Last updated: March 2026
⚡ Key Facts
→ The 100% tax has not passed. UK buyers can still purchase in Spain today under existing rules.
→ Fiscal residency matters, not passport — EU citizenship alone does not exempt you.
→ A Spanish company structure may offer protection regardless of what legislation passes.
When the headlines hit in early 2025, I thought the Spanish dream was over.
I’d been months into the process of buying in Alicante. I’d done the research, found a sourcing company I trusted, started setting up a Spanish company. And then: “Spain to introduce 100% tax on non-EU property buyers.” My stomach dropped. There was no way we could absorb a tax that size on top of everything else — especially after watching prices surge in Valencia and feeling like we’d already missed one window.
I had a few days of genuine sadness. Then I started digging into what was actually being proposed.
What the proposal actually says
In January 2025, Prime Minister Sánchez announced a proposed 100% tax on property purchases by non-EU residents as part of a housing affordability package. The measure was formally submitted to parliament in May 2025.
As of early 2026 it has not been passed into law. Most legal and tax experts following the legislation closely believe it is unlikely to pass in its current form — it faces significant parliamentary opposition and would require coalition support that currently isn’t there. A more moderate additional surcharge of 10–20% on top of the existing 10% ITP is considered more plausible if anything does pass.
UK buyers can still purchase property in Spain today under existing rules.
The EU passport misunderstanding
This is worth clarifying because it catches people out. I actually hold EU citizenship through my German heritage, and my partner is French. You might assume that makes us exempt.
It doesn’t. What matters is fiscal residency, not passport. We are tax residents in the UK, and that is what the proposed legislation looks at. To benefit from EU buyer status we would need to actually live in Spain — which simply isn’t feasible for us right now.
If you have an EU passport but live and pay taxes in the UK, don’t assume you’re protected. Check your fiscal residency status with a qualified adviser before making any assumptions.
The company structure solution
Here’s what changed everything for us. Business purchases through a Spanish company are subject to VAT rather than ITP — and the proposed measure as currently drafted applies to ITP transactions. A Spanish company is, in a sense, a Spanish entity. It falls outside the scope of the proposal.
This isn’t a loophole. It’s a legitimate structural choice that many buyers make for entirely separate reasons — tax efficiency, inheritance planning, long-term asset protection. The potential legislative protection is an additional benefit, not the sole reason to do it.
Setting up a Spanish company costs more upfront and carries ongoing accountant fees. But as a long-term investment in an asset we plan to hold and grow, the additional cost felt justified. We felt protected in a way that a personal purchase simply wouldn’t have provided.
I’ll cover the full company vs personal buy decision in a separate post — but if the tax proposal is what’s making you hesitate, the company route is worth understanding properly before you decide anything.
The sense of now or never
I’ll be honest: the tax proposal accelerated our decision. The combination of rising prices — Valencia had already moved beyond our budget in the time we’d been researching — and the looming legislative uncertainty created a genuine sense that the window was closing.
That urgency led us to move quickly when the right solution appeared. In retrospect I think we made the right call, but I’d caution against making any major financial decision purely from fear. Do the research. Understand the structure. Then decide.
The Spanish dream isn’t over for UK buyers. But the landscape is changing, and the buyers who understand the structure will be better positioned than those who don’t.
What to do right now
→ The existing rules apply today — 10% ITP, standard process.
→ Take the company vs personal buy decision seriously — it has implications well beyond the tax proposal. Read my guide to setting up a Spanish company as a UK buyer.
→ Watch this space — I’ll update this article as the legislation develops.
→ Always get advice from a qualified Spanish tax adviser before making any purchase decisions. This article shares my personal experience and research, not legal or financial advice.