Sanchez destined to fail

Increase in Spanish Property Tax Doomed to Fail?

The Spanish government still hasn’t managed to secure the parliamentary backing it needs to push through its controversial proposal to impose a 100% property tax on non-EU buyers.

What began as a bold political gesture from Prime Minister Pedro Sánchez in January has quickly turned into a legislative quagmire – and one that looks increasingly unlikely to succeed.

A Policy Stuck in Limbo

The idea first surfaced as a punitive levy equal to the full value of any property purchased by non-EU citizens. Weeks later, the rhetoric escalated to suggestions of an outright ban. By late May, the Socialist party tabled a draft law in Congress, reverting to the 100% property tax model. Since then, however, progress has stalled.

The measure was wrapped into a broader housing package containing sweeteners for landlords who rent at below-market rates, tweaks to the tax status of SOCIMIs (Spain’s listed property investment companies), and higher VAT on tourist rentals. Yet, despite the package, the non-EU buyer tax has become a political flashpoint.

Conservatives are firmly opposed to new property taxes, while left-wing factions argue that the plan still doesn’t go far enough. The result? Political deadlock.

Mixed Messages from the Regions

Adding to the confusion, some regional governments have flirted with their own restrictions. In June, the Catalan parliament passed a motion urging limits on non-resident foreign buyers, while in the Canary Islands local politicians are considering similar measures.

But without a national framework, these regional initiatives remain symbolic gestures rather than enforceable policy.

The European Legal Roadblock

Even if Sánchez were able to rally a majority in Madrid, the plan faces a formidable obstacle in European law. The EU guarantees the free movement of capital, and the European Court of Justice has repeatedly struck down discriminatory measures targeting foreign buyers.

Austria and Hungary both attempted comparable restrictions in the past—both failed under EU scrutiny. Spain would almost certainly face the same fate.

Likely Outcome: More Talk Than Action

Nine months on from the Prime Minister’s headline-grabbing announcement, the proposal remains mired in uncertainty. For now at least, non-EU buyers can breathe easy. The political and legal hurdles appear too high, and the government seems unlikely to transform tough talk into enforceable law.

In short: the Spanish property tax increase on foreign buyers looks doomed to fail—at least in its current form.