Spain's *NEW* 100% Property Tax EXPLAINED Simply!

I've already bought, so this isn't an issue for me, unless they make it a regressive tax.

But Daniel, are you 100% certain it's a 100% tax on the property price?

From what I've read elsewhere, it's a 100% increase on the existing tax rate?

If it is as you suggest, it's crazy.

You will instantly remove Brits, Americans/Canadians and Russians from the housing market and property development will collapse at a stroke in the tourist areas as the developers will not move to building cheap housing  to replace the money spinning properties being built now.

The solution already lies with the Spanish authorities, and they could act if they wanted to, and certainly should have done so.  Lack of long term urban planning strategy has caused the problem.  They could decide to only grant permission for affordable residential property to be built for the next few years, (with a restriction on who can buy, not permitted to be let short term), or build social housing. Stop granting planning permission for expensive housing complexes, clearly targeted to foreign buyers.

In Valencia region, local Town Halls have also had control over granting or refusing permission for Tourist License applications for 7 years, but some haven't restricted numbers allowed.

Extra purchase taxes could just mean prices drop because the market slows, but it won't produce residential affordable housing stock.

Dave, it's as I've said. The profit isn't there with cheap housing. 

The developers will pull out, unless big incentives are offered.

The problem is us foreigners can afford to pay more for property and bring new money into the economy.

A better solution would be to make any new development include a percentage of affordable/social housing.

That way, it ensures it has to be presentable to those paying for the higher priced properties, hence it should be decent quality too.

For anyone who is interested I came across a very good article about the Spanish housing situation, link attached. 

https://blogs.lse.ac.uk/inequalities/2024/03/05/the-trap-of-the-tenant-generation/

Rgds,

Aitch.

One solution could be to remove the transfer tax completly for qualifying Spanish residents. A no resale clause for so many years, or tax repayment, would need to be put in place to stop profiteering. 

This would still encourage foreign buyers but make properties 10% cheaper for poorer Spanish residents.

I appreciate you taking the time, and I understand why you might think that. You're actually bringing up something that I've heard from many people already regarding this proposed 100% tax.

But I’d like to ask you two quick questions: Who exactly said that this tax would simply double the existing property transfer tax (ITP)? And when did they say it?

Let me explain why this matters. I made my first video about this proposed 100% tax at the beginning of June, precisely because before May 23rd, there was nothing but rumors about it. However, on May 23rd, the Spanish government officially published a draft bill outlining this new tax—and it explicitly states that it is NOT a doubling of the existing ITP, but rather the creation of an entirely new "complementary" national tax.

Let me directly quote from the official draft bill:

"Article 1: A new Complementary State Tax on Property Transfers to Non-EU Residents is hereby created."

"Article 6: The tax rate shall be 100% applied to the taxable base (the full purchase price)."

"Article 11: From this total amount, the amount already paid under the existing Property Transfer Tax shall be deducted."

As you can see clearly, the government itself says explicitly that it will NOT simply double the existing ITP. Instead, they need to create a completely separate complementary tax, because legally they cannot simply increase the existing regional transfer taxes to 100%.

Trust me, I would also prefer if it were just a simple increase of the current ITP—this would make it less devastating and easier to challenge legally. But that’s unfortunately not what the Spanish government’s proposed legislation says. If you'd like, I highly recommend watching this video until the end because I've taken significant time and effort to explain the constitutional and European legal principles involved, after careful and thorough research.

Excellent point. What you mention is definitely one of the key causes behind the housing shortage in Spain. No matter what measures are taken, investors who have already put money in will do whatever they can to recover their investment — and ideally, turn a profit.

The real issue is that property-related taxes in Spain are not reinvested directly into housing or urban planning. That money just goes into the general public budget, which disconnects the tax from any targeted housing solution.

What you say about tourist licenses is also very true. Some town halls have stopped issuing new ones for over a year, even though it's legally questionable whether they can make that kind of blanket decision.

Thanks again for your thoughtful comment. Just reading your points of view makes it worthwhile to put in the work behind a video like this. I’ll definitely be covering more of these issues in future videos.

With regard to your comment on the legality of Town Halls being able to refuse a Tourist License, here in Valencia region it has been completely at the discretion of Town Halls since July 2018, when a decree was pased requiring the Town Halls to issue a Certificate of Compatibility before the actual application for the Tourist License could be made. The License is not issued by the Town Halls, it is issued by the provincial office for tourism (so in Alicante for Costa Blanca). Without the Certificate it isn't possible to apply for the Tourist License. 

Some Town Halls have never issued a CC at all (Algorfa being an example), so no new Tourist Licenses have been applied for in those municipalities at all for 7 years. Others put restrictions on location or type of property (example being Guardamar). Some opened applications for limited time periods only.  However, others were happy to issue them to all who applied.  But the Town Hall was given control over how many Tourist Licenses were issued in their municipality. In addition, any community could vote not to allow new Licenses and register that with the Town Hall so properties in that community could not get the CC. 

Licenses became compulsory in this region in May 2015 but the number of Licenses issued over the first 3 years (prior to the Town Hall involvement) was nothing like the level issued in the 3 years 2022/3/4 when the Town Halls did have control over numbers.  Yet they are not being held to account, just as they are not being held to account over their bad decisions over lack of forward planning on the housing/building front. Instead buyers and owners are being vilified!

It's been in the British press, a few times, over the last few months. I know what you're thinking. It's not a reliable source and I agree.

I just wanted you to clarify things.

Quite frankly, I'll be amazed if it happens, but it matters not. I have no aim to make money and my purchase has always been with retirement in mind.