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Taxes for acquisition and selling real estates in spain: a quick overview

Taxes for acquisition and selling real estates in spain: a quick overview
  1. I.The costs of purchasing a property in Spain.
  2. 1.Transfer Tax or VAT.

Which taxes are payable depends on whether the property is a new build or a resale.

A new build is a property that is being sold for the first time. When purchasing a new property in Spain you must paid VAT (10% of the purchase price) and stamp duty.

A resale property is any property that isn’t being sold for the first time. In your case, you are buying a resale property destined to housing. This transaction is exempt from VAT and you will need to pay Transfer Tax. The transfer tax in Catalonia is 10% of the purchase price, provided the value of the property does not exceed 1.000.000 €. If the purchase price is more than 1.000.000€ the tax rate of Transfer Tax is 11%.

  1. 2.Property Ownership Tax

You have to pay each year the Property Ownership Tax. This local tax is calculated on the basis of the cadastral value of the property.

  1. 3.Annual Wealth Tax

Also, you have to pay Annual Wealth Tax. This is a tax on the total value of your estate, including your property in Spain. The first 700.000 € are exempted, and the remaining amount is taxed according to a sliding scale

Taxable income

Until euros
Amount

Euros
Rest of taxable income

Until euros
Tax rate

%
0,00

167.129,45

334.252,88

668.499,75

1.336.999,51

2.673.999,01

5.347.998,03

10.695.996,06

0,00

334,26

835,63

2.506,86

8.523,36

25.904,35

71.362,33

183.670,29

167.129,45

167.123,43

334.246,87

668.499,76

1.336.999,50

2.673.999,02

5.347.998,03

en adelante

0,2

0,3

0,5

0,9

1,3

1,7

2,1

2,5

  1. 4.Non-resident income tax (IRNR).

Since you are Non-residents owning a property in Spain, you will have to pay an annual income tax, according to whether the property is leesed out or not.

  • 4.1.When not leased out: For the periods in which the property is not leased, you will have to pay, after Form 210, for an abstract revenue attached to urban properties (for own use) This abstract revenue is considered to have been generated once a year, on 31 December. The abstract revenue is calculated as the 1, 1 % or 2 % of the cadastral value of the property. The tax rate is 19% on the abstract revenue for a Residents in the EU, Iceland and Norway is 19%, and for other taxpayers is it 24%.

The Non- Resident Income Tax must be paid proportionally to the period in which the property was not rented.

  • 4.2.When leased out: The base for the applicable tax rate is the income that you receive from renting out the property. If you’re an EU citizen, you can deduct any rental expenses directly related to the incomes obtained in Spain and have a direct link with the activity performed. Tax rate for a Residents in the EU, Iceland and Norway is 19% of your net rental income, and for other taxpayers is it 24%.
In respect of the VAT on the rental income, you don’t have to charge it, provided that you are not planning to provide accommodation services (cleaning, breakfast, catering, etc.); in that case, the incomes will be subject to VAT.
  1. II.The costs of selling a property in Spain.
  2. 1.Plusvalía municipal tax (Tax on the Increase in Value of Urban Land)

The plusvalía is a local tax paid by the seller within 30 days of the sale. The taxable base of the tax is the cadastral value of the land, and the tax amount depends of the years that you had owned the property.

  1. 2.Capital gains.

If you sell your property you will have a benefit that should be taxed in Spain and therefor you will pay 19 % capital gains tax. The taxable base is the difference between the cost of acquisition and the income of sale.

When the seller is non-resident, the purchaser has to withhold 3% of the purchase price of the property to be deposited at the Spanish Tax Agency to cover the seller’s capital gains liability. In case that the Capital Gains Tax is higher than the amount covered by the 3%, then the seller has to provide the difference; in the opposite case, he will receive a refund.

  • III.Difference between buying the property as physical person or as a corporate.

If you buy the property as a physical person, you will have to pay each year the Spanish Wealth Tax, and if you do it through a corporate, you don’t have to pay that tax.

October 2019

Dimitrichka Anghelova
BDabogados

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