What is being proposed?
The Spanish government is considering a 100% tax surcharge on property purchases by non-EU, non-resident foreigners.
This “State Complementary Tax” would double the existing Property Transfer Tax (ITP).
Example: Buying a second-hand home for €500,000 would trigger an additional €500,000 tax—effectively doubling the purchase cost.
Why now?
The aim is to curb speculative buying in tourist-heavy, high-pressure real estate zones—such as the Balearic Islands, Canary Islands, Costa del Sol, Madrid, and Barcelona.
In early 2024, non-EU buyers paid more than double the price per square meter compared to Spanish residents (€3,379 vs. €1,659 /m²)
Who does it target?
Applied only to non-EU, non-resident foreign buyers.
Excludes EU citizens and legal residents of Spain.
Only affects resale properties; new builds pay VAT instead, and cannot be targeted by nationality-based tax discrimination.
Legal and constitutional concerns
Spanish Constitution chracteristics:
Prohibits confiscatory taxes (art. 31.1).
Forbids discrimination based on nationality (art. 14).
→ A 100% tax aimed solely at foreigners would likely be deemed unconstitutional.
Regional powers:
The ITP is managed by Spain’s Autonomous Communities. A new central surcharge would require careful alignment with regional tax authorities
EU law issues
Conflicts with the EU’s free movement of capital, which also protects investment from non-EU countries.
Could prompt infringement proceedings by the European Commission and challenges at the EU Court of Justice, similar to past rulings on Spain’s inheritance tax .
Global implications
Spain has international investment treaties with countries like China, Russia, and numerous Latin American states.
A 100% surcharge might be interpreted as indirect expropriation, leading to costly arbitration claims.
It may also tarnish Spain’s reputation as a welcoming investment destination, particularly in property and tourism.
Practical loopholes and evasions
New construction is taxed under VAT, a regime that cannot differentiate based on nationality—potentially encouraging buyers to shift away from the resale market.
Some might purchase via Spanish companies, prompting authorities to pursue anti-abuse measures as potential fraud.
Political feasibility
Implementation is uncertain due to the fragmented Parliament: PSOE + Sumar lack a clear majority and depend on support from regional or smaller parties.
Some left-wing parties support tackling speculation, while others (e.g., Junts, PNV) express pro-investment concerns.
Opposition from PP and Vox labels the proposal as xenophobic and interventionist
Expert opinions
Critics argue that because non-resident non-EU buyers account for only 2.5–4.3% of real estate transactions, the proposed measure may have limited impact nationwide
Additionally, domestic investors, EU nationals, and legal entities with speculative intent would be unaffected—raising questions about fairness and efficacy.
Economists suggest more comprehensive reforms: shifting investment toward affordable housing, rental controls, and social programs
Final assessment
The proposal addresses a real concern—foreign-driven property pressure—but, as drafted, it’s legally fraught at domestic, EU, and international levels.
Its discriminatory design and potential diplomatic fallout make it highly vulnerable to challenge.
Even if passed, it’s likely to be scaled back, revised for fairness, or abandoned altogether.
In summary: while the intention to temper foreign property speculation is understandable, the method—a sweeping 100% tax—appears unviable in its current form. It’s far more likely to spark constitutional, EU, and treaty-based challenges, and may prompt negotiations toward a more balanced, inclusive policy.
Let me know if you’d like more detail on any area: legal risks, alternatives, regional impacts, or related EU rulings!
