100% tax for non eu citizens purchasing property in Spain? The experts say absolutely not!
Following Pedro Sanchez’s recent announcement made at a housing forum, the international news have had a field day reporting speculation and mis information. We enclose announcements made by a respected law firm in Marbella below (credit to Manzanares Abogados).
Key takeaways – There is absolutely no substance to the reporting that a 100% tax could be applied to non EU citizens buying a property in Spain – this reporting is misinformation. If the government were to introduce an increased tax it is likely it would be applied to the resale tax which is currently 7% – however it is also important to know this transfer tax on resales (currently 7%) is ultimately decided by local governments and therefore even if the law was passed at a national level, locally it would not be supported and the 7% would remain in force.
Statement received on 14th January 2025
Dear Clients and Partners,
I wish to share this statement on behalf of our Law Firm in response to the unexpected and shocking announcement made yesterday, 13th January 2025. The Prime Minister, Mr. Pedro Sanchez, introduced a series of measures as part of a housing program aimed at improving access to housing for Spanish citizens.
This announcement came just 24 hours after the opposition party, the Conservative Popular Party, presented their own package of measures to address Spain’s housing deficit and facilitate homeownership for citizens. In what appears to have been a reactionary move, the government held a press conference to unveil their proposals, sparking widespread debate.
It is crucial to highlight that the measures were presented verbally, with no formal written documentation or legal framework in place. The presentation itself relied on the Prime Minister notes and impromptu statements during the briefing. There was no Cabinet resolution, no formal draft of the proposed laws, and no official transposition of these measures into tangible policy.
The most striking and controversial element of the announcement pertains to a potential 100% levy on the value of properties bought by non-EU citizens who are not residents in Spain. Such a measure, as described, seems unprecedented and highly questionable from a legal standpoint.
It is difficult to interpret this as anything other than an error or a misunderstanding in the communication of the policy. Many legal professionals and industry experts believe this was likely meant to indicate a 100% increase in certain taxes to be paid—whether on the acquisition or maintaining ownership of property—rather than a confiscatory tax of 100% of the property’s value at the acquisition of it. Such a measure, as initially described, would be without precedence in modern legal frameworks and would raise significant international concerns.
Our initial reaction, therefore, is to treat this as a misstatement, and we expect clarifications or corrections to emerge in the coming days. However, it is important to remind everyone that any legislative process entails several key steps: drafting, consultation, parliamentary debate, and, eventually, enactment and implementation.
A law cannot be implemented without going through a rigorous process, which begins with the creation of a well-structured and well-argued draft. This draft must then pass through Parliament, where it is debated and voted upon. It is worth noting that the Socialist Party currently governs with a precarious majority in the Spanish Congress, which comprises 350 deputies. To achieve a majority of 175 votes, the Socialist Party, with only 121 seats, must rely on the support of several smaller, diverse, and often ideologically divergent parties, many of which are nationalist or independentist in nature.
Even today, several allied parties have already voiced their strong opposition to a law of this nature. This makes it unlikely that such a proposal, as announced, would gain sufficient parliamentary support.
Therefore, to summarise:
1. The announcement lacks formal structure and is merely a verbal declaration, with no written or legal backing.
2. It is highly likely that the stated measures result from a misunderstanding or error, as the described policy is legally and constitutionally unsound.
3. Given the political realities and the statements from various parties, it seems improbable that such a measure would be approved in its current form.
We strongly urge calm and patience as we await further clarification in the coming days. It is essential to remain attentive to any developments, as the current situation is far too uncertain to draw concrete conclusions. Thank you for your attention to this matter. Should you have any concerns or require assistance, do not hesitate to reach out to us.
Subsequent Statement Received on 16th January 2025:
Dear Clients and Partners,
Following the report we shared January 14th, 2025, we are writing to provide an updated perspective on recent developments concerning the Prime Minister’s housing policy announcement. January 14th, our analysis was centered on the apparent ambiguity in the measures presented.
Specifically, there was significant uncertainty regarding the proposal that seemed to suggest a 100% tax on the value of properties purchased by non-EU, non-resident individuals. Such a policy, as initially described, appeared extraordinary, potentially due to an error or misstatement during its verbal announcement.
Yesterday 15th January, new information has come to light that provides clearer guidance on the intended direction of this measure. It appears that the proposal does not refer to a tax equating to 100% of the property value but rather to a 100% increase in the applicable tax on property acquisition for non-EU, non-resident buyers. This adjustment significantly alters the interpretation and reduces the perceived extremity of the policy.
This interpretation is supported by:
1. Official Clarifications: Certain written documents from the governing party now specify the proposal as a tax increase, not a confiscatory measure. For instance, point 10 of the housing plan refers to “a 100% increase in the applicable tax” rather than the entire value of the property.
2. Media Coverage: International media outlets have echoed this interpretation, aligning with a more practical and feasible tax adjustment approach.
3. Political Realities: The likelihood of passing such an extreme measure through Parliament is negligible, given the vocal opposition from allied political parties that have already expressed disapproval.
While this updated interpretation provides reassurance, it remains critical to note that no formal confirmation or categorical clarification has been issued by the government. Consequently, prudence is necessary. We also acknowledge the procedural hurdles any such measure would face. The legislative process requires thorough drafting, consultation, and parliamentary approval, which, in this case, seems increasingly challenging given the lack of majority support.
To summarize:
– Previous interpretation was speculative and based on initial ambiguities.
– Today, there is a stronger foundation to believe the proposal pertains to a 100% increase in the applicable tax, rather than a confiscatory property tax.
– Formal clarification from the government is still pending, and significant parliamentary obstacles remain.
We will continue to monitor this situation closely and will provide further updates as new information emerges. In the meantime, should you have any questions or require guidance, please do not hesitate to contact us.
Thank you for your attention.
Miguel Manzanares
Director General – CEO
