The ban on foreign property in the Balearic Islands is a violation of EU law

Left-wing parties continue to push for restrictions on non-resident investment

The Balearic government risks violating European legislation on the prohibition of foreign property. | Majorca Daily Bulletin reporter

Humphrey CarterPalma 02/28/2023 12:48 PM

Prohibiting the purchase of homes by non-residents in the Balearic Islands, as proposed by the Balearic Government, is directly contrary to the Treaty on the Functioning of the European Union, as this measure would be considered directly discriminatory in that it benefits Spanish citizens and harms those of other Member States.

This is the conclusion of the report on the compatibility with European Union law of the limitation on the purchase of housing in the Balearic Islands prepared for the Asociación Empresarial De Promotores Constructores De Baleares (Proinba).

Proinba warns that a regulatory measure prohibiting or restricting the purchase of housing in the Balearic Islands by non-residents “would restrict the two fundamental freedoms of the Treaty, such as freedom of establishment and free movement of capital.

This report, prepared by the law firm Uría Menéndez, analyzes the compatibility with European Union law of a law hypothetical prohibiting or restricting the purchase of housing in the Balearic Islands by natural or legal persons not residing in the islands or by persons having a period of residence in the community of less than five years.

They warn that this measure “would be directly contrary” to the Treaty on the Functioning of the European Union, as well as to the Charter of Fundamental Rights.

In addition, they point out that the Act of Accession of Spain to the EU does not contain any exceptions to the application of these rights, so that the restrictions would not be covered by it.

The report also points out that the government’s proposed measure would be considered indirectly discriminatory by benefiting Spanish citizens and disadvantaging those from other EU member states. “This fact alone would be sufficient for the measure to be contrary to EU law,” they add.

The High Court of Justice of the EU has repeatedly confirmed that restrictions on the sale and purchase of real estate imposed by Member States are, in themselves, restrictions on the freedom of establishment and the free movement of capital.