Spain ranks among the top countries indicated as the most attractive for property investment. The number of foreign investors – including Poles – buying houses and flats on the Iberian Peninsula is growing systematically. They are attracted not only by the friendly climate and local culture, but also by attractive legal and tax solutions.
Andalusia with a friendly tax system
Spain is very attractive and welcoming to foreign home and flat buyers. Particularly important for property buyers in Andalusia is the extremely favourable tax regime in this part of Spain. With the beginning of 2023, the Government of Andalusia has decided to extend indefinitely the tax reduction on property purchases.
A very favourable solution for property buyers on the Costa del Sol is the 100 per cent property tax rebate. Andalusia is the second region in the country, after Madrid, to decide to introduce this attractive measure. From September 2022, Spanish citizens and foreigners who live in the south of the country or have a second home here, and whose net assets on Spanish territory exceed €700,000, have gained a 100 per cent rebate on the wealth tax charged.
Legal and tax arrangements mean that Andalusia remains at the forefront of Spanish regions where foreigners invest. According to official figures, this region of Spain is now home to almost 740,000 foreigners – almost half of them from Europe. Among foreign nations, the British (approx. 88,000) and Romanians (75,000) lead the way. They are followed by Italians (24,000), Germans (almost 16,000) and French (13,500).
At this point, it is also worth mentioning our compatriots who make up the Polish community on the Costa del Sol and whose share of the Spanish property market is steadily increasing. In Q4 2023. Poles were again among the TOP10 foreign nations most likely to buy property in Spain.
Mortgage credit for non-residents
Some buyers of houses and flats on the Iberian Peninsula choose to purchase them using mortgages. It is worth noting that , being a non-resident, it is possible to apply for a loan for between 50% and 60% of the value of the property. Financial institutions grant the loan by accepting the value of the property according to the estimate of the valuer chosen by the bank. The maximum loan term is 20 years, which also depends on the age of the borrower.
The credit terms currently offered by the banks (analysis based on the current offer from Banco Santander and Banco Sabadell) are as follows:
- 50-60% of the valuation of the property,
- 20 years – loan repayment period,
- 3.60% interest rate in the first year of the loan,
- Euribor +1.9% interest rate from the second year of repayment (non-eurozone customers are offered variable rate loans from the second year of repayment),
- 1% to 1.5% mortgage opening commission,
- 0.25% in the first 3 years (0% thereafter) commission for early partial or full repayment.
A paradise for “digital nomads”
A major change in the Spanish property market came with the popularisation of remote working. The government in Madrid then decided to create a mechanism to attract such workers – creating an instrument called the ‘digital nomad’ visa. This is available to non-EU citizens who work remotely for companies outside Spain.
Both self-employed freelancers with multiple clients and remote workers – employed by a single company outside Spain – are eligible for a visa. Applicants must be from outside the European Economic Area, must not be living illegally in Spain at the time of application and must not have lived in Spain in the five years prior to application.
Those wishing to obtain a visa must also prove that they have worked with their clients or company for more than three months prior to applying, and the company they work for must have been in operation for at least one year. They must also be able to show that they have an employment contract or, if they are working as freelancers, have been regularly employed by a company outside Spain and that their work can be done remotely. Applicants must also prove that they have qualifications or experience in their field. Instead of a qualification, such as a university degree or professional certificate, a minimum of three years’ work experience is required.
