Spain

Foreign ownership

ITP (Impuesto sobre Transmisiones Patrimoniales) — resale property

ITP is a regional tax and varies sharply: Madrid 6%; Andalusia flat 7%; Catalonia 10% on the first €1m and 11% above; the Balearic Islands run a progressive scale reaching 11–13% at higher brackets, making the islands the most expensive region for transfer tax; Valencia reduced from 10% to 9% effective 1 June 2026 (11% for properties above €1m) under Ley 5/2025. Two properties of identical value can carry tax bills differing by tens of thousands of euros depending purely on which autonomous community they sit in.

IVA (VAT) + AJD — new-build property

New builds are subject to VAT instead of ITP: 10% for residential, 21% for commercial/land. AJD (stamp duty on the notarised deed) runs 0.5%–1.5% by region — Madrid at the low end (0.75%), Catalonia and Aragón at 1.5%. Valencia cut AJD to 1.4% from 1 June 2026.

Notary, land registry, legal

Notary fees 0.2%–0.5%; land registry 0.1%–0.25%; legal fees typically ~1%.

Total transaction cost

Global Property Guide puts Spanish roundtrip costs at 10.5%–20%, among the higher ranges in Europe. Most practitioner sources converge on 10%–13% for a typical resale purchase.

Gross yield range

Rental income tax

This is the single most punitive feature of Spanish property for non-EU capital. EU/EEA non-residents pay 19% on NET rental income after deducting mortgage interest, IBI, community fees, insurance, maintenance and management costs. Non-EU non-residents (which includes UK, US, UAE, Indian and all other non-EU nationals post-Brexit) have historically paid 24% on GROSS income with NO deductions permitted. On a property with significant costs, the effective tax burden is dramatically higher than the headline 5-point rate gap suggests.

A Spanish National High Court ruling dated 28 July 2025 indicates non-EU non-resident landlords MAY now be able to deduct qualifying rental expenses under IRNR, subject to the filing position and documentation. This is a developing area — the practical availability of deductions for non-EU landlords should be confirmed with a Spanish tax adviser before relying on it.

Imputed income tax

Spain taxes non-residents on the THEORETICAL rental value of a property even if it is never let. The calculation is typically 1.1% of the cadastral value, taxed at 24% for non-EU non-residents — roughly 0.26% of cadastral value per year. A holiday home used twice a year still generates an annual Spanish tax return and liability. Foreign buyers routinely fail to anticipate this.

Capital gains tax

Global Property Guide and several Spanish tax practices state a flat 19% for all non-residents regardless of EU status; other sources (including Wise) state 24% for non-EU residents. This is a genuine and unresolved discrepancy across otherwise credible sources and must be verified with a Spanish tax adviser for the specific case. In all cases: the BUYER withholds 3% of the total sale price (not of the gain) at closing and remits it to AEAT via Modelo 211 as an advance against the seller's liability; the seller then files to settle or reclaim the difference within 4 months. A separate municipal plusvalía tax also applies on sale.

Annual property tax

IBI is the municipal annual property tax, levied on cadastral value (typically 30–60% below market value). Separately, Spain levies a WEALTH TAX on Spanish-situated assets for non-residents — the exemption threshold is typically €700,000, but is regionally set (Madrid offers 100% relief; Catalonia's threshold is €500,000; the Balearics €3,000,000). Above €3,000,000 of Spanish net wealth, the national Solidarity Tax on Great Fortunes applies at 1.7%–3.5%. Foreign owners of high-value Spanish property frequently overlook this entirely.

Residency pathway

CRITICAL: Spain's investor Golden Visa — which granted residency for a €500,000 property purchase — was permanently closed to new applicants on 3 April 2025 under Organic Law 1/2025, which stripped Articles 63–67 of Law 14/2013 of all content. Buying Spanish property, at any value, confers NO residency. The closure was driven by housing-affordability politics. Existing holders are grandfathered and may still renew and progress to permanent residency (5 years) and citizenship (10 years). Applications filed before the cut-off may proceed under the old rules.

Residency now requires a separate visa on its own merits: the Non-Lucrative Visa (requires roughly €28,800/year in passive income for the main applicant, 2026), the Digital Nomad Visa (roughly €2,850/month gross), or an entrepreneur/startup route. Owning a home supports such an application practically — it provides an address — but is never the legal basis for the permit.

Proposed non-EU buyer tax

In January 2025, Prime Minister Pedro Sánchez announced the government would explore a tax of 'up to 100%' on property bought by non-EU, non-resident buyers. A draft bill was submitted to Parliament in May 2025. The measure has been widely and badly misreported as a literal doubling of the property price — it is better understood as a proposed complementary state tax that would sharply increase the effective transfer-tax cost for non-EU non-resident buyers of RESALE property. TWO POINTS MATTER: (1) It is NOT law. It requires full parliamentary passage. (2) The government does not command an absolute majority, several parties have signalled opposition, and tax practitioners broadly regard passage in the original severe form as unlikely. Any such tax would apply only to new purchases, not existing owners. This should be tracked, not panicked about — but it is a real signal of political direction toward non-EU capital.

Market conditions

Spanish house prices surpassed the mid-2000s peak in 2025. CaixaBank Research forecasts the INE transaction-price index to rise 10.1% in 2026 and 5.5% in 2027. The accumulated housing deficit exceeds 730,000 homes, nearly half concentrated in Madrid, Barcelona, Valencia, Alicante and Murcia. Foreign buyers accounted for nearly half of all transactions in Alicante province. The market is described by BBVA Research as entering a 'mature' phase — demand fundamentals stay constructive but transaction growth is increasingly limited by supply shortage and affordability.