Spain Plans 100 Percent Tax on Non-EU Residents Buying Homes

Jetfighters fly over the Spanish capital during a military parade marking the Spanish national holiday in Madrid on Oct. 12, 2007. Pierre-Philippe Marcou/AFP via Getty Images

Spain is planning to levy a 100 percent tax on homes purchased by non-European Union residents, the government announced on Monday.

Spanish Prime Minister Pedro Sanchez’s socialist government said it was aiming to limit the purchase of homes by foreigners with the tax increase, pointing to similar schemes that have different mechanisms but similar aims in Denmark and Canada.

On Monday, Sanchez told an affordable housing event at the Railway Museum in Madrid that the West faced a challenge “to not become a society divided into two classes, the rich landlords and the poor tenants.”

He went on to say that property prices had increased by 48 percent in the past decade in Europe, almost double the rate household incomes had grown.

The tax would be applied through what’s called an Impuesto sobre Transmisiones Patrimoniales (ITP), which broadly translates to Property Transfer Tax.

Homebuyers in Spain currently pay between 6 percent and 13 percent ITP tax, depending on the region.

Spanish real estate platform Fotocasa told Reuters that while the measure may discourage foreign investment, its effectiveness was questionable since only 2 percent of Spanish homes are purchased by non-EU residents.

Resolving Spain’s housing crisis has become a major issue for Sanchez, as the country suffers from a serious shortage of affordable homes and ever-increasing rents.

In order to bring in his proposed 100 percent levy on foreign buyers, he will need to get approval from a divided parliament and rely on Spain’s regional governments to implement it.

However, opposition to the plan erupted just a day after it was announced, with the People’s Party (PP) labeling the idea “xenophobic” and stating they would not apply it in the regions they govern.

“The problem is not that people want to live in Spain, the problem is that there is a lack of housing,” said Luis de la Matta, director of communications for the PP.

“We are not going to facilitate a xenophobic measure.”

The People’s Party governs most of the regions popular with British and Latin American buyers of second homes, including Andalusia and Valencia on the mainland, as well as the Canary and Balearic Islands.

In response to the opposition’s interjection, Housing Minister Isabel Rodriguez challenged them to nix a plan she says will boost the supply of homes.

“If someone wants to put a spanner in the works, they will have to answer to the people,” Rodriguez told a press conference.

The Catalonia Tenants’ Union said most of the foreign buyers in the region were from the EU and described the measure as “grandiloquent but irrelevant.”

New figures reveal that an estimated record number of foreign tourists visited Spain last year.

According to the Ministry for Industry and Tourism, some 94 million foreigners visited Spain in 2024, a 10 percent increase over 2023.

Spanish Tourism Minister Jordi Hereu said on Wednesday that their numbers were expected to keep growing in 2025, helping propel Spain’s economic growth amid a wider European slowdown.

Foreign tourists spent 126 billion euros ($130 billion) during their stays in 2024, up 16 percent from the 108.7 billion euros ($117 billion) the previous year, the minister said, predicting they would spend 36 billion euros in the first four months of 2025, also 16 percent higher than in the same period in 2024.

Spain ranks as the second most popular destination globally, after France, on the U.N. World Tourism Barometer, and tourism accounts for 12.3 percent of the country’s gross domestic product.

Despite the economic benefits of tourism announced by the ministry, protesters have linked its prevalence to the lack of affordable housing, sparking protests in some Spanish cities, most recently in Barcelona in November 2024.

Reuters and The Associated Press contributed to this report.