Earlier this week, Spanish Prime Minister Pedro Sanchez announced an extreme proposal that could hit some Brits hard if it is approved. A plan to impose up to 100% tax on the value of properties bought by non-residents outside of the EU (similar to the arrangements in Denmark & Canada).
This obviously doesn't sound good at all and we have already heard from hundreds of prospective Spanish property buyers this week that they have turned their intentions to buy property elsewhere in Europe now.
Whilst it's somewhat understandable that some have panicked from the announcement, we don't know when, how or more importantly even IF this will actually go ahead.
Firstly, Mr Sanchez doesn't have the best track record in parliament and to gain votes on this huge change will be a real uphill battle. Second, the how and the when means that IF it does get approved, it will take some time to be rolled out (it was a full year for the ending of the Golden Visa).
So why have we got here?
Spain has a housing crisis or better yet, a developing of homes crisis. Developers currently have a lack of incentive from Government to build what the country needs and where it needs homes the most.
Property prices have increased by an average of 50% in the past decade and rents have risen by 30%.
Population has reached an all-time high following an influx of immigrants from all over the world. For example, Latin Americans living in Madrid have risen from 80,000 in 2020 to 1,000,000 today.
However, around 15% of properties being sold in Spain are made by people that are not Spanish citizens (87,000 out of 583,000). Around 27,000 homes are bought each year in Spain by non-EU residents (10% of those are British).
Surely taxing these individuals is just a drop in the ocean and will actually just allow EU residents to then capitalize themselves. It doesn't make any sense to us or any of our partners, so this all just may be scaremongering to lower the swell. But in any case, change does clearly need to be made.
Abolishment of Spain's Golden Visa confirmed
On January 2nd 2025, Spain also announced the elimination of its Golden Visa programme on April 3rd 2025, a full year after it was approved by a close call of just 7 votes (177 v 170).
If you already hold a Golden Visa, you will not be affected by the change. For those of you planning to retire, work or study in Spain, you too will not be affected.
Since its launch in 2013, over 14,000 Golden Visas have been issued. 90% of them have been in Barcelona, Madrid, Malaga, Alicante & Valencia. The main beneficiaries in order of allocation have been from China (50%), Russia, Iran, UK & the US.
The Golden Visa was set up following the Euro-zone crisis to attract crucial foreign investment into the country. Similar programmes that were set up around the same time have too been abolished recently (UK, Australia, Ireland & Portugal).
If you have a minimum of €500,000 that you want to invest into property in Spain and in return to get a wealth of benefits, you have just a couple of months to get those wheels in motion.
We will be releasing articles on both topics next week in case you are interested and it will be back to the currency news as normal tomorrow.
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