Spain tax: 100% property tax hike proposed that could keep UK expats from Barcelona and Madrid - what it means

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The proposed tax hike could change the game for UK buyers looking to invest in sunny locations 🌞
  • Spain is considering a 100% property tax hike for non-EU buyers, including UK citizens
  • The measure aims to address rising housing costs but could discourage UK buyers from investing in Spanish real estate
  • Experts suggest buyers may look to alternatives like Cyprus, Greece, and other sunny destinations
  • Restrictions on foreign buyers are becoming more common in various countries, including Switzerland and Canada
  • Some lawyers and property professionals believe the proposal could backfire, affecting Spain’s real estate market long-term

Experts are warning that an "extreme" hike in property taxes in Spain could be a setback for UK buyers, potentially prompting them to explore alternatives like Cyprus and Greece.

The measures being considered include a tax of up to 100% on properties purchased by non-European Union residents, aimed at alleviating pressure on the country's housing market.

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If the measure passes, non-EU residents - which, of course, includes UK citizens - could be required to pay taxes equal to the full value of the property, effectively doubling the cost.

Similar to the UK, Spain has been grappling with rising housing costs. Rents, especially in major cities like Barcelona and Madrid, are a significant concern, while house prices have also been climbing.

Tourists look at apartments in the window shop of a real estate on the island of Ibiza (Photo: JAIME REINA/AFP via Getty Images)Tourists look at apartments in the window shop of a real estate on the island of Ibiza (Photo: JAIME REINA/AFP via Getty Images)
Tourists look at apartments in the window shop of a real estate on the island of Ibiza (Photo: JAIME REINA/AFP via Getty Images) | AFP via Getty Images

The growth of tourism and short-term rentals is further exacerbating the issue. Non-EU residents bought 27,000 properties in Spain in 2023, “not to live in” but “to make money from”, according to Spain’s Prime Minister Pedro Sanchez.

Toby Leek, president of property professionals’ body NAEA Propertymark, said: “Many Brits may take the news of heightened property taxes in Spain as a blow considering moving to such a location could well have been a lifelong ambition, especially with the convenient location and, of course, the improved weather it provides.”

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He said that, while it can be appreciated that Spain is addressing its own housing emergency and looking after Spanish citizens, the proposal is “quite an extreme increase”.

Seila Sanches Lucas, a lawyer at international law firm Broadfield, noted that the measures are “just a proposal at this point in time”, and are “not guaranteed to make it onto the Spanish statute books.”

“Even if adopted, the legislative process in Spain is tortuously slow and it is perhaps a little early for UK nationals to worry about this proposal.”

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Stephen Abletshauser, private client partner at Spencer West LLP, said Spain’s proposed tax hike on foreign property buyers could backfire in the long run, describing the move as a "populist" decision that could ultimately harm the country’s real estate market.

Abletshauser said that nations like Turkey, Italy, Malta, Cyprus, and even France are poised to benefit from Spain’s decision, as they compete for wealthy non-residents looking to retire in the sunshine.

Kate Everett-Allen, head of European research at Knight Frank, noted that the specifics of the proposed tax measures were still unclear, but pointed out that restrictions on foreign buyers are not unprecedented.

Countries such as Switzerland, Singapore, New Zealand, and Canada have previously implemented a range of measures, including higher taxes, outright bans, and limitations on property purchases to new homes only.

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What do you think about Spain's proposed property tax hike for non-EU buyers? Will it drive you to consider alternative destinations, or do you think it's a necessary step to tackle housing pressures? Share your thoughts in the comments.

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