Spain proposes 100% tax on property purchases by non-EU citizens

Spain plans to impose a tax of up to 100% on properties bought by non-EU residents, including those from the UK, reports a Kazinform News Agency correspondent.

Prime Minister Pedro Sánchez described the move as an “unprecedented” response to Spain’s housing crisis. He warned of a growing divide between “rich landlords and poor tenants” calling it a decisive challenge for the West.

In 2023, non-EU residents purchased 27,000 properties in Spain, primarily for profit rather than residence. Sánchez emphasized that, in a time of housing shortages, this practice is unsustainable. The tax aims to ensure that available homes prioritize residents.

Details of the tax and its timeline for parliamentary approval remain unclear, as Sánchez’s government plans to finalize the proposal “after careful study”. Gathering parliamentary support may be challenging for the prime minister, who has faced legislative hurdles before.

This tax is part of a broader strategy to improve housing affordability. Other measures include tax breaks for landlords offering affordable housing, transferring 3,000 homes to public housing, and stricter regulations with higher taxes on tourist flats.

Sánchez criticized the tax advantages short-term rental owners enjoy over hotels, stating, “It isn't fair that those who have three, four, or five apartments as short-term rentals pay less tax than hotels”.

Spain’s approach aligns with various international efforts to control foreign real estate investment. In Mexico, foreigners are restricted from purchasing property in “restricted zones” near borders and coastlines unless they use a fideicomiso, a legal workaround. Hong Kong imposes a 15% surcharge on non-resident buyers, while Switzerland enforces annual quotas and local restrictions on foreign ownership. Malaysia sets minimum property prices for foreigners, ranging from $100,000 to $650,000, depending on the region.

Australia requires foreign buyers to invest in new properties or vacant land for development, while foreigners in the Philippines can own homes but not the land they are built on. Singapore imposes an 18% property sales tax and limits foreign ownership to condos or apartments, pending government approval.

These measures reflect global trends aimed at balancing foreign investment with local housing needs.

Earlier, it was reported that low- to middle-income families in Britain are significantly poorer than their counterparts in Western Europe, with high housing costs cited as a primary contributing factor.