Following the measures already approved in Catalonia (which have increased the rates of TPO and AJD mainly in real estate transactions carried out by large holders or of significant amounts), the creation of a Complementary State Tax on the Transfer of Real Estate to non-residents in the European Union, which would amount to 100% of the purchase price of the properties, is being proposed, among other measures.
In recent months, housing taxation in Spain has come to occupy a prominent position in the tax agenda of the regional and state legislator, as a result of the rise in purchase and rental prices. In this context, some measures have already been approved and others are in the parliamentary processing phase. These measures have, in addition to a collection objective, the declared purpose of promoting affordable rents and containing certain speculative behaviour. The variety of formulas chosen, however, seems to lead to an increasingly complex regulatory environment, which may affect the competitiveness of real estate investment in Spain, especially that of non-residents, with the consequent possible increase in litigation.
At the regional level, Decree-Law 5/2025 has recently approved a battery of tax measures that profoundly modify the indirect tax treatment of real estate transfers in that autonomous community.
Specifically, in the modality of onerous property transfers (TPO) of the Tax on Property Transfers and Documented Legal Acts (ITPyAJD), the maximum marginal rate is raised from 11% to 13%, applicable to transfers of real estate whose value exceeds 1.5 million euros. In addition, a new rate of 20% is introduced applicable to the acquisition of homes in two very specific cases: (i) when the purchaser is considered a “large holder” (i.e. when they are natural or legal persons who own more than ten properties for residential use or a constructed area of more than 1,500 m² for residential use in Catalonia, or that they own five or more residential properties located in areas declared to be a residential market stressed by the Generalitat); and (ii) when a complete residential building is acquired, whether or not there is a horizontal division constituted. This increased taxation will not be applied when certain circumstances occur, such as the acquisition by social promoters or when the property is used as the purchaser’s registered office or workplace. In addition to the above, the 70% discount applicable to transfers of homes made to real estate companies for resale within a period of less than three years has been abolished; and the rate of the stamp duty (AJD) applicable when, within the framework of a transaction subject to VAT, the exemption provided for by law is waived.
These measures, which will come into force (mostly) on 27 June 2025 and have been accompanied by various reductions and bonuses (for example, in the purchase of housing by young people and certain vulnerable groups), do not constitute a generalised increase in ITPyAJD, but mainly affect a specific segment of operations with a large economic volume, typically led by foreign funds or large real estate operators. The justification of the regional legislator focuses on the need to redistribute the tax burden according to economic capacity and discourage speculative movements in the Catalan real estate market.
The aforementioned measures could raise doubts of unconstitutionality, given that they seem to affect the principles of equality, economic capacity and proportionality, with the possible impact on the principle of economic capacity being particularly noteworthy due to the increased rate of 20%. To this end, it should be stressed that the jurisprudence of the Constitutional Court requires that any differentiated treatment must have an objective and reasonable justification, especially when it introduces differences in treatment depending on the type of taxpayer. In addition, these increased rates could induce the relocation of investment to other autonomous communities.
At the same time, the bill registered on May 22 in the Congress of Deputies (currently in parliamentary processing) aims to introduce measures at the state level that substantially modify the taxation of the real estate market in Spain, especially that linked to housing. Among them, the creation of a new Complementary State Tax on the Transfer of Real Estate stands out, the purpose of which would be to tax the acquisition of real estate by individuals or entities not resident in the European Union at a rate of 100%, unless the acquisition is subject to and not exempt from VAT, with the aim of deterring this type of operation. especially when they refer to homes.
The introduction of this tax also raises legal and economic questions. From the perspective of European Union law, it could be considered contrary to the principle of free movement of capital enshrined in Article 63 of the Treaty on the Functioning of the European Union (which also protects non-EU nationals). In addition, from the point of view of Spanish domestic regulations, this new tax raises doubts as to its compatibility with the constitutional principles of equality, non-confiscatory and economic capacity.
Along with this measure, the bill also incorporates a reform of the system for imputing real estate income in Personal Income Tax. Specifically, it is proposed to establish a progressive scale that can reach up to 3% of the cadastral value of non-leased properties (almost tripling, in some cases, the percentage currently applicable). This reform aims to encourage the incorporation of the unoccupied real estate stock into the rental market, introducing progressivity criteria based on the value of non-productive properties.
At the same time, a complex regime of tax benefits for landlords of housing in the Personal Income Tax is introduced, in which very different percentages of reduction in net income will coexist (100%, 95%, 90%, 85%, 70%, 60% and 50%) depending on the combination of various variables (age of the tenant, location of the property, first lease, amount of rent, etc.); This can lead to the regulations being unintuitive and difficult for many taxpayers to apply, with the consequent greater risk of involuntary errors in self-assessments and legal uncertainty in the application of incentives, which could, in practice, limit their effectiveness.
Added to all this is the announced intention to modify the indirect tax treatment of tourist rentals, in order to rationalize the tourist use of the housing stock. Specifically, the application of the general rate of 21% VAT to this type of accommodation is proposed, especially in municipalities with more than 10,000 inhabitants, which would represent a significant change that could affect short-term rentals compared to the traditional hotel sector. However, taxing this type of activity can open the door to the deductibility of VAT paid by operators, thus solving one of the main problems that exist in this type of investment.
Another central piece of the bill lies in the possible modification of the special tax levy applicable to Listed Real Estate Investment Companies (REITs) on undistributed profits from the rental of homes, raising their amount from the current 15% to 25%. However, a 50% reduction in this taxation is foreseen if more than 60% of the housing stock is allocated to affordable rent; and 100% if, in addition, the profits are reinvested in new properties for that purpose within three years. The application of this rule depends on what is meant by affordable price for these purposes, which may be subject to subjective assessments.
In short, the new package of fiscal measures (both those approved and those that are in the pipeline) reflects a determined political will to intervene in the housing investment market in Spain through tax tools, which can have effects on legal certainty and other constitutional principles. It is therefore advisable to keep an eye on the evolution of the proposals and their subsequent application, if any.
