Spain versus Portugal property investment?

Published on 11th March, 2025

You may be deciding whether to choose Spain or Portugal for your property investment, but if you are a non-EU citizen, there could be dramatic differences between the two countries' tax regimes.

In January 2025, Spain’s Prime Minister Pedro Sánchez proposed a 100% tax on property purchases by non-EU non-residents, aiming to address the nation's escalating housing crisis. This measure targets foreign investors who, according to Sánchez, acquired approximately 27,000 properties in 2023 primarily for speculative purposes, thereby exacerbating housing shortages and affordability issues for Spanish residents.

The proposed tax would effectively double the cost of property acquisitions for non-EU buyers, making Spain a less attractive destination for foreign real estate investment. This initiative is part of a broader strategy to prioritise housing availability for locals and curb speculative practices that inflate property prices. The proposal has sparked controversy.

In contrast, Portugal's property tax system remains relatively stable and continues to encourage foreign investment. The Municipal Property Tax (Imposto Municipal sobre Imóveis, or IMI) is levied annually on property owners, with rates varying between 0.3% and 0.45% of the property's taxable value, depending on the area. In 2025, the majority of Portuguese municipalities (195 out of 308) opted to apply the minimum rate of 0.3%. Notably, cities like Lisbon, Faro, and Coimbra are among those applying this minimum rate.

37 municipalities have reduced their IMI rates for 2025, these adjustments reflect a trend toward making property ownership more affordable and attractive within Portugal.

Portugal also offers tax incentives to families, allowing municipalities to reduce the IMI based on the number of dependents. This policy further underscores Portugal's commitment to supporting property ownership among residents.

While Spain is considering stringent measures to restrict property purchases by non-EU non-residents through a substantial tax, Portugal maintains a more moderate and stable property tax regime and continues to welcome international buyers with favourable residency options, a strong real estate market, and a transparent tax system.

For help with your property search, contact our knowledgeable and professional team of multi-lingual Property Advisors. Email hello@PortugalProperty.com or call us on +351 308 800 878 or 0800 014 8201 free from the UK.

Published in: Miscellaneous / Portugal Property / Property for sale in Portugal / Taxation