The headlines certainly grab attention: Spain considering doubling property taxes for foreign buyers, effectively creating a 100% tax hike that could revolutionise, or at least reshape, the Mediterranean property market. For many potential buyers eyeing their dream home abroad, this news signals a significant shift in one of Europe’s most beloved property markets.

But while Spain contemplates closing doors, Montenegro stands out with a refreshingly different approach—property transfer taxes typically hover around just 3%, the ownership process is notably transparent, and foreign investment is actively encouraged. Add to that a celebrated coastline dotted with exciting new developments, an economy enjoying steady growth, and a slate of generous residency incentives.

Here’s what you need to know about these contrasting laws, and why 2025 might be your moment to consider Montenegro’s coast.

SPAIN’S PROPERTY TAX INCREASE FOR FOREIGN BUYERS: WHAT YOU NEED TO KNOW

The proposal comes as Spanish regions grapple with mounting housing pressures. In the 12 months leading up to Q3 2024, foreign buyers accounted for 18.4% of all homes purchased in Spain, many in prime coastal locations. This surge in foreign investment has contributed to several key issues that have ultimately led to this steep tax hike.

– What Does “100% Tax” Mean?

Under the draft legislation, non-EU buyers would face a tax equal to the property’s purchase price. For instance, a €300,000 villa might now incur an additional €300,000 in tax, bringing the total to €600,000.

– Why Such a High Rate?

Spanish lawmakers cite rampant property inflation and local residents being priced out of popular areas. The idea is to cool foreign demand in regions like the Costa del Sol, Barcelona, and the Balearic Islands.

– Is This Already Law?

Not yet. The measure is still under parliamentary debate, and opposition is strong. Even so, the possibility alone has many would-be buyers pausing or cancelling prospective deals

WHY IS SPAIN INCREASING PROPERTY TAXES FOR FOREIGN BUYERS?

Spain has long been a magnet for foreign homeowners seeking sunshine, culture, and relatively stable real estate values. But in recent years, a surge in property prices—often fuelled by overseas buyers—has raised concerns that Spaniards are being pushed out of coastal areas and city centres.

“Spain’s housing should be for Spanish people to live in,” Prime Minister Sánchez said, underlining his goal of deterring non-European Union residents from buying homes purely as an investment.

Key Points Behind the Push:

– Local Housing Crisis: Popular tourist destinations have seen property values skyrocket, making it difficult for average Spanish families to afford homes.
– Community Pressure: Grassroots movements argue that increased taxes on foreign buyers could level the playing field for locals.
– Government Revenue: Some proponents see it as an opportunity to redirect funds into housing programs or public services.

Nonetheless, critics worry this move could hamper Spain’s international appeal and reduce its standing in the global real estate market.

HOW SPAIN’S PROPERTY TAX HIKE IS IMPACTING FOREIGN INVESTORS

The implications of Spain’s proposed tax reach far beyond individual property costs, with experts worried that this policy shift could mark a fundamental change in how traditional Mediterranean markets approach foreign investment.

– Potential Market Slowdown: Real estate agents are already reporting hesitance from non-EU clients who fear the additional cost.
– Legal Challenges: There is speculation about whether EU directives on market freedom could clash with such a hefty, non-EU-specific levy.
– Comparisons to Other Countries: With taxes rising in established markets, astute buyers are pivoting toward regions where affordability and growth align—bringing Montenegro’s low-tax, high-potential landscape sharply into focus.

IS SPAIN’S 100% PROPERTY TAX GOING INTO EFFECT? EXPERT PREDICTIONS

At the time of writing, Spanish legislators are still debating the final scope and timing of the 100% tax —and the exact timeline for implementing the measure remains unclear. The proposals also require approval in Spain’s fragmented parliament, where Prime Minister Sánchez’s minority coalition may face significant challenges in securing the necessary votes.

While the uncertainty lingers, many prospective buyers are exploring other options to avoid potential financial pitfalls. If the measure doesn’t pass, Spain could remain a top contender for holiday homes and second residences. But if it does pass in its current form, Montenegro and a handful of other countries will gladly absorb much of Spain’s diverted interest.

SPAIN ISN’T ALONE: HOW EUROPEAN COUNTRIES TAX FOREIGN PROPERTY BUYERSE

– Italy’s Flat Tax Hurdle
Non-residents buying property in Italy face a flat tax of €200,000, significantly inflating the overall purchase cost.

– Rising Thresholds in Greece
In high-demand areas like Crete, Greece has raised its golden visa entry point to €800,000 and requires a €100,000 lump sum on non-Greek assets—factors that can deter cost-sensitive buyers.

– Additional Financial Requirements in Cyprus
While Cyprus offers attractive tax exemptions for non-domiciled residents, buyers must also demonstrate substantial financial reserves (for example, a minimum bank balance) alongside meeting the property purchase criteria.

– Income Tax Pressures in Malta
Even though Malta provides certain retirement perks, expats often face a flat income tax rate of 15% on foreign earnings, which might not suit all investment strategies.

MONTENEGRO’S PROPERTY MARKET: A TAX-FRIENDLY ALTERNATIVE FOR INVESTORS

While Spain’s legislation has potential buyers on edge, Montenegro is quietly attracting a growing number of international homeowners. Known for its rugged mountain backdrops, the Bay of Kotor, and an Adriatic coastline that rivals any European hotspot, this small Balkan nation has taken a more hospitable approach to foreign investment.

Lower Transfer Taxes: The Montenegro property tax on real estate transfers typically sits around 3%, a stark contrast to what Spain may soon impose.

Residency Incentives: Certain property investments can open pathways to Montenegrin residency, appealing to those interested in a second home or a more permanent lifestyle change.

Zero Tax on Yacht Fuel: Recently reinstated, this perk underscores Montenegro’s push to nurture its marine tourism—particularly relevant for coastal developments and boat owners.

Transparent Ownership Rules: Foreigners face minimal restrictions when purchasing real estate, and the legal framework is relatively straightforward, with most purchases being concluded within 30 days.

No Hidden Fees: Aside from the standard notary and registration charges, Montenegro’s property-buying process has fewer add-on costs than many neighbouring markets.

SPAIN VS MONTENEGRO: PROPERTY TAX AND INVESTMENT COSTS COMPARED

To illustrate how drastically the proposed Spanish tax could affect your bottom line, consider the difference when buying a €300,000 property:

Scenario	Spain (Proposed 100% Tax)	Montenegro (Typical 3% Tax)
Purchase Price	€300,000	€300,000
Tax/Levy	€300,000	€9,000
Estimated Total	€600,000+	€309,000

WHY INVESTORS ARE CHOOSING LUŠTICA BAY: A LOOK AT MONTENEGRO’S REAL ESTATE BOOM

To understand Montenegro’s property landscape, Luštica Bay is a prime example.

Luštica Bay is one of Montenegro’s premier developments, set across 690 hectares of the country’s most coveted coastline. This waterfront community has transformed a pristine peninsula into an exclusive residential destination, where the Adriatic Sea meets Montenegro’s historically significant landscape. With Marina Village already established and new neighbourhoods continuing to emerge, Luštica Bay offers a rare combination of immediate enjoyment and future potential. Here’s what sets it apart:

– Prime coastal position with private beaches and Montenegro’s clearest waters, set against dramatic peninsula landscapes

– The Chedi hotel and Marina Village form a sophisticated hub with restaurants, shops, and year-round community events

– Full-service marina accommodating vessels up to 35m, with direct access to premier Adriatic sailing routes

– Comprehensive wellness facilities and beach clubs, plus a championship golf course under construction

– Property options from marina apartments to hillside villas, all with guaranteed sea views

– Professional property management and maintenance services available year-round

– 15 minutes from Tivat International Airport, near UNESCO heritage sites and historic coastal towns

– Flexible payment plans and proven investment value in Montenegro’s growing luxury market

You can learn more about ongoing initiatives and property opportunities at Luštica Bay’s official website.

YOUR 2025 GUIDE TO PROPERTY INVESTMENT IN MONTENEGRO: TAXES, COSTS & PROCESS

Montenegro’s real estate market has become a standout option for international buyers, offering a wide spectrum of property—coastal apartments in Montenegro for sale at roughly €2,000 per square meter in lively towns like Kotor or Tivat, villas for sale in Montenegro with panoramic Adriatic views, or inland homes priced 40–50% lower.

Competitive costs, a growing market, and striking landscapes have turned buying property in Montenegro into a strategic move. The range of property for sale in Montenegro caters to varied tastes—modern seafront apartments, secluded stone houses, and everything in between—offering an opportunity to invest in a place that feels both welcoming and full of potential.

For a closer look at every stage of the process—plus insider tips on choosing the right location—read the full article here:

LEARN MORE: Guide to Buying Property in Montenegro: 2025 Investment Guide

Will the “Spanish Dream” survive such a steep tax hike? That’s the question on the minds of many international real estate agents right now. Some believe Spain’s proposal is too extreme to be fully implemented, while others see it as a wake-up call for local governments under pressure to protect domestic buyers.

Meanwhile, Montenegro’s consistent stance on low taxes, simplified ownership rules, and major coastal developments—like Luštica Bay—puts it in a prime position to welcome international investors seeking a more stable, cost-effective path to Mediterranean living.

DISCOVER YOUR DREAM PROPERTY IN LUŠTICA BAY!

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