🏠 URGENT LEGAL NEWS: Spain Proposes 100% Tax on Non-EU Property Purchases
The socialist party has taken a big step forward on this crazy idea and have actually presented the wording of the new law that contains this mesure to parliament.
What will the law mean if passed : A 100% tax on the purchase of property in Spain by NON EU RESIDENTS.
🚨 What’s Happening?
In my last newsletter, I reported on President Pedro Sánchez’s press conference in which he announced a proposed 100% tax on property purchases in Spain by non-EU citizens, unless they plan to become residents. The video where I commented on his words is below. Since then we where interviewd on national tv about this and at the time of that intervention I really did not thing it was going to happen. I still do not , but now I have doubts.
Yesterday, the Spanish Socialist Party presented a law proposal that formalizes this plan. The most controversial section appears in Article 4, which confirms exactly what the President declared.
It has NOT been passed by Parliament or the Senate yet.
The law is long and in Spanish , but I have prepared an English translation of the part that deals with the above (it is very short ) so that you can read it for yourselves.
Attached
– The full proposed law (attached)
– English translation of Article 4 – outlining the new tax targeting non-EU buyers (you only need to read this )
Other parts of the law may affect non-resident landlords. I’ll cover these in my next newsletter once I’ve reviewed the full text.
📘 Article 4: Full English Translation
With effect from the entry into force of this law, the State Complementary Tax on the Transfer of Real Estate to Non-Residents in the European Union is hereby created, with the following characteristics and legal framework:
1. Nature and Object of the Tax
The tax is indirect in nature and levies the onerous transfer of real estate located in Spanish territory, as well as the constitution and assignment of real rights over such properties (except security rights), in favor of individuals and entities not resident in the European Union.
2. Classification of Acts, Contracts, and Properties
The classification of legal acts, contracts, and properties shall follow the rules in the consolidated text of the Property Transfer and Stamp Duty Act (Real Decreto Legislativo 1/1993, 24 September).
3. Encumbrance of Transferred Properties
The rules concerning the legal attachment of transferred assets in the aforementioned consolidated law shall also apply to this tax.
4. Territorial Scope
1.This tax applies to the transfer of immovable property located in Spain and the constitution or assignment of real rights (excluding security rights) over them.
2.This article does not override existing economic agreements in the Basque Country or Navarre, nor applicable international treaties.
5. Taxable Event
1.The taxable event is the transfer of real estate and the constitution/assignment of real rights (excluding security rights) in favor of non-EU individuals or entities.
2.Transactions are exempt if subject to VAT, unless VAT-exempt. Transfers of business assets not subject to VAT will be taxed.
6. Exemptions
Subjective and objective exemptions from the existing Transfer and Stamp Duty law shall apply.
7. Taxpayer
The taxpayer is the non-EU resident (individual or entity) acquiring real estate or real rights over it.
8. Tax Base
1.The tax base is the market value of the transferred asset or real right. Liabilities are not deductible.
2.In the case of real estate, the cadastral reference value is used unless the declared or agreed price is higher, in which case the higher value applies.
3.Reference values may only be challenged via administrative or appeal procedures.
4.Challenges to reference values will involve binding reports from the General Directorate of the Cadastre.
5.Specific valuation rules apply to usufructs, bare ownership, and rights of use and habitation.
9. Special Rules
•Bare owners pay based on the value acquired.
•Promises/options to contract are taxed at the agreed price or 5% of the base value.
•For transfers with retroactive clauses or retract rights, adjusted bases apply.
10. Full Tax Amount
Calculated by applying a 100% rate to the taxable base.
11. Net Tax Amount
Deducts the amount paid under the regular Transfer Tax and Stamp Duty for the same operation.
12. Accrual
1.The tax is due when the act or contract is executed.
2.Transfers with suspensive conditions are deemed effective once those conditions lapse.
13. Management Rules
The Spanish State holds all powers regarding tax administration, collection, inspection, and review.
14. Self-Assessment
Taxpayers must file, self-assess, and pay the tax according to procedures set by the Ministry of Finance.
Payment may be made using culturally protected property (as per Law 16/1985, Article 73).
15. Tax Return
Returns must follow formats, deadlines, and documentation set by the Ministry of Finance.
16. Penalties
Infractions are classified and sanctioned under the General Tax Law (Law 58/2003).
17. Jurisdiction
The contentious-administrative courts have jurisdiction after exhausting administrative remedies.
18. Adaptation of Regional Tax Regimes
The Economic Agreements with the Basque Country and Navarre will be adapted through their respective commissions.
19. Enabling Provision for Budget Laws
The General State Budget Law may modify the tax rate and deductions in accordance with the Constitution.
⚠️ What This Means
– Foreign investment funds will likely cancel upcoming development projects because of the uncertainty.
– Property buyers will rush to purchase before this new tax comes into effect.
Possible outcomes:
1. The law is approved exactly as proposed.
2. It is rejected entirely.
3. It is watered down — lower tax rates, limited to certain regions, or negotiated changes.
4. It could be approved and then It could be challenged in court in the future for violating international treaties . Obviously counting on this is in now way a good idea.
✅ My Recommendation
If you are intending to purchase do so as soon as possible just in case.
Stay informed. I’ll be following this closely and sending updates as things evolve.
📬 Watch for my next newsletter with updates for non-resident landlords.
Kind regards.
Michael Davies
Abogado.
