Spain is making significant changes to its tax and immigration policies, impacting both minimum wage earners and foreign investors. On March 28, 2025, the Ministry of Finance and Ministry of Labour announced an agreement that will exempt workers earning the national minimum wage (SMI) from paying income tax (IRPF) starting in 2025. This decision comes in response to a recent wage increase and aims to protect low-income earners from financial burdens.
The SMI was raised by €50 in February 2025, bringing it to €1,184 across 14 payments annually. Initially, Treasury estimates indicated that about 20 percent of SMI recipients, primarily single individuals without children, would be liable for income tax. However, the Labour Ministry strongly opposed this stance, insisting that no SMI earner should face taxation under the revised income thresholds. The final agreement reflects this position, ensuring that all minimum wage earners will benefit from the tax exemption. The measure is expected to cost public coffers between €1.5 and €2 billion but is deemed necessary to maintain the purchasing power of those at the lowest income levels.
In a parallel development, Spain's Golden Visa program is set to undergo a major transformation. Starting April 3, 2025, the residency option through real estate investment will be eliminated, a move that has raised concerns among foreign investors. The Golden Visa program, which has been available since 2013, has attracted significant foreign investment, generating over €1 billion annually. This program allowed non-EU citizens to gain residency by purchasing property in Spain, but the government is now shifting focus to other investment options.
Spanish Prime Minister Pedro Sánchez emphasized that the removal of the real estate investment option aims to address housing speculation and promote housing as a fundamental right. Critics of the program have argued that it exacerbated local housing issues by driving up property prices. As a result, the government hopes to redirect investment towards more sustainable avenues.
Despite the changes, the Golden Visa program will not be entirely eliminated. It will continue to offer alternative investment pathways, although the specifics of these options have yet to be detailed. The upcoming deadline for foreign investors seeking to buy real estate under the current program is quickly approaching, leading many to rush their purchases.
Since its inception, the Golden Visa program has granted residency to approximately 15,300 applicants and their families, with over 6,200 of those visas issued through real estate investments. In 2023 alone, foreign buyers accounted for 15 percent of total real estate transactions in Spain, purchasing over 87,000 properties. This shift in policy is likely to influence the broader investment migration sector, as potential investors begin to explore alternatives in other countries.
Countries like Greece, Malta, and Portugal are emerging as attractive options for those seeking residency through investment. Greece, for instance, has a Golden Visa program that allows residency for a minimum investment of €264,208, significantly lower than Spain's previous threshold. The recent policy changes in Spain have already prompted a surge in interest in Greece's program, with a reported 50.4 percent increase in searches for "Greece Golden Visa" in just two months.
Malta also offers a straightforward path to EU citizenship through its Individual Investor Program, requiring a contribution of €600,000 for those who reside in Malta for 36 months, or €750,000 for those who live there for 12 months. Additionally, applicants must either invest at least €700,000 in real estate or lease a property with a minimum annual rent of €16,000.
As Spain's tax and immigration policies evolve, the implications for both local residents and foreign investors are significant. The exemption of income tax for minimum wage earners is a welcome relief for many, while the changes to the Golden Visa program may lead to a reconfiguration of investment strategies among foreign nationals. With the deadline for real estate investments approaching, many investors are now weighing their options and considering alternative pathways to residency in Europe.
In addition to the changes in immigration policy, Spain is also revising its income tax regulations for the 2025 tax campaign. Taxpayers will need to file their returns for the previous year, 2024, and several key changes are being implemented. For instance, individuals employed with a single employer and earning over €22,000 annually will still be required to file, as will those with multiple income sources exceeding €15,876, provided the second or third employer's income exceeds €2,500 per year.
The Spanish tax authorities are increasing scrutiny on income generated from digital platforms, requiring greater self-reporting and data sharing. If an individual sells more than 30 second-hand items on a platform like eBay, or if their total sales exceed €2,000 without proper declarations, they may face consequences from the treasury.
Furthermore, taxpayers will now be able to deduct 80 percent of the first €250 donated to official organizations or charities, a significant increase from the previous deduction limits. Unemployment benefits will also need to be reported in tax returns, regardless of the amount received.
As Spain navigates these critical changes, the government aims to balance the needs of its citizens with the demands of a global investment landscape. The upcoming months will be pivotal as both local residents and foreign investors adjust to the new regulations and explore the broader implications for their financial futures.
