Under the draft bill agreed by Germany's cabinet, EU citizens who fraudulently receive social benefits will be sent home and temporarily prohibited from re-entering Germany.
Citizens of other EU countries in Germany would also be expected to find work within six months of arriving, as part of the proposal that is yet to be passed by the country's national parliament.
The move backed by Chancellor Angela Merkel is also being pushed hard by her conservative coalition allies the CSU, who have used the slogan "those who lie, fly".
"This is basically a populist move," Frankfurt-based Spanish lawyer José Tortell told The Local.
"And while it's directed primarily against the workers from Eastern Europe, it will also seriously affect Spaniards," he said.
Germany's interior minister Thomas de Maiziere on Tuesday said Germany, Europe's largest economy, was not limiting the free movement of people within the EU, a core principle of the 28-nation union.
But Tortell believes the proposal contravenes EU laws that allow for people to seek work in other countries.
If a law is passed it could affect thousands of Spaniards who have moved to work in Germany. Around 6,500 Spaniards are currently receiving unemployment benefits in Germany.
"While Germany's economy is far healthier than Spain's, the crisis has still hit hard, and finding work is not always easy," Tortell said.
But the lawyer also conceded that many of the — mostly young — Spaniards who moved to Germany already had fixed employment contracts, with the health sector being the biggest hirer.
A total of 44,119 people left Spain for Germany in 2013, 19 percent more than the previous year, figures from Germany's official stats body show.
With youth unemployment currently over 50 percent in Spain, more and more young Spaniards are leaving for countries with better work prospects or with the goal of adding another language to their CVs.