Spain plans to tax residents outside the EU 100% on housing

Spain’s Government hasplans to tax people from outside the European Union up to 100% on housing they buy in the country.

It’s part of a broader Government strategy to improve housing affordability.

Housing

From 2015 to 2023, house prices across Europe increased by 48%, according to the European Parliament.

The rate was the same across the same time period in Spain, partly driven by tourism. Tourism has benefitted Spain’s economy by creating jobs. However, it’s strained the housing market by increasing the popularity of short-term rentals (e.g. AirBnBs).

In Barcelona, for example, the city council has banned short-term rentals after rents increased by 68% over 10 years.

Tax reform

In a speech on Monday (local time), Spanish Prime Minister Pedro Sánchez saidis one of the biggest challenges facing the country.

“The West faces a decisive challenge: not to become a society divided into two classes, that of rich owners and poor tenants,” he added.

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Additionally, under the measure, Spain’s Government said “the tax burden that [non-residents] will have to pay in the case of purchase will be increased up to 100% of the value of the property” or housing.

Sánchez said this policy was designed to stop the “exploitation of housing… as a source of profitability”. Particularly, by people who buy properties to rent them to tourists.

“Just in the year 2023, non-residents from outside the EU bought around 27,000 houses and apartments in Spain. They did it not to live in them, not for their families to live in them, but… to make money from them,” Sánchez said.

“In the context of the residential shortage we are experiencing, this is something we obviously cannot afford.”

Other measures

The new tax still needs to passParliament. Sánchez’s Spanish Socialist Workers’ Party has formed a minority government in coalition with several other parties.

Further plans announced by Sánchez on Monday included increasing the amount of public housing, and changing taxes on short-term rentals.

Tourist apartments will be “taxed as what they are: a business,” a Government release said.