When talking about property taxes there are many different taxes depending on the nature of the activity. Each property transaction whether buying a property or selling a property in Spain requires different taxes, and includes various costs and expenses. Some of these costs will be the responsibility of the buyer and others will be of the seller. It is a good idea to have an orientation of what costs and taxes correspond to you, as it is not unusually that a third party will try to push some costs over to reduce what their client ends up paying. This has happened in the past with estate agents, and unfortunately they only found out after the transaction had finished that they had overpaid.

When buying a property in Spain you will have to pay the following taxes to complete your purchase.

– New build or off plan: Taxes to pay are the VAT and Stamp duty (IVA and AJD)

-Re-sales and second hand properties: The taxes to pay are the transfer tax (ITP) and a non-resident retention tax.

Apart from these taxes, it is important to understand that these are not the only costs involved and that you will need to budget for more and the other expenses needed for the purchase are essential and sometimes costly. The other costs may include a survey, notary and agent fees, as well as documentation charges.

When selling a house the taxes will be completely different as to when you bought, although you will now have an idea of the Spanish system and some documentation integrating you into the Spanish system. This should all make the process, somewhat easier.

Taxes as followed:

  • Capital gains and liability (plus-valia)
  • Non-resident retention
  • General maintenance tax (IBI)

If your activity in Spain was for investment purposes, then you will have of course various taxes to account for. While Spain  tends to be lower than most of Europe, with some variation along the way, they favour businesses and investments within the country. If you are included in any financial activity in Spain you will have to declare income tax where applicable, by doing the Spanish tax return declaration.

As long as you have been advised as to how to go about the tax system in Spain then there should be no issues. It is always a good idea to seek advice from a professional and have financial representation.  However, if the taxation system is not taken seriously from the beginning, then there can be huge fines which can result in losing your assets in Spain. The tax offices in Spain act quickly if they believe that the corresponding taxes are not paid, particularly in recent years where they are cracking down on tax avoidance.

ABAD FINANCIAL AND LEGAL offices are equipped with trained experienced professionals that work efficiently as a team to get the best result for our clients. We ensure that our clients are not only informed every step of the way, but that they can be absolutely confident that every aspect is taken care of and everything will be attended to.

Property taxes in Spain

When talking about property taxes there are many different taxes depending on the nature of the activity. Each property transaction whether buying a property or selling a property in Spain requires different taxes, and includes various costs and expenses. Some of these costs will be the responsibility of the buyer and others will be of the seller. It is a good idea to have an orientation of what costs and taxes correspond to you, as it is not unusual that a third party will try to push some costs over to reduce what their client ends up paying. This has happened in the past with estate agents, and unfortunately they only found out after the transaction had finished that they had overpaid.

When buying a property in Spain you will have to pay the following taxes to complete your purchase.

– New build or off plan: Taxes to pay are the VAT and Stamp duty (IVA and AJD)

-Re-sales and second hand properties: The taxes to pay are the transfer tax (ITP) and a non-resident retention tax.

Apart from these taxes, it is important to understand that these are not the only costs involved and that you will need to budget for more and the other expenses required for the purchase are essential and sometimes costly. The other costs may include a survey, notary and agent fees, as well as documentation charges.

When selling a house the taxes will be completely different as to when you bought, although you will now have an idea of the Spanish system and some documentation integrating you into the Spanish system. This should all make the process, somewhat easier.

Taxes as followed:

  • Capital gains and liability (plus-valia)
  • Non-resident retention
  • General maintenance tax (IBI)

If your activity in Spain was for investment purposes, then you will have of course various taxes to account for. While Spain  tends to be lower than most of Europe, with some variation along the way, they favour businesses and investments within the country. If you are included in any financial activity in Spain you will have to declare income tax where applicable, by doing the Spanish tax return declaration.

As long as you have been advised as to how to go about the tax system in Spain then there should be no issues. It is always a good idea to seek advice from a professional and have financial representation.  However, if the taxation system is not taken seriously from the beginning, then there can be huge fines which can result in losing your assets in Spain. The tax offices in Spain act quickly if they believe that the corresponding taxes are not paid, particularly in recent years where they are cracking down on tax avoidance.

ABAD FINANCIAL AND LEGAL offices are equipped with trained experienced professionals that work efficiently as a team to get the best result for our clients. We ensure that our clients are not only informed every step of the way, but that they can be absolutely confident that every aspect is taken care of and everything will be attended to.

FAQs

The IBI is the Spanish council tax, which must be paid every year either in smaller payments or at once and the proof of them being paid is needed in order to sell a property.

Do to the way taxation is set up between certain countries you do not have to pay twice for something, however, if you are residing in Spain, on a permanent bases it is a good idea to pay your taxes in the place where you live, and declare that in the country of your last resident, particularly when Spanish taxes returns declaration state that you must include all incomes whether in Spain or not.

In order to invest in Spain whether through properties or business either directly or as a partner, you must pay tax. In order to be correct with the tax office you must be allocated a NIE and NIF number, which will serve as your identification and tax code, which once allocated, must be activated.

Your NIF number is the personal tax code allocated to you, to represent a fiscal present in Spain, but not necessarily a physical presence in Spain. It is the number by which all your taxes will be assigned to.

The non- resident tax in terms of property is the a 3% retention of the purchase price, that the buyer is to give to the tax offices to cover the taxes upon completing, there is usually money left over that the vendor can claim back.

You should aim to get it paid as soon as possible, either getting in touch with the tax office or waiting for the next letter to arrive and pay promptly. It is a good idea to make some arrangement to pay standard taxes, usually through your financial representative, particularly if you come and go often.

If you buy a new property, you will have to pay the stamp duty and the VAT for the first time on the property. You should estimate around 10-15% on top of the price to cover taxes and expenses.

The taxes you will have to pay will depending on the type of property, whether it is new or a resale. If it is a resale, then you pay the transfer tax, which includes stamp duty and the added value tax. You will also have to pay a 3% retention tax, which comes out of the purchase price when you buy from a non -resident.

When you sell a property in Spain you will have to pay the PlusValia and capital gains tax, as well as making sure all your other annual taxes have been paid to present. The plusvalía is the taxable increased value of the property and the other the taxable profit made from the sale.

In Spain they have been tightening down to tax payment and not just for non-residents, but everyone. The Spanish government has slightly increased taxes, and therefore if you are late paying the interest rate will be bigger and so will the charge, and it will keep increasing until paid.