Investment in Spain

Spain is one of the most developed and economically stable members of the European Union. Its real estate market is thriving. Its financial, industrial, technological and healthcare sectors are rapidly evolving. This country quickly overcomes the consequences of crises. If you decide to invest here, you'll get a handsome ROI. Moreover, you may become eligible for a Spanish passport. In this overview, we'll focus on the opportunities for business and property investment in Spain for foreigners.

Specifics of the National Economy

Over ⅔ of the local economy account for the tertiary sector. Around ¾ of all the employed residents belong to it. The banking industry consists of a dozen groups of institutions. Yet tourism outperforms banks by its contribution to the national GDP. This country is the runner-up on the global list of the most popular tourist destinations. Over 80 million individuals visit it yearly to relax, unwind and admire its sights.

⅕ of the workforce have jobs in the industrial sphere. They manufacture fabrics and processed alimentary products. They produce electronic components, steel and various types of machinery. Telecom, renewable energy and IT are rapidly evolving. The industry is responsible for ¼ of the GDP.

The agricultural sector employs less than 5% of all the active residents and contributes less than 5% of the GDP. Livestock, crops, fruits, wine and olives bring the highest tax revenue.

Nearly ⅔ of the GDP comes from foreign trade. The demand for Spanish export goods comes predominantly from its closest EU neighbours and the UK.


Spanish taxes are notoriously high. It doesn't make sense to invest in real estate here if you're planning to resell your property soon. Be ready to pay a tax when you:

  • Become the new owner of a house, apartment, plot of land or commercial building,

  • Keep using it for yourself,

  • Rent it out to third parties,

  • Sell it.

Those who opt for second-hand properties pay a tax for the transfer of the ownership right. Its amount might be up to 1/10 of the property's price.

Customers who prefer recently built properties pay VAT for them. Again, it might be up to 1/10 of the property's price. Plus, there will be a tax on documented legal acts. Its maximum amount is 1.5%. The exact number is determined by the local authorities.

Now, let's concentrate on income tax. You pay it for the fact of being the owner. The standard amount is 2% of the property's price. It decreases to 1.1% if the property's cadastral value has grown since 1994. This number is to be multiplied by 24% for owners who spend most of their time abroad. For residents, the multiplier varies from 15% to 24%, depending on how wealthy they are.

Let's resort to an example to explain how to calculate it. Imagine that you buy a €150,000-worth property. Its cadastral value hasn't increased since 1994, so we take 2% of its price. The owner lives abroad, so the multiplier is 24%. €150,000 x 0,02 x 0,24 = €720.

Be ready to pay this tax yearly. You'll be exempt from it if you relocate to Spain to live here permanently and don't have any other house or apartment. If you have a second property in this country, the authorities assume that you rent it out. That's why income tax becomes relevant.

Those who stay in the country all year round can minimize their expenses. First, they register their second properties as tourist rentals. Second, they categorize the costs for maintaining them in decent conditions as business expenses. If you're planning to live mostly abroad, this trick won't work.

Foreigners sometimes ask why Spain makes them pay a tax for selling their properties. The logic is simple: you return the capital gain. European residents lose approximately ⅕ of their profit because of this tax. Those who spend most of their time in Spain can claim tax relief. Expats who live abroad have to sacrifice approximately ¼ of their profit. The exact sum depends on the answers to two questions. For how many years did this house, apartment, plot of land or commercial building belong to you? How significantly has the price of the property risen under your ownership?

Those aged 65 or more are exempt from this tax when they get rid of their only homes. Those who are younger don't pay this tax if they meet one condition. It's if they sell their primary home to get another one.

The wealth tax might cost you up to 3.5%, depending on how rich you are.

Investments in Housing

Being a foreigner, you have a right to either use your Spanish property for yourself or rent it out. It doesn't matter whether you hold a local residency or not. The crucial factor is the renting permission. Not all houses and apartments are suitable for short-term tourist rentals. If you violate this rule, you'll get a fine.

Platforms that publish ads about tourist rentals report to the authorities about property owners whom they work with. It would be hardly possible to keep your economic activities secret. 

Investment in Spain: Business and Commercial Real Estate

Before investing in local business and commercial real estate, it would be smart to find out which sectors are expected to boom in the foreseeable future.

  • IT. Cybersecurity, video games and digital transformation are among the most thriving niches. IoT, big data, metaverse and cybersports have great perspectives too. IT professionals need premises to place their rigs (servers, data centres, mining equipment and so on). Cybersportsmen require spaces where they could gather to practice and take part in competitions.

  • Digital marketing. Companies from this sphere hardly go public. But they need stylish premises to arrange meetings with their clients and partners. Their offices serve as a meaningful element of their corporate style. Their goal is to impress the visitors.

  • Smart cities. This sector is far from being saturated yet. The competition in it is not too fierce but it's bound to increase. Sevilla and Malaga set the bar for other cities. Cutting-edge urban development projects have already been launched there. They strive to enhance the technological, social and economic landscapes of these locations. In the future, the prices for properties in smart cities and urban areas are expected to skyrocket.

Professionals from the three above-mentioned niches tend to work remotely. Nevertheless, some employers insist on the physical presence of their staff members in brick-and-mortar offices. Even remote workers might be required to attend face-to-face meetings from time to time. This type of workforce appreciates central locations with good transport accessibility. They love premises with a lot of natural light, so panoramic windows would be a big boon. Their ideal office features a leisure area where workers can play games or have a nap.

Spanish Citizenship by Investment

Foreigners can become local residents and then citizens by buying property in this Mediterranean country. It doesn't matter whether it's a commercial building or a stylish penthouse. Moreover, you may get a plot of land to build something or grow something on it. The exact location of your land or property is not important.

The primary prerequisite is that you should spend at least half a million euros on your purchase. It's the most budget-friendly option for acquiring residency. If you opt for buying shares of local businesses, be ready to spend twice as much — and 4 times as much if you prefer government bonds.

The immigration law gives you an opportunity to distribute that half a million euros over several properties. Let's say, it can be several apartments or a house and a garage. Please mind that you'll need to pay the full sum from your own pocket. Mortgage won't make you eligible for residency.

First, you'll be granted a residence permit for two years. It's twice as long as most other types of permits that enable foreigners to stay on Spanish territory. When this document will be about to expire, feel free to renew it. After you've spent five years here, your residency will be qualified as a permanent one. Ten years after the deal, you may become a local citizen. It's vital to remain the owner of your property during all this time.

Other varieties of resident permits would require you to spend most of your time in Spain. This rule is not relevant for property investors. You'll be required to visit the country just once per 12 months. If you want to work here, you'll be allowed to become employed.

Terms for Obtaining Permanent Residency by Investment

To qualify for the local residency, it's essential to tick these boxes:

  • Come of age,

  • Have been fully law-obedient in the previous 60 months,

  • Prepare medical insurance and a medical certificate,

  • Be financially sustainable,

  • Have a registered residency address.

The last point from this list contains valuable insight. It explains why houses and not offices generate the highest demand among foreign buyers.


The set of required papers includes:

  • An application (fill it in and sign it),

  • 2 photos (colored, 3.5 x 4.5 cm),

  • A passport,

  • Copies of all passport pages,

  • Proof of the fact that you have never been involved in criminal activities,

  • Proof of the fact that states who have signed visa-free agreements with Spain allow you to enter their territories,

  • A visa,

  • Health insurance,

  • Proof of investment,

  • Proof of financial sustainability.

In 2023, an individual is considered financially sustainable if they make at least €600 monthly or have accumulated at least €7,000 in savings.

The formula for calculating the sustainability threshold for a family is simple. Take the minimum required sum of savings or the amount of the monthly income. Multiply it by the number of persons mentioned in the application. If you have a wife and two kids, your family should earn at least €600 x 4 = €2,400 monthly. Alternatively, you may have at least €7,000 x 4 = €28,000 in savings.

If your dearest and nearest depend on your finances, feel free to mention them in your application (kids and parents). Your spouse, if you have him/her, doesn't have to compose a separate application either. If you haven't tied the knot officially yet, it's not obligatory. It would be enough to prove that you've been together for a while.

It's vital to submit the papers personally. Get an investment visa and head to the Migration Service office. Be ready to wait for up to 50 days for the final decision of the authorities.

Real Estate Market Trends

The demand for Spanish real estate has been continuously growing. 2021 was a record-breaking year: property sales were at their highest within the last 14 years. Nearly ⅕ of all purchase contracts were signed by foreigners. Most buyers arrive from the UK and Germany.

The prices have skyrocketed. Foreigners typically pay €2,500 per square meter. In the capital, the average price per square meter is €4,923. Some people believe it would be reasonable to postpone the purchase and wait until the bubble bursts. This seems to be an erroneous approach. There is no bubble on the market currently. The economic situation on the international level is too unstable. Most likely, the prices will slow down. There might be fewer sales in 2023.

The "Best place to invest in Spain" ratings show that most deals tend to take place in five locations. These are the Balearic Islands, Canary Islands, Andalusia, Cantabria and Valencia.

The supply might fail to satisfy the demand. Only around 145,000 new homes are supposed to be built in 2023. Many of them will have solar panels and other energy-efficient features. They might cost more from the onset — but their owners will save on utility bills in the long run.

We won't focus on mortgage rates in this overview. But we'll mention that they're very affordable now, especially the fixed ones.


Real estate insurance might be mandatory only if you apply for a mortgage. Otherwise, it's up to you to decide whether to insure your property or not. It would be wise to do so to protect your investment from different varieties of damage. These include flood, fire, natural disasters and defective workmanship.

If you purchase an apartment in a block, your service charges might include insurance. In most cases, it can't substitute the full insurance that you buy on your own. Please double-check its conditions with the vendor.

Do Foreigners Have a Right to Invest in Spain?

People from other countries have a right to invest in local real estate and the economy on par with locals. The trickiest thing for foreigners is to pick the genuinely best purchase option and avoid excessive costs. It would be wise to resort to professional investment services to save your time, nerves and funds. When organized properly, your real estate or other assets in Spain can bring you decent revenue in the long run. If you're planning to use them for yourself, you'll have a great time! But mind that investment in Spanish real estate makes sense only in the long run.

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