Spain’s government, led by Prime Minister Pedro Sánchez, has put forward a controversial proposal to impose a 100% tax on property purchases by non-European Union citizens. The measure aims to address one of the country’s most severe housing crises in decades, marked by a sharp rise in home prices, particularly in major tourist cities like Madrid and Barcelona.
Among the key measures proposed by Sánchez’s left-wing government to curb rising prices and combat real estate speculation is an hefty tax on properties bought by non-EU nationals, including British and American buyers. The idea is to slow the influx of foreign investors who, according to Sánchez, are fueling the speculative bubble and pushing local residents out of city centers.
“We have decided to limit the purchase of homes by non-EU foreigners, increasing the tax on transactions up to 100% of the property’s value,” Sánchez announced on Monday. He pointed out that housing prices in Europe have surged by 48% over the past decade, nearly double the growth in household incomes. He described the issue as a “serious problem with huge social and economic implications.”
The proposal, which still faces a tough road to parliamentary approval, has sparked mixed reactions. Supporters argue it’s necessary to make housing more accessible to Spanish citizens. However, critics worry about its potential negative effects on the economy, particularly on the job market and foreign investments. The proposal draws inspiration from similar measures in countries like Denmark and Canada, where price controls were accompanied by structural reforms aimed at increasing the supply of affordable housing.
The measure would particularly impact the approximately 300,000 British citizens who have chosen to retire in the Mediterranean cpuntry. It would also affect the growing number of American buyers, attracted by favorable exchange rates, low financing requirements, and Spain’s pleasant climate. Recent data shows that over 2,600 homes were purchased by U.S. buyers between mid-2022 and mid-2023 alone.
Overall, according to 2023 real estate registry data, around 15% of Spain’s housing market (87,000 sales out of 583,000) involved foreign buyers.
Madrid’s proposal comes just days before Donald Trump’s inauguration at the White House. During his second term, Trump could impose tariffs of up to 20% on various European products, including Spanish olive oil.
The incoming president has announced plans to create a new government agency—the External Revenue Service—to collect customs duties and other taxes from trade with foreign countries. Modeled after the U.S. Internal Revenue Service, the agency would collect revenue from tariffs of up to 60% on goods from China and 25% on products from allied nations like Canada and Mexico.
Like Sánchez’s proposal, Trump’s plan has sparked significant controversy, as economists have warned that the cost of these tariffs will likely be passed on to consumers, driving up the prices of goods.
