The European Commission has issued Spain a final warning over property tax rules that it says unfairly penalise non-resident homeowners. In a formal notice released on 23 October 2025, Brussels claims the Spanish tax code breaches EU free-movement principles by forcing foreigners to pay capital-gains tax immediately upon sale, while residents can defer payment. If Madrid fails to amend the law within two months, the case will be referred to the Court of Justice of the European Union (CJEU).
Spain has faced similar litigation before—in 2014 it was forced to change inheritance-tax rules. Tax lawyers predict that if the case reaches court the government could be ordered to reimburse thousands of expat property owners going back several years, opening claims potentially worth hundreds of millions of euros.
Regions such as the Balearics and the Costa del Sol, where foreign ownership exceeds 25 percent, are watching closely. A reimbursement wave could inject cash into local expatriate communities but strain Spain’s Treasury. Real-estate agents warn that continued uncertainty may chill purchases this winter, complicating mobility plans for executives seeking relocation housing.
Finance Ministry sources told Spanish media they will ‘study possible adjustments’ but insist the differential treatment responds to administrative practicality, not discrimination. Industry groups urge a swift compromise to avert litigation and preserve Spain’s image as an open investment destination.
Global mobility and tax teams should flag the dispute to affected assignees and consider contingency funds for possible refund claims, while monitoring parliamentary discussions on amending the tax law.
Spain has faced similar litigation before—in 2014 it was forced to change inheritance-tax rules. Tax lawyers predict that if the case reaches court the government could be ordered to reimburse thousands of expat property owners going back several years, opening claims potentially worth hundreds of millions of euros.
Regions such as the Balearics and the Costa del Sol, where foreign ownership exceeds 25 percent, are watching closely. A reimbursement wave could inject cash into local expatriate communities but strain Spain’s Treasury. Real-estate agents warn that continued uncertainty may chill purchases this winter, complicating mobility plans for executives seeking relocation housing.
Finance Ministry sources told Spanish media they will ‘study possible adjustments’ but insist the differential treatment responds to administrative practicality, not discrimination. Industry groups urge a swift compromise to avert litigation and preserve Spain’s image as an open investment destination.
Global mobility and tax teams should flag the dispute to affected assignees and consider contingency funds for possible refund claims, while monitoring parliamentary discussions on amending the tax law.
