Spain's Proposed 100% Non-EU Property Tax Stalls in Congress Amid Political Hurdles

March 28: The Spanish government's proposal to impose a tax of up to 100 per cent on property purchases by non-EU buyers has hit a roadblock, with Prime Minister Pedro Sanchez's minority government struggling to secure the necessary parliamentary support. The plan, first unveiled in January 2025, aimed to reduce competition for local buyers in a country facing a severe housing shortage.

Despite generating global headlines when it was announced over a year ago, the bill had still not been debated by March 2026, according to parliamentary documents.

What the Proposal Aimed to Do

The proposed tax was designed to target non-EU residents purchasing property in Spain, with rates potentially reaching 100 per cent of the property's value. Sanchez had described the measure as effectively banning non-EU property buyers "since they only do so to speculate."

Foreign buyers represented 20 per cent of all property purchases in Spain last year—unchanged from the previous year—with Britons remaining the largest group of foreign purchasers at around 8 per cent.

Political Hurdles

Sanchez's Socialist-led minority government relies on a patchwork of smaller parties that support legislation on a case-by-case basis. As his term progresses, gaining support for legislation has become increasingly difficult.

A senior government source, who asked to remain anonymous, said new taxes are among the most difficult issues on which to gain majority support.

Key political divisions include:

Junts (Right-wing Catalan separatist party): Recently withdrew its support for the government and opposes the tax. Junts lawmaker Marta Madrenas stated: "The government has chosen to limit, ban and penalize instead of addressing the real issue: a lack of housing supply."
Podemos (Far-left party): Takes a different stance, arguing the government lacks the "political courage" to ban all purchases of houses not intended for residential use.

With elections slated for August 2027 at the latest, the government now risks running out of time to pass the measure.

Housing Crisis in Spain

Spain is among the European nations where public anger is most acute over affordable housing shortages. Rental supply has halved since the pandemic, creating intense competition for available properties.

The International Monetary Fund (IMF) warned in a report last Friday that Spain must address double-digit house price increases driven by strong demand and population growth through immigration. The IMF emphasized the need for a sharp increase in housing supply to address the crisis.

Market Impact

Early data suggests last year's announcement had little immediate impact on the property market. Foreign buyers continued to represent 20 per cent of all purchases, unchanged from the previous year.

Paloma Perez, CEO of luxury real estate firm Dils Lucas Fox, commented on the market reaction:

"The announcement created uncertainty, triggered a surge in legal and tax inquiries, and brought forward some purchases that were already well advanced. However, it did not spark a big buying spree among non-residents, as it unsettled some high-net-worth international buyers who value legal certainty."

What's Next

The government source said it would continue to raise the 100 per cent tax proposal for debate in congress. However, the measure was not included in a second housing bill put up for debate last year to regulate short-term rents.

With parliamentary support fragmented and elections approaching, the future of the proposal remains uncertain. The government faces a choice between pushing ahead with the tax measure or shifting focus to other housing policies that might secure broader political backing.

Outlook

Spain's housing crisis continues to intensify, with affordability concerns driving public frustration. While the 100 per cent non-EU property tax captured international attention, its political viability appears increasingly doubtful. The government may need to explore alternative approaches to address the housing shortage—such as increasing supply and regulating short-term rentals—that could attract broader parliamentary support.

For potential non-EU property buyers, the uncertainty around the proposed tax may continue, though the lack of legislative progress suggests immediate implementation remains unlikely.