Spain pushes ahead with 100pc tax raid on holiday homes

Telegraph

23-05-2025

Spain is pushing ahead with plans to hit British people with a 100pc tax when buying holiday homes in a bid to tackle the country's growing housing crisis.
A bill presented to the Spanish parliament by Pedro Sánchez, the prime minister, seeks to promote 'measures that enable access to housing, since we are facing one of the largest problems our society is currently confronted with,' Bloomberg reported.
Mr Sánchez first revealed plans to tax non-EU citizens in January in an attempt to curb growing discontent about surging real estate prices and housing shortages.
At the time, he said that foreign buyers had bought thousands of properties 'not to live in, but to make money from them'.
'Which, in the context of the shortage that we are in, we obviously cannot allow,' he told an economic forum in Madrid.
Figures provided by Mr Sánchez showed that 27,000 non-EU residents bought properties in Spain in 2023.
In total, foreigners make up 15pc of the housing market, with UK citizens leading the way in coastal areas such as the Costa del Sol, Valencia and the Balearic Islands.
EU citizens, including Germans and the Dutch, who also make up a significant proportion of foreign buyers in Spain, will be exempt.
The bill faces hurdles in order to get approved in Parliament, where Mr Sánchez does not hold a majority.
He has been leading a minority coalition since 2023 and needs support from about eight parties when he wants to pass legislation.
The proposed bill outlines that the tax will not affect foreign businessmen or professional workers based in Spain. This could potentially shield expat workers.
In Spain, people are classed as non-residents if they live in the country for less than 183 days in a year. The proposed law follows similar schemes in Canada and New Zealand.
The bill also seeks to increase VAT on short-term rentals and raise taxes on publicly-listed real estate investment trusts. It also seeks to set a levy on houses that are empty.
Iain Michael Tozer, who runs an estate agency in Barcelona, said there had already been a negative impact on buyers because of the uncertainty surrounding the law.
'There has been a negative impact on some buyers, but more due to the uncertainty around it, not due to the idea of the tax itself,' he said.
'What they did was they announced they were going to apply up to 100pc tax for foreign buyers, but they didn't really say which one.
'That caused a double effect. People hesitate because they think 'am I going to get a 100pc tax on the whole property'. When they speak to agents, we clarify that it can't be that, it'll be on the closing tax.'
There are two closing taxes in Spain: one is VAT, which is at 10pc and the other is transfer tax (ITP).
When property is bought in Spain, transfer tax paid on second-hand properties – generally between 6.5pc and 12pc of the purchase price – is decided at a regional level.
Mr Tozer added that he did not think the proposed bill would solve the housing crisis.
'The people that buy properties overseas are either very high-end or condominium-style properties in Costa Blanca and Costa del Sol where there's a lot of supply in property and it's not the type of property your average Spanish family is going to buy.'
Central and local authorities have spent years clamping down on holiday rentals under intense public pressure from anti-tourist activists.
The country's consumer rights ministry recently ordered Airbnb to remove more than 65,000 holiday homes from its platform as part of a crackdown on illegal listings.
Many of those who were banned were operating without a licence number, while it was unclear whether others were run by individuals or a company, the ministry said.
The clampdown came as activists ramped up protests against over-tourism ahead of the summer seasons.
Organisers in the Canary Islands said that 100,000 demonstrators took part in a protest against tourism in Tenerife's capital city, Santa Cruz, on Sunday.
The cost of an average rental property in Spain has doubled in the past decade, figures show, with Spain the world's second most popular tourist destination after France.
Mr Sánchez said earlier this year that 'there are too many Airbnbs and not enough homes', and vowed to prevent the 'uncontrolled' expansion of holiday homes.
Individual councils have also begun to act. Barcelona City Hall said it would eliminate 10,000 short-term tourist apartments by the end of 2028.
In the Canary Islands, Ibiza, and Murcia, authorities have reached agreements with Airbnb to ensure property owners comply with tourist rules, including having proper licences.