TAX LAW
On May 22, 2025, the Socialist Parliamentary Group submitted a bill proposal with significant implications for the real estate market. Among the new measures, three major tax changes stand out: a reform of the system for imputing real estate income, the creation of a new tax for foreign buyers not resident in the European Union, and an increase in the special tax rate for publicly traded Real Estate Investment Trusts (known as SOCIMIs). These measures, which aim to mobilize vacant housing, have already sparked notable debate among tax experts and economists in the sector, who foresee that this new set of tax policies will increase the fiscal burden on citizens and result in an ineffective stimulus for the real estate market.
The first affected area in the new bill proposal is directly related to the system of imputing real estate income in the Personal Income Tax (IRPF). Until now, owners of non-rented properties had to impute, as a general rule, a real estate income of 2% on the cadastral value of the property in their income tax return. For properties in municipalities where the cadastral value had been reviewed in the last 10 tax years, the percentage rate was reduced to 1.1%. If this reform proceeds, the current calculation system would disappear and be replaced by a progressive bracket system, as follows:
- Up to €100,000 of cadastral value sum: 1.1%
- From €100,000 to €500,000: 1.5%
- From €500,000 to €1,000,000: 2%
- Over €1,000,000: 3%
In short, Spaniards will face a higher tax burden for owning a second home or a vacation property.
Another key point of this bill focuses on toughening the tax regime applicable to SOCIMIs. The legal text intends to modify the fourth paragraph of article 9 of Law 11/2009, of October 26, which regulates SOCIMIs, by increasing from 15% to 25% the special tax rate applicable to undistributed profits of these legal entities, provided that these profits derive from rental housing activity.
This new measure could significantly impact the tax planning of many SOCIMIs, especially those focusing their real estate business on renting housing in major cities.
Finally, the third novelty is the introduction of a new tax into the legal framework called the State Complementary Tax on the Transfer of Real Estate to Non-Residents in the European Union. The purpose of this indirect tax is to levy the onerous acquisition by subjects (individuals and legal entities) who are non-residents of the EU of real estate located in Spanish territory.
The taxable base of this tax will be the highest of the following amounts: the reference value of the property, the declared value by the interested party, and the transfer price of the property. From the resulting taxable base amount, any mortgage debt that the buyer may have will not be deductible.
The total tax rate is 100% of the taxable base amount.
Only amounts paid as other indirect taxes (such as Transfer Tax and Stamp Duty – ITP-AJD) will reduce the total tax. Consequently, any non-EU resident wishing to purchase property in Spain will pay, in taxes, roughly the same amount as the price paid for the acquisition, which practically means paying double compared to an EU resident for buying property in Spain.
As expected, this legislative initiative has sparked controversy in the legal and tax community, as the imposition of a 100% tax rate is considered to violate the constitutional principle against confiscatory taxation.
This complementary tax will not apply to property sales when the sellers are businesses or professionals acting within their economic activity, in which case the transfer will be subject to VAT.
In summary, it will be important to watch how this bill evolves in parliament, as, as noted above, it is already generating controversy in the legal and economic sectors.
