has introduced a system in which the amount of municipal tax varies depending on the region. On the Costa Blanca, non-residents usually have to pay IBI at a rate of 0.4-1.1%. On the Costa del Sol, owners of flats are subject to a tax of 0.5-1.2%.

Importantly, property tax in Spain is calculated on the basis of the cadastral value, or valor catastral. Unlike the market value, it is not fixed – the authorities make annual adjustments, calculating it in accordance with the regulations. They take into account factors such as location, floor space, land value, construction and historical value, any renovations or technical condition.

You may be interested in: How to buy a flat or house in Spain?

The Spanish Prime Minister has proposed changes to tax law. The reason for this is the ‘extraordinary housing situation’. According to Pedro Sánchez, investors are buying houses and flats not to move to the Iberian Peninsula. Instead, they are finalising transactions for rental properties, i.e. for profit.

The Prime Minister's proposal is intended to alleviate the effects of the housing crisis, which has led to social protests in Barcelona and Madrid. The cause is an over 8% increase in apartment prices.

According to the Prime Minister, the new tax on property purchases would amount to as much as 100% of the value of a house or flat. However, the official document proposes doubling two fees:
 

• ITP, or Impuesto de Transmisiones Patrimoniales – a regional tax that may increase from 7% to 14%,
• VAT – here the rate would be not 10%, but up to 20%.
   

Pedro Sánchez's initiative has sparked controversy. However, the Prime Minister has proposed more than just a higher property tax. Spain would introduce a whole package of changes aimed at improving the situation on the housing market. 
 

In addition to a 100% tax on property purchases, the list includes other proposals, such as:
 

• the newly established Public Housing Company is to receive over 3,300 flats and approximately 2,000,000 m² of land on which protected housing will be built;
• renovation of vacant properties and renting them out at affordable prices;
• taxation of houses and flats intended for short-term rental (e.g. on Airbnb);
• creation of PERTE in Valencia, i.e. the Strategic Project for Economic Recovery and Transformation (PERTE), which will focus on the reconstruction of regions affected by natural disasters.
   

Interestingly, the idea of increasing property tax in Spain has prompted other countries, such as Portugal, Greece and France, to consider introducing similar measures. The reason is the same: a difficult housing situation, large rent increases, and numerous properties intended for short-term rental with an insufficient number of properties available for citizens.

The higher property purchase tax would apply only to people from outside the European Union. According to reports, investors from the United Kingdom, the United States and China would be most affected by the change. Importantly, the restrictions proposed by the Prime Minister would apply to persons who do not have resident status, i.e. those who do not pay tax locally on their income earned in Spain or other countries.
 

To obtain tax resident status, several conditions must be met:
 

• Length of stay – a minimum of 183 days per year spent in Spain. Importantly, there is no continuity requirement – residents may visit for as little as a few days.
• Centre of economic interests – in exceptional circumstances, if someone runs a business in Spain, they may be considered a tax resident even if they do not spend 183 days a year there.
   

In addition, family ties, e.g. a partner or children living in Spain, are also grounds for obtaining tax resident status

At this point, the higher property purchase tax for investors from outside the European Union is only a proposal. Experts point to the low chances that the changes will come into force quickly. There may be several reasons for this. The first is the lack of a parliamentary majority, which is necessary to pass changes to tax law. 

Prime Minister Pedro Sánchez has not presented how the new property tax in Spain would be calculated, nor has he provided any details on its implementation. In addition, there are critical voices pointing to the possible negative effects on the local economy in areas that have been most popular with foreign investors. These include the Costa Blanca and Costa del Sol.

The real estate agency Gilmar also commented on the Prime Minister's proposal. In a statement to CNN, a representative of the company pointed out that investors from outside the European Union are interested in a completely different type of housing than what the country needs to solve the ongoing crisis.

Any changes to housing law and higher property taxes in Spain, even if they come into force, will not affect Poles and other investors from the European Union. However, they may reduce the number of transactions completed by people from outside the EU. If you want to find a house or flat on the Iberian Peninsula now, use the services of Elite World Estates – a Polish real estate agency in Spain!

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Let us narrow down the search among the properties available through us, by contacting us and finding the best options for you. We are here to help you! Please enter your contact details below and we will contact you as soon as possible.

Let us narrow down the search among the properties available through us, by contacting us and finding the best options for you. We are here to help you!
Please enter your contact details below and we will contact you as soon as possible.