Everything we know about Spain's ‘100% tax’ announcement

The announcement

Spanish Prime Minister Pedro Sanchez unveiled a proposal on Monday, January 13th, to combat Spain's housing affordability crisis by announcing a potential 100% tax on property purchases made by non-EU non-residents.

The proposal - affecting Britons and Americans -  is part of a comprehensive plan that includes increasing the supply of social housing, offering incentives for renovating and renting vacant properties at affordable rates, and tightening regulations on short-term tourist rentals.

But it was the 100% tax for non-EU non-residents that immediately sparked controversy. Industry professionals and the media questioned if the PM really meant something that would effectively double the purchase price for affected foreign buyers, marking the most aggressive policy responses to foreign real estate investment among European nations.

According to the BBC: “Sánchez did not provide details on how the tax would work nor a timeline for presenting it to parliament for approval, where he has often struggled to gather sufficient votes to pass legislation.”

The official statement/press release: 

Many articles have been published questioning whether this was a slip of the tongue by the PM. Kyero can confirm this is backed by an official press release here. 

The relevant part of the press release states: “"...after a thorough study, the purchase of homes by non-resident foreigners from outside the EU will be limited. More specifically, the tax burden they will have to pay in case of purchase will be increased to 100% of the value of the property, in line with countries such as Denmark and Canada."
 

UPDATE: Mon 27th Jan

At a political rally on Sunday (January 19), Pedro Sanchez said: “...vamos a proponer el que se prohíba a esos extranjeros extracomunitarios que no Residen ni ellos ni sus familias y que por tanto solamente están especulando con esas viviendas y con esas casas El que puedan comprarlos en nuestro país...”

Translated this means: "...we are going to propose that those non-EU foreigners who neither reside here nor have their families residing here, and are therefore merely speculating with these homes and properties, be 𝐩𝐫𝐨𝐡𝐢𝐛𝐢𝐭𝐞𝐝 from purchasing them in our country..."

FAQs:

Who does this affect? Non-resident buyers from outside the EU. So if a buyer plans to relocate and become a resident, this doesn't apply.

I am from outside the EU. Can I still buy a property in Spain? Yes. Nothing has changed. 

I am from outside the EU planning on moving to Spain and becoming a resident. Will this affect me? No. The PM specified it would apply to non-residents. 

I am from outside the EU. Can I become a resident in Spain? Yes, there are several options available to you 

Could it really mean paying double? We don't think so, but we don't know. The PM said up to 100% of the property value. No further details are available. See comment below from a Spanish lawyer.

Is this now law? No. At the time of writing, this is not the law in Spain. 

How likely is it that it will happen? We don't know.  Any changes to or new taxes require parliamentary approval. Given the government's minority status, passing the legislation may present challenges. 

What do the experts say?

Spanish Lawyer Miguel Manzanares the CEO of leading Costa del Sol-based conveyancing lawyers Manzanares Lawyers writes in a statement that 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 he writes and in any case “The legislative process requires thorough drafting, consultation, and parliamentary approval, which, in this case, seems increasingly challenging given the lack of majority support.”

Mark Stücklin, Spanish property expert and owner of Spanish Property Insight writes: “While Sánchez’s proposal has generated headlines, it’s unlikely to result in any concrete measures that affect British and American buyers on Spain’s costas, at least not anytime soon.”