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Costs Involved in Purchasing Property in Spain

01/11/2016 Rafael Guerrero

Purchasing property in Spain is undoubtedly a big decision. Taxes, urban planning and legal paperwork all need to be taken into consideration when budgeting for expenses. Here at Andalucía Lawyers we have a lot of experience in buying various types of property throughout Andalusia. We can assist you in all aspects of the purchase process, giving you peace of mind as well as saving you money.

Choosing the Right Spanish Property for You

In order to choose the right Spanish property for your need, whether as a home, office or an investment, the first step is always to thoroughly investigate the various options on the market. Once you have found a property you are interested in, it is important to carefully examine the building’s structure and surroundings and check the property’s legal status before committing to a purchase. Our conveyancing service takes care of all these checks for you.

Estate Agents

Choosing a Reliable Estate Agent in Spain

It is important to verify that any estate agent you work with is professionally qualified and licensed, with experience in the area where you wish to purchase. A couple of checks to carry out are finding out if they are a member of a professional real estate association, whose members usually have some level of professional indemnity insurance. You can also request an agent’s registration number and have it checked.

Estate Agent Fees in Spain

Normally the estate agent charges a commission based on the sale price. This fee may vary from 2% to 5% depending on the area, the price of the property and other factors. These fees are normally paid by the vendor and included in the sale price. Therefore, it is worth shopping around to see if you can find the same property for a lower price from a different agent. Each agent sets their own fees, and also whether the vendor or buyer, or both, is charged. The important thing is to establish this from the outset and not to sign anything you do not fully understand. Consulting with an experienced local lawyer is essential to protect your interests.

What is the responsibility of the lawyer and estate agent when purchasing property in Spain?

Everyone is responsible for their own acts. Reputable estate agents and lawyers will have professional indemnity insurance. At Andalucía Lawyers we take responsibility for our job and have third party liability insurance.

Legal Fees When Purchasing Property in Spain

When selecting your property and estimating the purchase expenses you need to take into account a number of costs, such as:

Notary and Land Registry Fees

The scale is fixed by law and ranges from around €300 to €1,000 depending on the price of the property.

Conveyancing Fee

Normally 1% of the purchase price (minimum fee of €1,000). Co ntact us and we will be happy to prepare a quote for your particular situation.

Taxes on Resale Property in Spain

Spanish Transfer Tax (ITP)

This only affects resale properties; it doesn’t apply to new build purchases. It is payable by the buyer. The national rate is 7% of the purchase price. However, if the minimum fiscal value of the property, set by the local autonomous government, is higher than the agreed purchase price then it is this higher figure that is used to calculate the transfer tax due. Although the national rate is set at 7%, this tax is controlled by the local government so the rates vary from one autonomous community to another. Be sure to check the rate that applies to your property’s location. The following table shows the ITP rates for Andalucía:

Property including flats, houses, villas, land, and business premises.	Garages not belonging to an adjacent property. Garages when a property has 2 or more garages.
Minimum fiscal value/purchase price.	Minimum fiscal value/purchase price.	Transfer Tax
Up to €400,000.	Up to €30,000.	8%
From €400,000 to €700,000.	From €30,000 to €50,000.	9%
Over €700,000.	Over €50,000.	10%

It is very important to understand that this tax is cumulative. For example, if you buy a property for €900,000 the ITP will be calculated as follows:

€400,000 at 8% = €32,000
€300,000 at 9% = €27,000
€200,000 at 10% = €20,000
Total transfer tax to be paid: €79,000

Spain’s Municipal Value Added Tax (Plusvalía)

This is a local tax payable when a Spanish property is sold, calculated on the increase in value of the land from the time the previous owner (now vendor) bought the property to the time of the present sale. It is calculated from the property’s cadastral value (the rateable value of the property) and the number of years since the property was last sold. It is usually payable by the vendor, however this is negotiable. Depending on the property market, either the vendor or the buyer may agree to pay it according to who has more negotiating power. Again, having a good lawyer representing you will ensure you avoid any pitfalls.

Spanish Capital Gains Tax

In Spain, capital gains tax is paid on the profit the vendor makes on the sale of their property, i.e. the difference between the listed purchase price and the listed sale price. It is payable by the vendor of a property. However, as a buyer it is important to be aware of it as sellers will sometimes seek to mitigate or completely avoid capital gains tax by asking the buyer to list the sale price as lower than the actual price paid. Not only is this legally problematic, but it will also very likely increase your capital gains tax should you sell the property in the future. This is yet another example of why it is so important to employ an experienced Spanish solicitor when purchasing property in Spain.

Spanish Taxes on New Build Property

VAT and Stamp Duty

New Build Properties Including Houses, Villas, Flats or Garages Annexed to a Dwelling.		New Build Commercial Premises, Commercial Garages, or Newly Urbanized Land Parcels
VAT	Stamp Duty	VAT	Stamp Duty
10%	1.5%	21%	1.5%

Andalucía Lawyers’ Conveyancing Service

Here are a few of the steps our conveyancing service takes care of on your behalf when you purchase property in Spain:

We check with the Land Registry that the property is free of debts, encumbrances and charges, and that there are no outstanding payments.
We ensure that the title deeds are properly executed.
We check that the property has all the necessary licences and authorisations.
When buying from a developer there are specific regulations that have to be checked; we take care of that for you.
We oversee the exchange of private contracts or the signing of an option to purchase, ensuring that the rights of the buyer are protected within the contract.

Property conveyancing

What other legal services do you provide?

We also have a fiscal and tax department in charge of resident and non-resident tax matters, such as capital gains tax, inheritance tax and council tax, which may be of interest to you.

Tax advice

Consult with Andalucía Lawyers

Buying property in Spain can be a relatively straightforward process, when you have the right legal representative. If not, it is possible to fall into traps or simply to miss something that may end up costing you dearly in the future. Our English-speaking team at Andalucía Lawyers has over twenty years’ experience buying property in Andalusia, don’t hesitate to contact us to enquire about our property buying services.

Buying Property in Spain Through a Family Trust

Due Diligence When Buying Property in Spain

Buying Property in Spain from a Tax Haven Country

Golden Visa: Spanish Residence Permit for Non-EU Investors

Buying Property from a Developer

What is a Power of Attorney?

Appointing a Representative

Spanish Corporate Tax 2022

04/21/2015 Marina Rodriguez

The key information you need to know about Spanish corporate tax rates for the years 2014, 2015 and 2016.

Residence

According to Spanish law, any company incorporated in Spain – with a registered office in Spain or its effective management in Spain – is resident in Spain and subject to Spanish corporate tax. Resident companies are charged corporate tax on worldwide profits and capital gains. Non-resident companies are taxed on their Spanish-source income and gains according to the guidelines of the relevant tax treaty. Branches are generally taxed in a similar way to subsidiaries.

What is the taxable income?

The taxable income is the amount left over when deductible expenses are subtracted from the profits, calculated according to the balance sheets of the company. Some expenses are not considered deductible for tax purposes. Disallowable items are:

– Penalties and fines.
– Corporation tax payments.
– Gifts and donations (except to certain organisations).
– Expenditure on improvement and enhancement of capital assets.
– Depreciation over maximum prescribed rates (unless proven that it was in fact real depreciation).

For taxable years 2013, 2014 and 2015, the depreciation rates applicable to tangible assets are limited to 70% of the maximum rates provided by law for corporate taxpayers with a turnover exceeding €10 million.

Corporate Tax Rates Applicable to 2018

	2018
General rate of corporate tax	25%
Companies dedicated to the exploration, investigation and exploitation of hydrocarbon deposits and other activities (law 34/1998).	25%
Newly-created companies, applicable to the first two years in which they obtain a taxable profit.	Profit under €300,000: 15% Others: 20%
Small companies with turnover in the previous year under 5 million euros and with less than 25 employees.	Profit under €300,000: 20% Others: 25%
Medium-sized companies with previous year turnover under 10 million euros.	Profit under €300,000: 25% Others: 30%

Losses

Operating losses may be carried forward for up to 18 years, starting from the first period in which profits are earned. Tax losses can be carried forward up to 10 years. The carry back of losses is not permitted. For tax periods from 2001 to 2015 limitations apply on the use of the net operating losses if it is a big company.

What are the allowances and deductions in Spain?

Deductions are available for investments in the environment, double tax relief on dividends (subject to certain requirements), double tax relief for capital gains derived from the transfer of shares (under certain circumstances) and extraordinary profits reinvestment.

Capital gains derived from a holding non-resident company are exempt under two conditions:

If there is a treaty for double taxation that includes an exchange of information clause with the country in which the company is resident.
If the paying entity is subject to a tax equivalent to the Spanish corporate income tax (subject to certain requirements).

Tax Year

The tax year (1 January to 31 December) coincides with the accounting period. The tax period must not exceed 12 months.

When is corporate tax due?

Corporate tax must be filed and taxes paid within six months and 25 days of the close of the fiscal year (31 December). Corporations are required to make three advance payments of income tax in April, October and December of each year.

Other Taxes on Corporations

Payroll tax – Withholding tax on income from employment is applicable on payroll (i.e. in relation to personal income tax).
Social security – Read our article Employment, Payroll and Dismissal for more information.
Council tax – Read our article Council Tax in Spain for more information.
VAT – Read our article Spanish VAT (IVA) for more information.
Capital duty –

Capital duty at a rate of 1% is applicable to:

The reduction of share capital (including demergers) – payable by the partners or shareholders.
The liquidation of a company – payable by the partners or shareholders.
Any other partner contribution that does not increase the share capital.

I have an inactive company, do I have to declare corporate tax?

Yes, the declaration must be made even if the company is inactive.

Small Companies Tax Package
We offer a tax returns, accounting and advice package for small companies from just €150 per month.

Spanish Tax Return (RENTA 2022)

Employment, Payroll and Dismissal

Spanish VAT (IVA)

Starting a Business in Spain – Registration of the Business and Formation of the Company

Starting a Business in Spain – Registration of Self–Employment (Autónomo)

Tax Advice for the Self–employed in Spain

Spain’s New Inheritance Tax Law for Non-Residents of Spain

02/18/2015 Rafael Guerrero

Spain has responded to the European Court of Justice’s ruling of 3 September 2014 condemning Spain’s inheritance law as “discriminatory” against non-residents of Spain.

On 27 November 2014, Spain’s new inheritance tax law was passed. Read on to learn about these recent changes to Spanish inheritance tax rules and how they could affect you.

Spain’s Previous Inheritance Tax Law

Under the previous Spanish inheritance tax law, each of Spain’s 17 autonomous communities was free to amend the State rules, thus setting its own particular fiscal reductions on Spanish inheritance tax. However, these tax reductions were only applicable to Spanish residents. Non-residents of Spain were subject to the Spanish State’s much less favourable inheritance tax rates. This resulted in discrepancies, at times very large, between the inheritance tax residents and non-residents of Spain were liable to pay.

Read Andalucía Lawyers’ article The EU Court Rules that Non-Resident Inheritance Tax in Spain Is Illegal to find out more about the ECJ’s ruling and its implications.

Spain’s New Inheritance Tax Law

Coming into effect on 1 January 2015, Spain’s new inheritance tax law includes four important changes:

If the deceased was a Spanish resident and the beneficiary is a non-Spanish resident, but an EU or EEA national, the beneficiary will be obliged to pay inheritance tax according to the tax rates of the autonomous community in which the deceased resided.
If the deceased was a non-resident of Spain living in the EU or EEA with assets in Spain, the beneficiary will pay inheritance tax according to the tax rates of the autonomous community where the deceased’s highest valued assets in Spain are located.
If an EU or EEA national who is a non-resident of Spain acquires property in Spain as a gift or inter vivos gift, the beneficiary will pay tax according to the inheritance tax laws of the autonomous community where the property is located.
If a Spanish resident acquires property in a Member State outside of Spain as a gift or inter vivos gift, then the beneficiary will pay tax according to the inheritance tax laws of the autonomous community where they reside.

Am I a Spanish resident?

You are considered a Spanish tax resident if:

You spend a total of 183 days a year in Spain.
Your “centre of vital interests” is in Spain. In other words, if your spouse is a Spanish resident and you’re not legally separated, you’re considered a Spanish resident.

Determining Place of Residence for Spanish Inheritance Tax

Place of residence in Spain is considered to be the autonomous community where the deceased lived for the longest period of time during the five years prior to their passing.

Obtaining a Tax Refund

Non-residents of Spain who are EU or EEA nationals and have paid the “discriminatory” Spanish inheritance or gift tax during the past four years now have the option of applying for a tax rebate. This involves claiming back the difference between the tax they paid and the amount they would have paid had it been calculated according to the relevant autonomous community’s tax regulations, as determined by Spain’s new inheritance tax law. The Spanish treasury may also be obliged to pay interest of 15% – 20% on the amount due.

However, there is a time limit on claims; you have only five years to make a claim from the time of the inheritance. Furthermore, you can only apply for a refund once.

Contact Us

If you think you may be affected by these changes to Spain’s inheritance tax law, it is essential you consult an experienced Spanish tax expert. Contact us at Andalucía Lawyers to arrange an in-person consultation in one of our offices in Granada or Marbella, over email or telephone, to discuss how Spain’s new inheritance tax law could apply to your situation.