TAX PROPOSALS
EXPERTS VIEW
Analysis
Recent headlines about proposed property tax changes in Spain have created quite a stir in the international property market. As CEO of Sandtons Property, with three decades of experience in Spain'spropertysector,I'dliketoprovidesomeclarityandcontext tohelpyouunderstandwhat'sreallyhappening.
UnderstandingtheContext
TheproposalscomeamidbroaderEuropeanhousingchallenges. Whilehousingpriceshaveindeedsurged48%acrossEuropeinthe pastdecade,it'simportanttounderstandthattheseproposalsare primarilyaimedataddressingdomestichousingconcerns, particularlyinurbancenterslikeMadridandBarcelona.Withsocial housingrepresentinglessthan3%oftotalstock,thegovernmentis exploringvariouswaystosupportyoungpeopleandworking families.
Spain’sHousing
The Reality in Numbers
Let's look at the actual market data, which tells a very different story from the headlines:
Spain has a total housing stock of 26 million homes
Q3 2024 saw 165,000 property transactions
Non-EU buyers account for just 13,500 purchases (8% of total)
Investment properties represent less than 4% of the total market
AsAntoniodelaFuente,managingdirectoratColliers,aptlyputsit:
"This is a drop in the ocean compared to Spain's 26 million homes."
Legal Framework and Protections
Twokeylegalprecedentsprovideimportantcontext:
The 2014 European Court of Justice Ruling (Case C-127/12) required Spain to modify inheritance tax laws and established clear non-discrimination principles.
T 72/2018) confirmed regional autonomy in property taxation matters
Emphasises that any discriminatory measure would “flagrantly violate EU law, specifically Article 63 of the Treaty on the Functioning of the European Union."
REGIONAL AUTONOMY: A CRUCIAL FACTOR
A vital point often overlooked is that property transfer taxes are controlled by regional governments, not the central government. The Andalusian government, for instance, maintains control over:
Property transfer tax rates (currently 8-12%)
Stamp duty
Local property regulations
Development permissions
Implementation Reality
Importantpointsabout implementation: -
-Theseareproposals,not enactedlegislation
-MustpassthroughSpain'slegislative process
-Requiresap
-Needsdebatei
-SubjecttoSenatereview
Economic Impact and Market Strength
1Themarketfundamentalsremainexceptionallystrong:
- Foreign second-home owners contributed €635 billion to GDP
- Generated over 105,000 jobs in tourism sector and over 17% of all new jobs across Spain in 2023
- 50,000 new jobs on the Costa del Sol in services and construction have been created in the last year
- Prime areas like here on the Costa del Sol show 13.7% annual appreciation
- Rental yields remain strong at 8-11% in prime locations"
Expert
Consensus
"”We can confirm that this is not a law. So it is not something that can be enforced. And even in the unlikely event that they try to take it to the Parliament, we consider that is very unlikely to be approved, considering that the Socialist Party is in the power under minority."
Felipe Martinez del Mármol Real Estate Partner Lawyer MartinezAchevarriaLawFirm
"”Although the planned measure complicates the situation and makes Spain less competitive compared to others, it won't stop the arrival of new buyers.'"
MaryemEssadik,CEOofMarfourInternationalLawfirm,
"”Each autonomous region can set their own tax rate. Some regional governments are run by different political parties. The regional governments which do not belong to the central government may not agree '"
MMorenoofPerezLaw,
"”These measures could impact Spain's reputation as a property investment destination.'"
PPspokespersonBorjaSamper
The PP run the Andalucian Government with a national commitment to reach only 4% in Property Transfer Tax to encourage more foreign investment.
WhatThisMeansforBuyers
Ifyou'reconsideringpurchasingpropertyinSpain,herearethekey takeaways:
transactions proceed under existing rates
Looking Forward
While headlines may create temporary uncertainty, the fundamentals that make Spain, particularly the Costa del Sol, an attractive destination remain unchanged Strong rental yields, supply scarcity, and continuing infrastructure development continue to drive the market's appeal.
Get Personalised Advice
Every buyer's situation is unique. For personalized advice about your specific circumstances, contact Sandtons Property:
Contact Details:
Address: Calle San Antonio 35, Old Town Estepona
Phone: +34 951 338 173
Website: www.sandtons.com
Brian Stevendale is the CEO of Sandtons Property, with over 30 years of experience in the Spanish property market He specialises in helping international buyers navigate the Spanish property market with confidence
