Taxes property Spain Notary fees Plus Valia land tax transfer IVA VAT Spanish property tax

You should allow approx. 10% of the purchase price to cover these costs. They are broken down as follows:

It is impossible to give tax advice without detailed knowledge of your personal circumstances. You should therefore treat this guide as no more than background reading designed to give you some idea of the structure of the tax system in Spain.

We can accept no responsibility for any action that you take or fail to take as a result of reading this document.

The Spanish authority responsible for the collection of taxes is the Agencia Tributaria (Hacienda). This is organized on a provincial basis. In each province there is a main office of Hacienda, and in some cases there are also one or more sub-provincial offices.

All sales of second hand dwelling houses (i.e. re-sales) carry Transfer Taxes. It is generally 7% of the declared value of the property as expressed in the Escritura de Compraventa (Title Deed).

Impuesto sobre el valor anadido (I.V.A.)
This is the Spanish equivalent of V.A.T. It is paid instead of Impuesto sobre actividades patrimoniales in the case of a new building (when you buy from a promoter rather than the private individual). It is charged at the rate of 7%.

Impuesto sobre actos juridicos documentados (A.J.D.)
In addition to I.T.P. you will also have to pay a document tax or stamp duty at 0,5% (in some cases 1% depending on the province you buy) of the purchase price.

Plus Valia
The other tax on property sales is arbitrio sobre el incremento del valor de los terrenos, the municipal tax on the increase in the value of the land since its last sale. This is usually called the plusvalia for short and it can vary widely.

In the case of a purchase in a new urbanization there has been a little increase in value because a short time has passed since it was developed, the tax can be very low. But if you buy a house with several square meters of land, which has not changed hands for a long time the tax can be much higher.

Land registry fees
They are not strictly taxes but rather administrative fees but are referred to in this part of the book. These vary according to the locality, type and value of the property.

Notary fees
These are not exactly taxes but should be considered. They vary depending on the value of the property and various other factors. Allow 1% of the price of the property for initial planning purposes.

Impuesto sobre bienes inmuebles (IBI)
The annual real estate tax on your Spanish property must also be paid every year. The amount of the tax is calculated by reference to the valour catastral (offical value of the property) registered in respect of all properties in Spain. It can vary widely from town to town for the same type of property because it is a municipal tax. This tax is raised every year, as a result of inflation.

If you are non-resident, the best solution for you is to have the tax domiciliado in you bank. This is a standing order to the bank to pay the tax and you can include any other municipal charges as well. You obtain a form at the bank that authorizes them to pay the tax bill. You are thus assured that your taxes are paid when they are due, the same as the telephone, water and electric bills.

In general terms IBI will cost less than taxes on a similar property in the UK.

Tasas y cargas
Some Municipalities raise additional taxation in relation to the services they supply to people in the area. These may include rubbish collection, cleaning of the streets and beaches etc. Municipalities also have the right to raise a charge for the use of a vehicle in their area, but not all do so. The amount of these tasas y cargas is not generally high.

Impuesto sobre la renta de las personas fisicas
Income tax - In Spain for tax purposes non-residents must still make an annual declaration for income tax. The Spanish authorities are only concerned (in the case of non residents) with the income you earn from activities in Spain, not your worldwide income. Typical examples of this will be interest on any money you have in a Spanish bank account or income you earn from letting your property.

Tax on the Notional letting value of your property
In addition to the ordinary tax return, which you must submit in appropriate cases, you will in all cases be required to make a tax return in respect of the notional letting value of your property. This tax return has to be made whether you do or do not let the property.

The reason this is paid even though there is no income is that the Tax Authority assigns an imaginary income, or imputed income, or notional letting value to the property.

The tax base is the valor catastral, the local assessed value of the property, which can be found on an I.B.I. (annual real estate tax) receipt. The percentage then to be applied is of 25% of a 2% of the valor catastral, in other words, 0,5% of that value.

If you have actually let the property to any body or not, then the money you have received will been declared in your ordinary income tax return.

Impuesto sobre el patrimonio (property wealth tax)
The name "wealth tax" may not sound like property legal terminology, but it is an adequate translation of the Spanish name, as it is exactly that, a tax on all you assets and property, your total wealth. This tax started in 1978 as a special measure to force many Spanish citizens who has been hiding their wealth, especially property, to bring these assets into the open.

The base for calculating the tax is the higher of either the assessed value (town hall value), the assessed value by the tax authority or the declared price shown on the Title Deed when the property was purchased. This real value is almost the base for calculating the property wealth tax.

Impuesto sobre el incremento del patrimonio (capital gains tax)
Anyone who buys a property in Spain today will be liable to pay Spanish capital gains tax when they sell their property in the future, this is the same for both residents and non-residents.

Residents pay a maximum of 18% and their capital gains are calculated as part of their Spanish income tax. Non-residents pay a flat rate of 18%. Buyers from non-resident sellers are required to withhold 3% of the total purchase price and pay it directly to the Spanish Tax Agency, thus making sure that the seller does not take the money and run.

The prices used to calculate the tax liability are those declared in the Title Deed.

The Fiscal Representatives
The Spanish Tax Authorities until recently required any person who had dealings within Spain but who was not a full time resident in Spain to appoint a fiscal representative. A fiscal reprehensive is a person who undertakes on behalf of the taxpayer all dealings with the Spanish Tax authorities. The appointment of fiscal representative is the only way in which you can be sure that the Spanish Tax Authorities, who may be unable to contact you, do not take damaging and expensive action against you to collect any sums of taxes, which they allege to be due.

N.I.E. (numero de identification para extranjeros)
There is a new law as of the 1st January 2003 that requires any foreigners purchasing a property in Spain now need a NIE (National Identification Number for Foreigners).

A NIE is needed to hold a Spanish insurance policy, to open a bank account, to buy or to sell property and to pay any taxes. It is necessary for practically any transaction in Spain.

This is obtained from the local police station at the foreigners department. Your lawyer can apply for it on your behalf.