In recent years, Spain has experienced a surge in housing prices, especially in tourist-heavy regions and urban centers. This has led to growing public concern over housing affordability and the impact of foreign investment on the domestic real estate market. Among the most striking proposals recently discussed is the idea of imposing a 100% tax on property purchases by non-EU nationals—a measure intended to deter speculative buying and prioritize access for local residents. While the sentiment behind such proposals is understandable, their legal viability within the European Union framework is deeply questionable. This article explores the legal, constitutional, and practical implications of restricting foreign access to property in Spain and similar EU Member States. What Does European Union Law Allow? At the heart of this debate lies a core principle of the European Union: the free movement of capital, enshrined in Article 63 of the Treaty on the Functioning of the European Union (TFEU). This principle guarantees that citizens and companies from EU Member States may move and invest capital—including through the purchase of real estate—without unjustified barriers. Importantly, this freedom also extends to non-EU nationals, though with slightly more flexibility for national governments to impose certain limitations. Still, any such restrictions must meet the following criteria:
Be justified by a legitimate public interest, such as urban planning or preventing housing exclusion.
Be proportionate to the goal pursued (i.e., not more restrictive than necessary).
Be non-discriminatory and transparent in their application.
Align with existing EU secondary legislation, such as rules on non-discrimination and access to markets.
A blanket tax of 100% on all non-EU buyers would likely fail these tests, and could expose Spain to legal challenges at both EU and national levels. What International Precedents Exist? Other countries have experimented with similar restrictions, with mixed results:
Canada recently implemented a two-year ban on foreign homebuyers in response to its own housing crisis. However, the impact has been modest, and critics argue it diverts attention from systemic issues such as lack of supply and inadequate zoning policies.
Australia applies strict regulations to non-residents purchasing property, including requirements to obtain approval from the Foreign Investment Review Board (FIRB). Yet, the system includes multiple exceptions, especially for new builds or long-term residents, and is backed by a strong administrative infrastructure.
Spain, by contrast, currently does not restrict real estate purchases based on nationality, and any move toward doing so would represent a radical policy shift. A measure like the proposed 100% tax could:
Violate the Spanish Constitution, especially in relation to equality before the law and property rights.
Trigger infringement proceedings by the European Commission if it were deemed incompatible with EU law.
Damage Spain’s international investment climate, affecting not only real estate but broader economic confidence.
What Legal Alternatives Do Public Authorities Have? If the objective is to curb speculative buying and protect local access to housing, there are less invasive and more legally sound alternatives:
Introduce progressive taxation on second homes or vacant properties, discouraging speculative holdings without discriminating based on nationality.
Expand affordable housing programs, particularly in high-demand areas, through public-private partnerships or social housing initiatives.
Implement urban planning measures that promote sustainable development and limit over-tourism-related gentrification.
Create incentives for long-term rentals, instead of short-term tourist accommodations, to stabilize local communities.
Such measures align more closely with EU law and constitutional principles, while still addressing the root causes of housing pressure. How Can Dr. Frühbeck Abogados Assist? At Dr. Frühbeck Abogados, we advise foreign investors, real estate developers, public institutions, and private clients on navigating the complex legal landscape of real estate acquisition in Spain. Our team offers:
Regulatory risk analysis for cross-border investments.
Legal structuring of real estate transactions to ensure compliance with EU and Spanish law.
Advice on property taxation, planning, and development.
Representation in constitutional or administrative litigation should controversial housing measures be challenged.
We help clients understand not only what is possible, but what is sustainable—from both a legal and reputational standpoint. Whether you're a policymaker evaluating housing reforms or a foreign investor interested in the Spanish market, having experienced legal counsel is essential.