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Once a property has been purchased in Spain, after signing the deeds before a Notary Public, certain tax requirements must be fulfilled and the property registered.

The tax arising from the transaction on the property has to be paid at the local Tax Collection Office, otherwise the deeds may not be referred to the appropriate Land Registry Office for registration. Once the property has been registered, the Land Registry Office supplies the buyer with a stamped copy of the deeds, thus protecting the buyer against any third party claims, and at which point the buyer must also pay the Registrar's fees.

THE MOST IMPORTANT TAXES:

IVALUE ADDED TAX (VAT)

VAT is payable at the rate of 7% of the value of the property where the property is a newly built house, and at 16% on the value of the property where the property purchased is a newly built business premises or plot.

Additionally, a further 0.5% in respect of a tax on documented legal transactions, known as the "Impuesto sobre Actos Jurídicos Documentados", is payable on all the above transactions.

CAPITAL TRANSFER TAX

Where no VAT is applicable, a Capital Transfer Tax, known as the "Impuesto sobre Transmisiones Patrimoniales", is payable at the rate of 6% of the sale price. Normally this tax is payable when the seller is a private individual rather than a company.

"PLUSVALÍA"

"Plusvalía" is the tax paid on the increase in the value of the property. This tax is applied on the increase in the value of land classified as urban land. The amount payable varies from one town to another and depends on the number of years that have past since the last time the property changed ownership. The tax has to be paid to the municipal tax office, known as the "Oficina Tributaria Municipal" of the town in which the property is located.

TAX DEDUCTED AT SOURCE

Where the property is purchased from a non-resident person or from a non-resident company, the buyer is obliged to retain 5% of the sales price. The funds retained have to be paid to the central tax inspectorate, known as the "Oficina Tributaria Estatal", as a guarantee on any liabilities the vendor might have in respect of income tax.

This tax is not applicable, however, where, as at the 31 December 1996, more than 10 years had elapsed since the last change of ownership.

INCOME AND PROPERTY TAX

If you are a non-resident citizen, you should make only one annual tax return on any property you own in Spain.

If you are a resident, you will have the same tax liabilities as any other Spanish citizen.

LOCAL PROPERTY TAX

Your local tax authorities will charge you annual rates on your property, which as a general rule will be fairly low -approximately 0.70% of the cadastral (rateable) value of the property-, a figure which might vary slightly from one town to another.

Finally, we recommend that, for each specific situation, you seek the kind of professional advice available from any of the legal firms and tax advisors that we work with on a daily basis.

<< topLegal Advice

Just like anywhere else in the world, when it comes to purchasing a property it is worth getting to know the peculiarities of the legislation and the fiscal regulations applicable in each country.

Subject to the specific circumstances of each transaction, a summary has been provided below, as a general guide to the sales procedure in Spain.

Let us help you to get to know the area and the kind of property that best suits your needs. We provide fully qualified professional estate agency services and are familiar with all the options available on the Costa del Sol, enabling us to provide our clients with the best possible information, so that our clients are satisfied with the property they decide to purchase.

If you are thinking of making an investment but don't have the capital to invest now, we can arrange mortgage facilities with a range of banks, enabling you to partially finance your purchase.

Once the necessary funds are available and you decide to purchase a given property, we will supply you with all the relevant legal information, including a certified copy of the entry in the Land Registry Office, known as a "Nota Simple" in Spanish, an official document issued by the latter, enabling you to confirm the current status of your property.

The next step is to draw up and sign the sales contract between the parties involved, i.e., between the seller and the buyer, indicating the terms and conditions of the sale and stipulating any monies paid on account, payment periods and the price agreed prior signing the public deed before the Notary Public assigned. It is very important that the information in the contract should also include the method of payment for some of the taxes arising from the transfer of the property.

Once this contract has been signed, the appropriate funds for purchasing the property should be prepared and a final check made on all the details before signing the public deed of sale ("Escritura de Compraventa") before the Notary Public. The buyer should be aware that the amount outstanding must be paid either before signing the deeds or on signing the deeds and that on signing the deeds, the Notary Public's fees have to be paid as well.