Spain is making global headlines with its latest and most controversial attempt to combat the country’s deepening housing crisis. The Spanish government, under Prime Minister Pedro Sánchez, is pushing forward with a radical housing reform bill that includes a shocking 100% property tax on purchases made by non-European Union (EU) citizens—most notably affecting British buyers. This tax, if passed, would mean that a non-EU individual buying a holiday home in Spain would pay the full purchase price of the property again in taxes, effectively doubling the cost.
This bold measure has ignited fierce debate across Europe and beyond. British citizens, who have long been among the top foreign investors in Spanish real estate—especially in the Costa del Sol, Balearic Islands, and Canary Islands—are expressing outrage. The plan is widely seen as a direct move to reduce non-resident foreign ownership, especially in tourist-heavy areas where housing prices have surged beyond the reach of local residents.
But this tax is just the tip of the iceberg. Spain’s housing bill also proposes other aggressive reforms: increasing VAT on short-term rentals, imposing higher taxes on publicly listed real estate investment trusts (REITs), and cracking down on vacant homes. These sweeping changes are designed to address the housing shortage that has left thousands of Spaniards struggling to afford homes in their own cities.
Is this a necessary reform to fix a broken housing market? Or is it a populist move that will scare off foreign investors, tank the real estate sector, and create more problems than it solves? Here’s everything you need to know about this unfolding property war.
What Is the 100% Property Tax and Who Does It Target?
At the heart of the controversy is a single, explosive proposal: a 100% property tax on purchases made by non-EU citizens who are not legal residents of Spain. According to the bill’s text, foreign nationals from outside the EU would be required to pay a tax equal to the full value of the property being purchased, effectively doubling their investment cost.
To break it down simply: if a British buyer were to purchase a €400,000 holiday home in Marbella, they would also owe €400,000 in taxes—bringing the total cost to €800,000.
This tax, however, would not apply universally. The bill includes some notable exemptions:
- EU citizens would not be subject to the 100% tax.
- Non-EU citizens who plan to live in the property as their primary residence would also be exempt.
- Professional workers residing in Spain under valid contracts would not be impacted.
The clear focus is on holiday home buyers and short-term property investors who, according to the Spanish government, are inflating local housing markets and contributing to housing scarcity for native Spaniards.
Britons, who make up a large portion of foreign property buyers in Spain, are understandably the most vocal critics. Post-Brexit, British citizens are now classified as non-EU nationals, making them prime targets under the new policy. In 2023 alone, non-EU residents purchased over 27,000 properties in Spain—thousands of which were bought by UK nationals seeking sun-soaked retirement spots or investment properties near the coast.
The fallout could be immense. Estate agents are already reporting a freeze in inquiries from British buyers, while legal experts warn that foreign interest could plummet if the bill is passed.
Supporters of the measure argue that the boom in non-resident ownership is pricing Spanish citizens out of their own neighborhoods. Many coastal towns have seen housing stock drained by vacation rentals and second homes that sit empty for most of the year. This tax, they claim, is a necessary deterrent to foreign speculation.
Critics, on the other hand, are calling it discriminatory, unconstitutional, and economically reckless. “You don’t fix a housing crisis by punishing people who want to invest in your country,” said one British-Spanish dual citizen who owns multiple properties in Valencia.
The proposal’s shock factor alone has already shaken the real estate industry. But the 100% property tax is just one element in a broader and far-reaching housing overhaul.
