A recent new law proposals were made, which steered a lot of interest, and uncertainty among brokers, investors and property owners, which motivated us to write this article together with Mr. Jose del Prado, Managing Partner from Del Prado & Partners, a top law firm in real estate here on Costa del Sol here in Spain.
Introduction:
The Spanish government has announced plans to propose a 100% tax on non-EU, non-resident property buyers in Spain. This raises critical questions:
Does the government have the parliamentary majority to pass such legislation?
Would the law be universally effective, or would exemptions apply?
Is this proposal a genuine solution to housing challenges, or a strategy driven by electoral motives?
If enacted, could the law be legally circumvented?
In this article, we will analyze these key questions to provide clarity on the potential impact and implications of this proposal and our recommendations for real estate investors.
Top line summary:
The proposed tax measures are unlikely to achieve their intended objectives and may negatively impact all stakeholders by reducing competitiveness, creating inefficiencies, and diminishing economic fairness. Rather than protecting the targeted sector, the legislation risks producing counterproductive outcomes, similar to previous poorly implemented laws.
If the law does get implemented there are viable solutions to overcome this tax by becoming a resident before purchase or alternatively buying as a Spanish registered company.
However, the current political uncertainty has temporarily depressed property prices, creating an opportune moment for foreign investors to enter the Spanish real estate market. With a government change expected within 1 to 2.5 years and historically low mortgage interest rates of 2.2%–2.5%, conditions are ideal for purchasing high-value properties at reduced prices. Savvy investors can capitalize on these temporary disruptions to secure long-term financial gains and benefit from future market recovery.
THE FULL ARTICLE
1. Does the government have the parliamentary majority to pass such legislation?
While the Spanish government technically has the authority to propose such a law, its implementation is far from guaranteed. The current political landscape suggests that this proposal is more of a deterrent signal than a practical reality.
To enact the law, it must first gain approval in Parliament and subsequently in the Senate. However, the government lacks a parliamentary majority. In the most recent elections, the Spanish people overwhelmingly voted for the opposition party (the Popular Party, or PP), which opposes the proposal. Unlike the PSOE-led government, the PP supports foreign investment, viewing it as beneficial for Spain’s economy and for fostering international partnerships.
This lack of majority is a significant barrier. The government would need support from other political factions to pass the legislation. However, the coalition supporting the government includes parties with conflicting economic ideologies, such as independentist groups that advocate for economic liberalism. This ideological divide creates additional challenges in securing the votes needed to advance the proposal.
Even if Parliament were to approve the law, the Senate—controlled by the centre-right Popular Party—could block it. While the government could technically bypass the Senate, doing so would introduce delays and further complications.
More importantly, the proposal faces widespread opposition from the Spanish public, particularly in key regions like the Costa del Sol, Madrid, Levante, the Balearic Islands, and the Costa Brava. These areas rely heavily on foreign investment, which raises the standard of living and drives economic growth. Resistance from these regions reflects the broader sentiment that the proposal undermines Spain’s economic interests.
In summary, while the government has the authority to propose this tax, the combination of political opposition, public resistance, and procedural hurdles makes its enactment highly unlikely in the short to medium term.
2. Why such a proposal came to life
The current government has deviated significantly from the platform for which it was elected, often prioritizing its own political interests and those of the party over the needs of its voters or the country.
If the proposed law were to be approved, its practical effectiveness would likely be minimal. The exact wording and implementation details would be critical, but recent legislative efforts from the government have suffered from poor technical and legal drafting. A notable example is the controversial «yes means yes» law, which, due to inadequate legal structuring, led to unintended consequences. Instead of protecting victims, it inadvertently allowed convicted offenders to secure early release, achieving the opposite of its intended purpose.
This example illustrates a broader issue: the government’s lack of precision and expertise in drafting effective laws. Many of their initiatives, even those aimed at addressing simpler issues, have failed to deliver meaningful results. Considering this track record, there is little confidence that a complex law like the proposed tax on non-EU property buyers would be executed successfully or achieve its stated objectives.
Ultimately, the combination of ideological motives, poor timing, insufficient resources, and inadequate legal expertise casts significant doubt on the viability and effectiveness of the proposed legislation.
3. Who will this law affect if implemented and they ways to go around it
The proposed law directly targets some groups while indirectly impacting others, creating widespread negative effects.
We here at Del Prado & Partners already see how we could advise our clients on solutions that would exempt them from such a tax.
Residents in Spain would likely be exempt from this tax, as subjecting them to such a high levy would amplify its discriminatory nature. Applying this tax to long-term foreign residents, who have contributed to the economy for years, would harm those who generate wealth and foster redistribution within the country. By obtaining residency before purchasing property, individuals could avoid the tax entirely.
Additionally, the tax could be circumvented by forming a Spanish company—a process with relatively low setup costs. As a Spanish legal entity, the company could purchase property without incurring the proposed tax. This approach is not only a viable workaround but also fiscally advantageous, as purchasing high-value properties through a Spanish company often provides tax benefits, even for residents or Spanish nationals. Consequently, this loophole would undermine the law’s intent, rendering it ineffective in achieving its stated objectives.
4. CONCLUSIONS
The proposed measures are likely to harm all stakeholders and produce outcomes contrary to their stated objectives. Alongside increased taxes, the government risks reducing competitiveness and ultimately losing revenue. Similar to the widely criticized «yes means yes» law, which unintentionally resulted in early releases for convicted offenders rather than strengthening protections, this tax proposal may fail to achieve its intended goals.
Rather than protecting the sector it claims to support, the law could lead to greater inefficiencies, reduced wealth redistribution, and diminished economic fairness. In the end, this approach risks harming everyone, including those it purportedly aims to benefit. The proposal appears to be more ideological and rhetorical than practical or effective, failing to address real-world challenges in a meaningful way.
5. RECOMMENDATIONS BASED ON ALL OF THE ABOVE: IT IS THE BEST TIME FOR FOREIGNERS TO BUY
The current political uncertainty in Spain has created an opportunity for investors to purchase properties at reduced prices. Even if the proposed tax law were to be approved, it is widely anticipated that a change in government, expected within the next 1 to 2.5 years, would result in the swift repeal of the legislation. Once repealed, property prices are likely to rise significantly, making this an ideal time to buy. Strategic investors who understand and capitalize on these dynamics are often rewarded with substantial long-term economic gains.
This period of uncertainty should be viewed as a temporary, artificial market disruption. It provides a unique opportunity for informed buyers to secure high-value properties at lower prices before the political situation stabilizes and the market rebounds. Such intelligent, risk-informed decisions are crucial for maximizing returns in a competitive investment landscape.
Low Mortgage Rates: A Perfect Opportunity
Adding to the favorable conditions for investment, mortgage interest rates in Spain are at historic lows, ranging between 2.2% and 2.5%. These rates significantly enhance affordability, reducing the cost of financing and improving overall returns on investment. For investors, low borrowing costs amplify the potential upside of purchasing properties during this artificially depressed market.
This combination of temporary price reductions and favorable financing terms creates a rare window of opportunity. Savvy investors who act now can benefit from lower acquisition costs, minimal financing expenses, and future market appreciation, all while contributing to the continued strength of Spain’s real estate sector.
If you need a consultation or assistance on real estate transactions, taxation or legal issues here in Spain please get in touch.
Our indicative fees / hourly rates:
Consultation with Mr. Jose del Prado the Managing Partner: USD 500 / € 476
Graduated in Law, Political Science and Sociology
Consultation with our real estate lawyer: USD 150 / € 142
Consultation with tax lawyer: USD 150 / € 142
Legal assistance when purchasing a real estate in Spain: 1% of the value of the property (plus 21% VAT).
Prices include 21% VAT tax.
Contact:
Thomas Warzywoda
Head of Partnerships
Key Accounts Manager
Direct:
Whatsapp: +34 692 71 46 08
Email: info@delpradolegalservices.com
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Landline: +34 952 49 19 96
Fax: +34 952 52 72 17
Address:
Ctra. de Cártama, 32 bajo, AlhaurÃn el Grande, 29120, Málaga, España
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