Spain needs to remember tourism is their number one export, a 100% tax on Brits buying property is a knee-jerk reaction

15 January 2025, 07:58

By Sean Woolley, CEO, Cloud Nine Spain

Spanish Prime Minister Pedro Sanchez announced that they are planning to impose a tax of up to 100% on properties bought by non-EU residents to deal with the country’s housing emergency.

Brits and other non-EU buyers are worried what the implications of the proposed tax change will be.

The detail is vague on what this really means, and the divided Spanish parliament will need to agree in order to meet approval, which will be no easy feat.

We see it as a scare tactic to deflate the market, and on the ground in Marbella, it is already spooking some potential buyers.

The difficulty in making decisions based on this announcement, is that there is very little detail around the proposed policies.

There has been a recent, targeted attack by the socialist government on overseas wealth – the abolition of the Golden Visa and now proposing huge fiscal barriers to deter overseas investment.

The government is under increasing pressure from Spaniards who are finding it harder to afford to buy or rent their own homes during this cost-of-living crisis.

The scenario of rich foreigners buying up their country’s real estate does not sit well with this left-wing government’s ideals.

My view is that there needs to a be a smarter balancing act rather than a severe knee-jerk reaction like this.

After all, Spain needs to be careful what it wishes for, bearing in mind that tourism is its number one export, and the country has attracted a huge amount of tax revenue from people who have relocated to Spain for a better quality of life.

For sure, they need to take care of their own, but they need to be careful that they don’t alienate those foreigners that have helped to create wealth for those everyday Spaniards who are now demanding change.

It seems that it’s only the speculative purchasers who are being targeted, so I would expect any crackdown to be aimed solely at those non-EU buyers who have no intention of seeking permanent residence in Spain, and who are thereby adding very little everyday value to Spanish society (i.e. a property left vacant for 10 months of the year and only contributing negligible tax revenues). How they intend to police this particular issue will be interesting.

We hope that clarity will be given quickly of what it really means in practice, to enable potential buyers to make an informed decision.

• Sean Woolley, is the CEO of Cloud Nine Spain

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