The Spanish government has presented a draft bill aimed at addressing speculation in the housing market through a series of fiscal measures, including the ‘supertax’ on non-EU non-resident property buyers. Here are all the proposed new taxes.
The draft bill registered at the Spanish Congress plans aimed at limiting the number of short-term tourist apartments in Spain, something many blame for rising rental costs, while ensuring the availability of public housing stock, incentivising lower rental prices and, most headline-grabbing of all, curbing home purchases by non-resident third-country nationals.
In order to do this the Spanish government is further tinkering with tax rules to essentially double the price for non-EU, non-resident foreigners buying property in Spain.
As reported by The Local last week, according to the legal text for the so-called “Complementary State Tax on the Transfer of Real Estate to Non-EU Residents”, this tax “will be obtained by applying a 100% tax rate to the taxable base”, which is the value of the property.
READ MORE: Spain pushes forward with tax that will double property price for foreigners
The 100 percent tax has caught international media coverage, but the bill also includes several other policies and tax changes that the Spanish government hopes can help the property market.
Tourist flat tax hike
Among the proposed measures are an increase in VAT on holiday apartments to 21 percent, so that they are there taxed as any other economic activity.
The idea is to try and make tourist rentals a less attractive option for landlords, who can currently make a lot more money than renting out to locals long term.
Currently, landlords who rent out Airbnb-style properties that do not provide typical services similar to a hotel (cleaning, meals, laundry) are VAT exempt.
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Extension to IRPF rebates in ‘non-stressed’ areas
Similarly, the extension of the net rental yield rebates for IRPF is included, which can reach 100 percent in areas that have not been declared ‘stressed’ rental markets.
This deduction will be made available for owners who rent properties below the reference price on Spain’s state rental index.
Property investment companies taxed more
The draft also proposes to tighten taxation on listed real estate investment companies (known as SOCIMIs in Spain), which would go from being taxed at 15 to 25 percent, except in the case of homes intended for rent at affordable prices.
Updating capital gains tax
The proposed law also includes an update to rates and quotas for the Increase in Urban Land Value tax (known as plusvalía) following a recent constitutional court ruling, though the details are still unclear.
READ ALSO: What you need to know about Spain’s plusvalía tax on property sales
Penalising empty properties
There are also a range of measures to penalise landlords who keep empty properties, especially if they hold large real estate portfolios. The government argues this is a way of encouraging them to rent them out to local people as taxes levied on empty properties will be increased.
Rates currently range between 1.1 percent and 2 percent. For this reason, greater progressivity will be established by introducing more tax brackets, the percentage of which will be updated in coordination with the Ministry of Finance.
