Spain Considers Hefty Surcharges on Empty Second Homes

Spain's government is contemplating significant tax surcharges on empty second homes, a move that could heavily affect British expats and other foreign property owners. Under the proposed measures, properties left vacant for three years could face a 100% tax, while those empty for two years might incur a 50% surcharge. Homeowners with multiple properties could potentially see their tax burden increase by up to 150%.

These proposals, reportedly from the Spanish Socialist Workers' Party, aim to empower local authorities to impose additional taxes on properties. Town halls in areas struggling with overtourism may also be permitted to charge holiday homes higher council taxes, alongside a 10% Value Added Tax (VAT).

Currently, property owners in Spain pay the Impuesto Sobre Bienes Inmuebles (IBI), a municipal property tax that varies from 0.4% to 1.3% based on the property's value and the municipality's tax rate. The proposed surcharges would apply to Spanish residents, non-residents, holiday home owners, and companies owning property.

Alex Radford, from My Lawyer In Spain, suggested to The Telegraph that while the law allows town halls to adjust local rates for tourist properties in areas with high housing demand, he views the proposed measures as insufficient. He argued that Spain needs to focus on building more properties and streamlining the planning permission process.

Spain has been grappling with a housing shortage, exacerbated by its popularity among foreign buyers seeking rental properties. In 2023, non-EU residents purchased approximately 27,000 properties. Official data indicates that around 321,000 homes were listed as holiday rentals in November 2024, a 15% increase since 2020, with many more believed to operate without official licenses. British nationals continue to be the largest group of foreign property buyers in Spain, accounting for about 8% of all foreign purchasers last year.

These potential tax changes come as Spain is projected to become the world's most-visited country by 2040, potentially surpassing France. Research from Deloitte and Google forecasts Spain to welcome 110 million inbound visitors, compared to France's projected 105 million. This surge in tourism, while economically beneficial, has intensified issues of overtourism, leading to protests in regions like Majorca. Residents have voiced concerns over rising housing costs driven by holiday rentals and foreign-owned second homes, as well as increased congestion in local towns and villages.