Since The Local Spain broke the news that the Spanish government has lodged a draft bill to charge non-EU non-resident home buyers a 100 percent tax, there have been doubts about how much this tax would be.
The Socialist government of Pedro Sánchez last week presented a draft law in the Congress which confirmed what the Spanish premier announced last January – his administration plans to slap a 100 percent tax on property purchases by non-EU non-resident foreign buyers.
This is one of several fiscal measures proposed as a way to tackle Spain’s housing crisis, but it is the one that targets third-country nationals such as Brits and Americans specifically, just as the cancellation of the golden visa scheme last April did as well.
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So how much money does 100 percent tax add up to?
Some of our readers have claimed that the 100 percent tax would double the property tax (ITP or AJD) and not the value of the property as we reported.
Up until recently, it wasn’t known how the Spanish government planned to apply this tax, but the draft bill or proposición de ley now clarifies this.
“The full amount of the tax will be obtained by applying a 100% tax rate to the taxable base,” reads the text on the new State Complementary Tax on the Transfer of Real Estate to Non-EU Non-Residents.
The taxable base of a property, or base imponible, is the value of the property.
In this case, the taxable base will be the highest of either the declared value, the market value or the cadastral reference value.
Therefore, if the taxable base of a property in Spain is €100,000, and the tax imposed on it is 100 percent, what a non-EU non-resident would pay would be closer to €200,000, double the amount.
Reputable sources such as Spain’s leading daily El País have also reported that non-EU non-residents will effectively be paying double for Spanish properties they buy. Property and legal experts such as Spanish Property Insight or Agusti Asociados confirm too that the tax will apply to the taxable base
However, the legal text does state that those who pay property transfer tax on second-hand homes (ITP) or stamp duty (AJD) on a regional level will be able to deduct this sum from that doubled amount.
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These taxes vary depending on the region. ITP for example is between 6 and 11 percent.
So for example, if a non-EU non-resident buys a €100,000 second-hand home in the Valencia region, where ITP is 10 to 11 percent, they could subtract that €10,000 or €11,000 from the €200,000 sum.
Therefore, they’d end up paying €190,000 or €189,000, instead of the €110,000 or €111,000 that Spaniards and foreign residents would pay for the home and taxes.
It’s crucial to stress that this law has not passed and may never pass given that the ruling Socialists have a weakened position in the Spanish Congress.
The same was said about the golden visa scheme however, and Sánchez’s administration still managed to slip in a legislative change to another bill which spelled the end of the residency scheme for non-EU nationals who purchased property worth at least €500,000.
