Spain Targets Non-Resident Homeowners in the Canary Islands
The Spanish Ministry of Finance has set its sights on non-resident foreigners who own property in Spain but spend less than half the year in the country. The goal? To increase revenue through income tax, particularly targeting those who use their second homes for seasonal getaways. Unsurprisingly, the Canary Islands—a hotspot for international homeowners—has seen one of the highest spikes in tax collection, with a 63% rise in early 2025, totaling €63 million.
A Growing Trend in Tax Enforcement
This year’s Tax Plan explicitly prioritizes tightening regulations for non-residents, and the strategy is working. By early 2025, Spain collected €1.674 billion from this group—a 38% increase compared to 2024. This follows a pattern of rising enforcement, with annual collections exceeding €4 billion in recent years. The government, led by Minister María Jesús Montero, is also scrutinizing foreigners who should be paying full taxes in Spain due to extended stays but are still taxed as non-residents.
Who Pays and Why?
Non-residents who earn income in Spain—such as landlords renting out their holiday homes, pensioners receiving Spanish benefits, or digital nomads—must pay taxes, even if they spend fewer than 183 days a year in the country. The Canary Islands, a magnet for British and German retirees, remote workers, and holiday homeowners, ranks second in tax collection growth, trailing only Galicia. However, the influx of foreign buyers has driven property prices to unsustainable levels, exacerbating the local housing crisis.
EU Scrutiny and Local Pushback
The Spanish government’s approach hasn’t gone unnoticed. The European Commission recently reprimanded Spain for potentially violating EU principles by discriminating against non-resident taxpayers. Meanwhile, the Canary Islands government is leveraging its “outermost region” status to seek exemptions, citing precedents set by Denmark, Finland, and Malta. The outcome remains uncertain, as the EU fiercely protects citizens’ rights—including free movement and capital flow.
A Balancing Act for the Archipelago
The Canary Islands faces a delicate challenge: curbing foreign property speculation without alienating the international community that fuels its economy. With housing prices soaring and EU regulations looming, the archipelago’s next moves could set a precedent for other tourist-dependent regions.
