The European Commission warned Spain on Wednesday April 28th that it is violating the free movement of capital by taxing non-resident taxpayers on homes they use as their primary residence in Spain.
It cautioned Spain saying that if the situation is not changed within the next two months, it will take the case to the European Court of Justice.
In Spain, non-residents must pay taxes on their properties, equal to two percent of the cadastral value, while resident taxpayers in Spain are not subject to this tax if it's their habitual residence.
The European Commission believes that these rules relating to the taxation of non-resident taxpayers on their primary home in Spain undermines the free movement of capital within the EU.
Back in June 2025, the European Commission opened a formal case against Spain, criticising the way in which the Treasury taxes non-resident property owners.
Back then, Brussels called it "discriminatory" for Spain to tax non-resident foreigners on the value of their Spanish homes.
This is because non-residents are charged the above tax, even if they don't earn income letting them out. They are essentially charged a tax for theoretical income.
The issue is that often it’s these non-residents’ only home in Spain, not their second home. This means it will be their habitual residence during the periods they spend in Spain, thus their 'primary home in Spain'.
Because Spain didn’t make any moves to rectify this after the first warning, the EU have now decided to issue Spain a deadline, giving them two months to change it.
If the Spanish government still doesn’t take action, the European Commission said it will move on to the third and final phase of the infringement procedure, which consists of filing a formal complaint with the European Court of Justice (CJEU).
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