Spain's Proposed 100% Property Tax on Non-EU Buyers: What UK Buyers Actually Need to Know in 2026

Few headlines in the history of Spanish property have generated as much alarm among British buyers as the announcement in May 2025 that a draft bill had been submitted to Spain's Congress of Deputies proposing a 100% tax on property purchases by non-EU nationals. Social media groups for expats erupted. Solicitors and gestors were flooded with panicked phone calls. Estate agents on the Costa del Sol reported buyers freezing mid-transaction, unsure whether to proceed.

Much of the subsequent coverage has been inaccurate, incomplete, or outright sensationalist. As a result, UK buyers are making decisions based on fear rather than facts. This guide is our attempt to provide a calm, comprehensive, and legally accurate analysis of what has actually been proposed, who is genuinely affected, how likely the bill is to become law, and — most importantly — what you should do about it.

If you are a UK national considering buying property on the Costa del Sol, or already own property here and are worried about the implications, this is the most complete resource available. We will update it as the legislative process unfolds.

What Was Actually Proposed: The Draft Bill Explained

On 14 May 2025, a coalition of left-wing deputies led by the housing spokesperson of the Sumar party submitted a Proposicion de Ley (private member's bill) to Spain's Congress of Deputies. The formal title of the bill is the Impuesto Complementario Estatal sobre Transmisiones de Bienes Inmuebles a Residentes No Comunitarios, which translates as the "Complementary State Tax on Transfer of Real Estate to Non-EU Residents."

The key provisions of the draft bill are as follows:

• A new state-level tax of 100% on the acquisition price of residential property purchased by individuals who are (a) not resident in Spain and (b) not nationals of an EU or EEA member state. In practical terms, this would mean a buyer paying EUR 300,000 for an apartment would owe an additional EUR 300,000 in tax, effectively doubling the cost of the purchase
• The tax applies only to resale (second-hand) property — transactions that are currently subject to Impuesto de Transmisiones Patrimoniales (ITP), the transfer tax. This is a critical distinction that most media coverage has missed
• New-build and off-plan purchases are excluded because they are subject to IVA (VAT) at 10% rather than ITP. The bill's explanatory memorandum explicitly states that the intention is to reduce speculative acquisition of existing housing stock, not to discourage construction and economic development
• The tax would be collected by the Agencia Tributaria (Spain's national tax authority) and is described as "complementary" to existing regional transfer taxes, meaning it would be payable in addition to the normal ITP rate of 7% in Andalusia
• No exemptions for golden visa applicants (though Spain's golden visa programme for property purchases was already abolished in April 2025)
• A 12-month grace period from the date of publication in the BOE (Official State Gazette) before the tax takes effect, to allow transactions already in progress to complete

The bill's explanatory memorandum cites housing affordability as the primary justification, arguing that purchases by non-EU investors are driving up property prices in coastal and urban areas, reducing the housing stock available to Spanish residents. It references similar measures in Canada (which imposed a 25% foreign buyer tax in certain provinces), Singapore (which charges a 60% Additional Buyer's Stamp Duty to foreign purchasers), and Denmark (which restricts non-resident purchases altogether).

Who Is Actually Affected — and Who Is Not

This is where the misunderstandings are most dangerous, so we need to be precise. The bill targets a specific category of buyer defined by two cumulative conditions:

You would be affected if you are:

1. Not a tax resident of Spain — meaning you do not hold a certificado de residencia fiscal issued by the Agencia Tributaria and do not spend 183 or more days per year in Spain, AND
2. Not a national of an EU or EEA member state — which, since Brexit, includes all UK passport holders

Both conditions must be met simultaneously. This means the following groups would NOT be affected:

UK nationals with Spanish residency: EXEMPT

If you are a UK passport holder who has established tax residency in Spain — whether on a non-lucrative visa, a digital nomad visa, an entrepreneur visa, or any other legal basis — you are not a non-resident buyer. The bill does not apply to you. This is the single most important point that UK buyers on the Costa del Sol need to understand. The bill targets non-resident purchasers, not non-EU nationals per se.

This distinction is consistent with the bill's stated purpose: reducing speculative purchases by overseas investors who do not live in Spain. A UK national who is legally resident in Spain is part of the local community and is contributing to the Spanish tax base through income tax (IRPF), social security contributions, and local taxes.

Dual nationals with an EU passport: EXEMPT

If you hold dual nationality — for example, a UK passport and an Irish passport — you qualify as an EU national. The bill does not apply to EU nationals regardless of residency. If you have any claim to citizenship of an EU member state (Ireland being the most common for British nationals, but also Italy, Portugal, Poland, and others), this is worth investigating urgently.

Buyers of new-build or off-plan property: EXEMPT

As noted above, the bill applies only to transactions subject to ITP (resale property). Purchases of new-build property directly from a developer are subject to IVA (VAT) at 10% plus AJD (stamp duty) at 1.2% in Andalusia, and these transactions fall outside the scope of the proposed tax entirely. This exemption has significant practical implications that we will explore in our strategy section below.

Corporate buyers: partially affected

The bill includes provisions for purchases made through companies. Where the ultimate beneficial owner of a company is a non-EU, non-resident individual, and the company acquires residential property, the tax would apply. However, the enforcement mechanisms for tracing beneficial ownership through complex corporate structures remain vague in the current draft, and this is one of the areas likely to face amendment during the legislative process.

The Parliamentary Reality: Why This Bill Faces Enormous Obstacles

Understanding Spanish politics in 2025-2026 is essential to assessing the likelihood of this bill becoming law. Spain has a minority coalition government led by the PSOE (Spanish Socialist Workers' Party) in partnership with Sumar, a left-wing alliance. The government does not have a majority in the Congress of Deputies and relies on external support from regional parties — most notably Junts (Catalan pro-independence), ERC (Catalan Republican Left), PNV (Basque Nationalist Party), Bildu (Basque left), and BNG (Galician Nationalist Bloc).

The bill was introduced by Sumar, the junior coalition partner, not by the PSOE. The PSOE has been conspicuously non-committal in its public statements about the proposal, with the Economy Minister describing it as "one contribution to a broader housing debate" — a phrase widely interpreted as diplomatic distancing.

The opposition is substantial and cross-party

The Partido Popular (PP), Spain's main centre-right opposition party, has publicly opposed the bill, calling it "economic populism that would destroy jobs and investment in the tourism and construction sectors." VOX, the right-wing party, has also opposed it. More significantly, several of the regional parties upon whose votes the government depends have expressed reservations:

• PNV (Basque Nationalists) have raised concerns about the bill's compatibility with international investment treaties and Spain's obligations under bilateral tax agreements
• Junts (Catalan pro-independence) have not declared a position but have historically prioritised attracting international investment to Catalonia and are unlikely to support measures perceived as deterring foreign capital
• Canarian Coalition has expressed opposition, given the Canary Islands' dependence on tourism-related property investment

Without the support of at least some of these regional parties, the government cannot pass the bill. Simple arithmetic in the Congress of Deputies means the coalition needs external votes that are currently not forthcoming.

Probability assessment

Based on the current parliamentary composition, public positions of key parties, and historical precedent with similar ambitious legislative proposals in minority government situations, we assess the probability of the bill passing in its current form — a 100% tax rate — at approximately 30% to 40%. The probability of some form of increased tax on non-EU, non-resident buyers passing within the current parliamentary term is higher, perhaps 50% to 60%, but any enacted version would almost certainly look very different from the current draft.

Constitutional and Legal Challenges

Even if the bill were to pass through Congress, it would face immediate and serious legal challenges on multiple fronts. Legal scholars and tax practitioners across Spain have identified several significant vulnerabilities.

Article 31.1 of the Spanish Constitution: The Anti-Confiscatory Principle

Article 31.1 of the Spanish Constitution states that Spain's tax system shall be based on the principles of equality, progressivity, and shall "in no case have a confiscatory character." Spain's Constitutional Court (Tribunal Constitucional) has historically interpreted this provision as prohibiting taxes that, individually or in combination, result in the taxpayer being deprived of the substance of their assets or income.

A 100% tax on the acquisition price, when combined with the existing ITP (7% in Andalusia), notarial fees (approximately 0.5%), Land Registry fees (approximately 0.3%), and legal fees (1-1.5%), would bring the total tax and transaction cost burden to approximately 109% to 110% of the purchase price. Several constitutional law professors have publicly stated that this would be difficult to defend as non-confiscatory. The Constitutional Court struck down aspects of the plusvalia municipal tax in 2021 (STC 182/2021) on precisely these grounds when the tax exceeded the actual gain, and a 100% acquisition tax arguably presents an even stronger case for confiscation.

Article 63 TFEU: Free Movement of Capital

Although the UK is no longer an EU member state, Article 63 of the Treaty on the Functioning of the European Union (TFEU) protects the free movement of capital not only within the EU but also between EU member states and third countries — including the United Kingdom. This is a wider protection than the free movement of persons, workers, or services, which apply only within the EU.

The Court of Justice of the European Union (CJEU) has consistently held that discriminatory tax treatment of capital flows from third countries must be justified by overriding reasons of public interest and must be proportionate to the objective pursued. A 100% tax that applies exclusively to non-EU buyers would almost certainly be challenged as a disproportionate restriction on the free movement of capital. The CJEU's jurisprudence on this point is well-established, and any challenge would be supported by strong precedent.

Spain's own Audiencia Nacional has recently applied precisely this principle in the context of rental income taxation for non-EU property owners (see our detailed analysis in our article on the landmark 2025 ruling on rental expense deductions for UK landlords), confirming that discrimination against third-country nationals in property-related taxation is incompatible with EU law.

Bilateral investment treaties

Spain has bilateral investment treaties (BITs) with numerous countries, including the UK. The UK-Spain BIT contains provisions protecting investors against discriminatory treatment and expropriation. A 100% acquisition tax could potentially be challenged under the BIT's provisions on fair and equitable treatment, particularly if it were found to be discriminatory against UK nationals. While BIT challenges are complex and slow, the existence of this avenue adds another layer of legal risk for the Spanish government.

What a Scaled-Back Version Might Look Like

Most tax lawyers, property law specialists, and political analysts we have consulted believe that even if the political will exists to impose some form of additional tax on non-EU, non-resident buyers, the enacted version will be substantially different from the current draft. Based on international precedents and the constraints outlined above, the most likely scenarios are:

Scenario A: A surcharge of 20% to 50%

This would mirror the approach taken by Australia (which charges foreign buyers an additional 7% to 8% depending on the state), Canada (25% in affected provinces), and Singapore (60%). A surcharge in the 20% to 50% range would still be significant — adding EUR 60,000 to EUR 150,000 on a EUR 300,000 property — but would be more defensible against constitutional challenge than a 100% rate. The government could argue it is a proportionate measure to address a legitimate housing policy objective.

Scenario B: A regional pilot programme

Rather than a blanket national tax, the government might introduce a framework allowing autonomous communities to impose additional surcharges on non-EU, non-resident buyers in areas where housing affordability is deemed to be most affected. This would give regions like Andalusia, the Balearic Islands, the Canary Islands, and the Valencian Community the power to set their own rates (or choose not to impose the surcharge at all), while allowing regions that want to attract foreign investment to remain competitive. This approach would also ease some of the constitutional concerns, as it would allow the tax to be targeted at specific affordability problems rather than imposed indiscriminately.

Scenario C: A tiered system based on property value

A progressive surcharge that increases with property value — for example, 0% on properties below EUR 200,000, 10% on the portion between EUR 200,000 and EUR 500,000, 20% on the portion between EUR 500,000 and EUR 1,000,000, and 30% above EUR 1,000,000 — would better align with the stated objective of tackling speculative investment at the upper end of the market while leaving the affordable end of the market unaffected. This would also be more defensible under the constitutional requirement of progressivity.

Timeline: When Could Any Change Actually Take Effect?

The Spanish legislative process is not fast, particularly for controversial fiscal legislation introduced by a minority government. Based on the standard legislative timetable and the political realities described above, the timeline is approximately as follows:

• May-September 2025: Initial debate and assignment to parliamentary committee (Comision de Hacienda). The summer recess (typically mid-July to mid-September) will slow progress
• September-December 2025: Committee hearings, expert testimony, and potential amendments. This is where the bill will either be substantially rewritten or effectively shelved. If the government cannot secure sufficient support, it may be returned to plenary session with a recommendation for rejection
• January-June 2026: If the bill survives committee, it proceeds to plenary debate, vote, and then to the Senate. The Senate can propose amendments or return the bill to Congress, adding further delay
• Second half of 2026 at the earliest: If the bill passes both chambers, it must be published in the BOE (Official State Gazette). The current draft includes a 12-month grace period before the tax takes effect, which would push the earliest implementation to the second half of 2027
• Constitutional challenge: It is virtually certain that any enacted version of this bill would be challenged before the Tribunal Constitucional, either by the PP (which can bring a direct constitutional challenge as the main opposition party) or by affected individuals. The Constitutional Court can suspend application of the law pending a ruling, which typically takes 12 to 24 months

The most realistic assessment, therefore, is that even in the worst-case scenario where the bill passes, non-EU buyers are unlikely to face any new tax before the second half of 2027 at the absolute earliest, and a Constitutional Court suspension could delay implementation further. In the more likely scenario of a scaled-back version, the timeline extends even further due to the need for extended negotiation and amendment.

Three Practical Strategies for UK Buyers

Given this analysis, UK buyers considering property on the Costa del Sol have three clear strategies available. The right choice depends on your individual circumstances, timeline, and risk tolerance.

Strategy 1: Establish Spanish Residency Before Buying

Because the bill targets non-resident buyers specifically, establishing legal residency in Spain before purchasing property would exempt you from the proposed tax entirely. For many UK buyers considering a permanent or semi-permanent move to the Costa del Sol, this may be the most straightforward strategy.

The most common residency routes for UK nationals are:

• Non-lucrative visa: For retirees or those with passive income. Requires proof of sufficient financial means (currently approximately EUR 2,400 per month for the main applicant plus EUR 600 per dependent) and private health insurance. Does not permit employment in Spain. Processing time: 2 to 4 months
• Digital nomad visa (Ley de Startups): For remote workers employed by non-Spanish companies. Requires a labour relationship with a foreign employer and income of at least EUR 3,256 per month. Processing time: 1 to 3 months. Comes with a favourable Beckham Law tax regime for the first 6 years
• Entrepreneur or investor visa: For those establishing a business in Spain or making a qualifying investment. Processing time: 3 to 6 months

Once you have obtained your visa and registered as a resident (empadronamiento in your local municipality and NIE/TIE from the national police), you are a Spanish resident for the purposes of the proposed legislation. You can then purchase property — including resale property — without any exposure to the proposed tax.

Use our property calculator to model the full costs of purchasing property in Spain, including current taxes and fees. Visit our UK buyers' page for detailed guides on the residency application process.

Strategy 2: Purchase New-Build or Off-Plan Property

As the proposed tax applies only to resale property (transactions subject to ITP), purchasing a new-build property directly from a developer is entirely unaffected. New-build purchases are subject to IVA (10%) and AJD (1.2% in Andalusia) — a combined tax burden of 11.2%, which is actually higher than the current ITP rate of 7% on resale property, but dramatically lower than 7% plus any potential surcharge on non-EU buyers.

The Costa del Sol has a robust pipeline of new-build developments, particularly in areas like Estepona, Marbella East, Fuengirola, and the New Golden Mile. Advantages of new-build include modern energy efficiency ratings, contemporary design, developer warranties (Ley de Ordenacion de la Edificacion provides a 10-year structural guarantee), and the ability to customise finishes during construction.

The disadvantage is that new-build properties are typically 15% to 25% more expensive per square metre than equivalent resale properties, and off-plan purchases involve completion risk (though this is mitigated by mandatory bank guarantees on deposits under Spanish law). Nevertheless, for a non-resident UK buyer, the certainty of exemption from any future non-EU surcharge may outweigh the premium.

Browse our property listings and use our calculator to compare the total costs of new-build versus resale purchases.

Strategy 3: Buy Now Under the Existing Rules

Given the legislative timeline outlined above — which places the earliest possible implementation in the second half of 2027 even under the most aggressive assumptions — UK buyers who are ready to proceed have a substantial window in which to purchase under the current, well-established tax rules. The current position for a non-resident UK buyer purchasing resale property in Andalusia is:

• ITP (transfer tax): 7% of the purchase price
• Notarial fees: approximately 0.3% to 0.5%
• Land Registry fees: approximately 0.2% to 0.3%
• Legal fees: typically 1% to 1.5% (plus IVA)
• Total acquisition costs: approximately 9% to 10% of the purchase price

These rates are competitive by international standards and have been stable for years. A buyer who purchases now locks in these costs permanently — any future tax changes would apply only to subsequent transactions, not retroactively to purchases already completed.

For many of the UK buyers we work with, the practical advice is clear: if you have found the right property, at the right price, in the right location, do not allow a bill that has a less than 40% chance of passing — and which, even if passed, is likely to be challenged, delayed, and scaled back — to derail your plans.

Read our property glossary to understand every term you will encounter during the buying process, and consult our frequently asked questions for quick answers to common concerns.

What This Means for Property Values on the Costa del Sol

A question we are frequently asked is whether the proposed tax, even if never enacted, will affect property values. The short answer is: probably not in any meaningful way, and possibly not at all.

Non-EU, non-resident buyers represent a significant but not dominant segment of the Costa del Sol property market. Data from the Colegio de Registradores (Spain's Land Registry association) shows that foreign buyers accounted for approximately 15% of all property transactions in Malaga province in 2024, with UK buyers representing approximately 2.5% of total transactions. Even a complete withdrawal of non-EU, non-resident buyers (which is an unrealistic worst case) would remove only a fraction of market demand.

Moreover, the Costa del Sol market is driven primarily by domestic Spanish demand (particularly from Madrid, the Basque Country, and Catalonia), EU buyers (Scandinavians, Germans, Dutch, Belgians, French), and the growing digital nomad and remote worker demographic. These groups are entirely unaffected by the proposed legislation.

If anything, the publicity surrounding the bill has brought fresh attention to the Costa del Sol as a property investment destination, with some buyers accelerating their purchase timelines to "beat the tax" — an effect that supports rather than undermines prices in the near term.

Frequently Asked Questions

Does this tax apply if I am buying with my Spanish-resident spouse?

If you purchase jointly with a spouse who is a Spanish resident, the proposed tax would apply only to your share as a non-resident, non-EU buyer — not to the entire purchase price. If the property is purchased 50/50, the surcharge would apply to 50% of the acquisition price. However, if your spouse is an EU national (or becomes a Spanish resident, which satisfies the residency test regardless of nationality), their share is exempt. The most tax-efficient approach in this scenario is to structure the purchase predominantly or entirely in the name of the resident spouse, subject to appropriate legal advice about ownership rights and estate planning.

I have an Irish passport as well as a UK passport. Am I affected?

No. If you hold the passport of any EU or EEA member state, you qualify as an EU national for the purposes of this legislation. Ireland is the most common dual nationality for UK buyers, but any EU passport will suffice. If you have a potential claim to EU citizenship through ancestry (particularly common with Irish, Italian, and Portuguese descent), this is worth investigating with an immigration lawyer.

What about buying through a UK company?

The current draft includes provisions targeting purchases through corporate structures where the ultimate beneficial owner is a non-EU, non-resident individual. However, the enforcement provisions are vague, and the interaction with existing corporate tax rules is unclear. Buying through a company solely to avoid this tax is unlikely to be effective and carries its own tax and compliance costs. We do not recommend this approach without detailed legal and tax advice specific to your circumstances.

Could the tax be applied retroactively to purchases I have already made?

No. Spanish constitutional law prohibits retroactive application of tax legislation that increases the tax burden on transactions already completed. Article 9.3 of the Spanish Constitution guarantees the principle of non-retroactivity of punitive or restrictive measures. Your existing property ownership is not at risk.

Should I wait and see what happens?

This depends entirely on your personal circumstances. If you are actively looking for a property and find one that meets your criteria at a price you consider fair, we see no rational basis for waiting. The probability of the bill passing in its current form is low, the timeline is long, and the legal challenges are substantial. Waiting could mean missing the right property, facing higher prices due to the general upward trend in Costa del Sol values, and potentially still buying under the same rules that apply today. Conversely, if you are in no hurry and are comfortable with the risk of prices rising, there is no harm in waiting for greater clarity — which should come by late 2025 or early 2026 as the parliamentary process develops.

Our Commitment to Keeping You Informed

At MUNDO, we believe that informed buyers make better decisions. We will continue to monitor the legislative process closely and update this article as developments occur. We are in regular contact with tax lawyers, parliamentary observers, and the Colegio de Abogados de Malaga to ensure our analysis reflects the latest position.

In the meantime, we encourage you to:

1. Avoid making decisions based on social media speculation or sensationalist headlines
2. Consult a qualified Spanish tax lawyer (abogado fiscalista) if you have specific concerns about your personal situation
3. Use our property calculator to understand the current costs of buying on the Costa del Sol under existing rules
4. Read our comprehensive UK buyers' guide for everything you need to know about purchasing property in Spain as a British national
5. Browse our property glossary to familiarise yourself with the legal and financial terminology you will encounter
6. Check our FAQ section for quick answers to the questions we hear most often

The Costa del Sol remains one of the most attractive property markets in Europe for UK buyers, offering exceptional climate, infrastructure, healthcare, connectivity to the UK, and — under current rules — a transparent and well-regulated purchasing process with reasonable transaction costs. A draft bill that faces long odds, serious constitutional obstacles, and a timeline measured in years should be understood and monitored, but it should not be a reason to panic.