Could France follow Spain’s plan for 100% tax on non-EU buyers of second homes?

The Spanish prime minister has announced plans for a new tax on second-home property purchases in the country by non-resident, non-EU citizens, which may reach up to 100% of the home’s value in some cases.

It is part of a wide ranging reform to combat a mounting housing shortage in the country.

Other measures include an expansion of social housing – only 2.5% of housing in the country is currently set aside for this purpose – and incentives for owners who renovate and let out their properties at affordable rates. In comparison, 15.9% of main homes in France are social housing. 

There will also be attempts to crack down on short-term holiday rentals, an area where France has recently introduced tougher laws.

Read more: AirBnb rental laws to be toughened in France 

“The west faces a decisive challenge: to not become a society divided into two classes, the rich landlords and poor tenants,” said Spanish prime minister Pedro Sánchez at an economic forum in Madrid where announced the measures. 

“In 2023 alone, non-European Union residents bought around 27,000 houses and flats in Spain. 

“These were not to live in or for their families to have a place to live; they did it to speculate, to make money from them, which we – in the context of shortage that we are in – obviously cannot allow,” he said. 

The plans are yet to be finalised and approved by the Spanish parliament. 

Housing costs in the EU have risen 48% in the last decade, said the EU in a 2024 report on the housing crisis.

Will France bring in similar rules?

Currently, France has no plans to introduce such a charge on non-EU property buyers.

In comparison to the figures in Spain, the number of non-resident EU home buyers in France over the same period was lower.

Britons (the largest non-resident EU buyers) purchased 2,341 properties in France in 2023 according to the Crédit commercial de France (CCF), with Americans the next highest group with 863 purchases. 

The majority of non-French resident buyers came from within the EU including from Belgium, Netherlands, Germany etc, so would not be subject to a Spanish-style tax.

Read more: Britons no longer the biggest group of foreign homebuyers in France

Housing crisis does exist in France

However, this is not to say that France is not facing a housing shortage of its own.

There are thousands of communes in France listed as facing a housing shortage (zone tendue), including 28 major agglomerations covering the largest cities. 

A change to the rules in 2023 saw the previous limit on population size for zones tendues (50,000) abolished, adding over 2,000 additional communes to the possible list that can be classed as a commune with a housing shortage for taxation purposes.

A list of the communes can be found here in the Journal Officiel.

In addition, you can use this online government tool to see if your property is located in a zone tendue by inserting your address.

Surcharges on second-home property tax (taxe d’habitation) are possible on properties situated in a zone tendue. These can add up to an additional 60% on the original tax sum. 

Read more: More owners will pay French empty home tax in December 2024

Properties in zones tendues can be subject to limits such as rental caps and plans to promote long-term renting rather than short-term holiday lets. 

Read more: France expands number of areas that can bring in rent controls

Conversely, residents looking to purchase a home in these areas, or buy-to- (long-term) let landlords may receive incentives such as a zero-interest loan to purchase properties.

Are there limits on non-EU buyers in France?

There are no official limits on non-EU residents purchasing properties in France. 

However, banks are historically more cautious to lend money to this group to purchase a home in France – particularly if they do not speak French – meaning the deposit requested may be higher.

Read more: Can non-EU residents get a mortgage to buy French property?

In addition, non-EU residents will still be limited by the amount of time they can spend at the property, as purchasing a home does not grant an individual the right to live in France.