Spanish Property Guide - Buying Property In Spain
Section 3: Spanish Fees & Taxes
Post completion, payment of all fees and taxes must now be made:
- VAT is payable by the purchaser where the vendor is considered as a Developer who pays VAT and/or this is the first time that the property has been sold/transferred. The VAT rate depends on the type of property being sold, as follows:
Residential properties 7%
Plots of land 16%
Commercial premises 16%
Garage/parking spaces & storage 16% or 17%If the garage/parking space is transferred at the same time as the residential property and in the same Escritura, the VAT rate payable is 7%, but if it is conveyed separately then the applicable rate is 16%.
- Stamp Duty is always payable at the rate of 1% where VAT is payable
- If the property is a resale, (second transfer) Transfer Tax is always payable by the purchaser at the rate typically of 7% of the sale price declared in the Escritura and has to be paid to the Spanish Treasury within 30 days from the date of signing the title deed.
- Plusvalía is a tax based on the increase in value of the land since the previous transfer of the property. The rate varies according to the individual town. Technically the vendor pays this tax although it is very often agreed for the purchaser to pay it. This tax also has to be paid to the Spanish Treasury within 30 days from the date of signing the title deed.
However, when only land is being sold, the person purchasing it will be liable for the tax instead of the vendor when he/she is a non-resident in Spain.
- Land Registry fee for the registration of the Escritura. It is not compulsory to register a property, but you are advised to do this as proof of ownership to any third party.
- The Notary’s fee is payable when your copy of the Escritura is returned to you by them.
If you are buying a property from a person or a company non-resident in Spain, then you are obliged to retain 3% of the sale price declared in the public deed of sale. This amount has to be deposited with the Spanish Treasury on account of the Capital Gains Tax the vendor has to declare and pay.
However, if the vendor is a private individual and is able to provide proof that he/she is a resident of Spain, or that they bought the property on or before the 31 December 1986, or provided no improvements have been made and registered, the above retention does not have to be made
If the vendor is a foreign non-resident company in Spain, then the purchaser has to make the retention, regardless of the purchase date.
The purchaser then deposits the amount retained with the Spanish Treasury and passes the receipt to the vendor. If the purchaser does not deposit this amount, the Spanish Treasury is entitled to make a claim against the property for that amount of money.
Tax Identification Number Número de Identidad de Extranjeros (NIE)For any economic or professional activity you will need a Tax Identification Number and this has to be produced in a variety of situations:
- Opening a bank account
- Contracting goods and services (telephone, electricity etc)
- Taking out an insurance policy
- Dealing with the national and local tax authorities
- Buying/selling stocks and shares or bonds
We can arrange this for you, or you can apply in person at any National Police Station in Spain.
Moving In
As in this country you have to transfer all the utilities and services into your name and where possible set up direct debits with your Spanish bank to pay the bills. You also need to inform the local Council and Residents Association that you now own the property. The easiest solution is to find a local administrator (Gestor) to arrange everything for you, they are not expensive and this way you can be sure that you have filled in the right forms
Property Owners Obligations
Whether you are resident or non-resident in Spain there are certain obligations to be met:
- Council Tax (Impuesto sobre Bienes Inmuebles)
This has to be paid every year, usually in one lump sum, between the 15 September and 15 November and depends on the location, size and age of the property. Non-payment of the council tax can lead to legal proceedings and an embargo on your property. You should ask your Gestor to register you as the new owner of the property to ensure you receive the demands. The safest way to pay is by direct debit.
- Residents Association charges (Cuota Comunidad de Propietarios).
You must pay these charges otherwise the property can be confiscated and auctioned-off in order to settle the debt.
- Electricity, gas, water, sewerage, rubbish collection bills etc.
- Income Tax
If you are non-resident you must declare any income you have earned in Spain. Even if you do not receive any rent from your property it is assumed that you have earned some rent and this is taxed at 0.5% of the valor catastral.
The tax paid is based on the higher of three values: either the valor catastral, the figure that appears on your council tax receipt; the value declared in the title deed; or the value assessed by the tax authority.
To jump to our other sections on the topic of buying property in spain, see below:
Section 1 - Do I Need a Lawyer?
Section 2 - The Spanish Property Buying Process
Section 3 - Spanish Property - Fees & Taxes
Section 4 - Spanish Property Buying Checklist
Section 5 - Spanish Wills & Inheritance
Should you wish to discuss any Spanish Legal Services, we offer a FREE No Obligation initial telephone consultation.
Please contact:
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Diego Rubio Tel.: 01494 670440 Email.: drm@chebsey.com |
