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A beginner's guide to purchasing property in Spain
efficient. You have been the best firm worked to help us. Thank you." Client Introduction - Buying a property in Spain Inheritance laws and ownership Types of purchase + Domicile and residence + Existing properties Wills and estate planning + New properties ("off plan") + Gift of property NIE - Número de Identificación de extranjeros (foreigners' identification number) + Income Tax (Impuesto sobre la Renta Stages of a purchase de no residentes) Preliminary contracts + IBI (Impuesto sobre bienes inmuebles) + Existing properties + Wealth tax (Impuesto sobre el patrimonio) + IVA (Spanish VAT) + New properties ("off plan") + Capital Gains Tax (CGT) + Planning consent + Plusvalía + Bank guarantees + Inheritance Tax (IHT) + Licence of First Occupation + Tax Summary table + Coastal laws and land grab Costs and expenses Completion and the Deed of Sale (Escritura de Compraventa) + Conversion guide Power of attorney + Legalisation (apostille) Ownership structures + General advice and tips for buyers of property in Spain + Individual+ Company NIE Application Form

Buying a property in SpainSpain has a surface of over 195,000 square miles (500,000 km2) and almost 3,084 miles (5,000 km) of coastline. Though more than twice the size of Great Britain, its population is roughly one third smaller. A country of infinite variety country property, villa or differ from those with which and character, coupled with an apartment in a seaside or they are familiar. an agreeable climate, it is not surprising that so many people In the following pages, we buy second homes there or Despite occasional bad press briefly outline some of these move to live there permanently. and the recent downturn differences and identify the Outside the large cities, the during the recession, buying a main pitfalls. This introductory relative under-population of property in Spain need not be a booklet is not, however, intended Spain means that these visitors traumatic or overly-worrying to be a comprehensive guide or new residents are easily exercise provided that the buyer and buyers should therefore accommodated and welcomed, understands and accepts that the obtain individual advice before whether they buy an existing legal procedures in Spain may embarking upon any transaction.
A beginner's guide to purchasing property in Spain
Types of purchase Completion of the sale cannot Timeshare
take place until the actual You may decide to buy an property is built. The length A timeshare is a form of existing property from a private of time can vary greatly and ownership or right to the use individual or company that has the contract period is usually of a property most often an been already been built for some between 1 to 3 years before the apartment in a co-ownership time and owned and occupied by property is completed.
development where multiple previous owners (segunda mano).
parties hold rights to use Your personal lawyer should the same property and each In this case the actual purchase check that all necessary building timeshare owner is allotted could be completed within an licences and permits are in place a period of time. These were agreed timescale by both parties and that you also receive a bank once very popular but this form (seller and buyer) after checks guarantee or insurance certificate of ownership has diminished have been carried out to confirm which protects your deposit and in popularity over recent that the property complies instalment payments so that years possibly as a result of with the existing local building these are repaid in the event that bad publicity and a change in regulations and that the seller the property construction is not preference to buyers wishing to is up-to-date with the payment own the freehold, benefit from of local taxes, community of year round holidays, permanent owners' fees (if the property use or potential rental income. is part of a complex or Extra care should also be taken development) and all utilities.
Properties can be bought at on this type of purchase owing to an auction also and this has the legal implications of owning New properties ("off plan")
increased in popularity during a share in the property only and the economic recession period potential issues when trying to These are generally properties with the growth in the number of sell this as there may not be as under construction or recently distressed properties available. many buyers prepared to invest built and not previously owned. Extra care and advice should in a share ownership structure.
Some buyers prefer these as be taken in such purchases as they can specify to some degree there may be charges and other their own requirements and encumbrances attached to the design input. Many believe this property and independent legal type of property has a higher representation is essential as potential investment or return such properties are acquired at as they only pay a relatively the buyer's risk. It would also be small, pre-agreed deposit at the necessary to have finance in place outset followed by instalment and immediately available.
payments, agreed with the developer, whilst the property is being built with the balance paid only at completion. NIE - Número deidentificación de extranjeros (foreigners' identification number) The NIE is an identification and What does a NiE look like?
In person, in the United Kingdom tax number which is required at one of the Consulates and used in all dealings with The NIE document itself is an A4 (London and Edinburgh). the Spanish tax authorities. sized piece of paper on which are You will need to attend one of the We recommend that you apply detailed the holder's full name, consulates in person to submit for your NIE as the initial step as date of birth and NIE (foreigner's your application. We understand early as possible, before viewing ID number). It will bear an that this process is currently properties, when considering official stamp. The number (NIE) taking an average of 1 to 3 months undertaking a purchase in Spain.
itself starts with a letter and is followed by seven numbers and once the signed NIE application This ID number is legally required ends with a letter eg A1234567Z. form and other documents have for non-Spanish nationals for a been stamped and sent to Madrid variety of purposes; whether you for processing.
wish to buy land, have inherited a An application for a NIE can be By power of attorney, in the property in Spain, want to apply made in various ways: for a mortgage or open a bank account, you will need a NIE.
In person in Spain at a national Contact us for further A separate number is required The police station attended for each individual, named buyer, should be the one most closely The process of obtaining the beneficiary or executor of an located to where you have or NIE, though relatively easy, can estate, before they can sign a intend to have your property be time-consuming and costly, public deed in the presence of a in Spain. This can involve the whichever option is taken, we Spanish Notario. Consequently, applicant queuing for several can assist with this process.
it is just as important to obtain hours at the station in order to this ID number as early as submit the application in person NIE registration and activation possible in the course of any before being given a receipt Once NIEs are issued they need transaction in Spain.
and having to return in person to be registered and activated with the Spanish tax office. As Many people do not know that to the station to collect the part of our NIE service, we can they need a NIE, often through NIE document in due course. arrange for this to be carried out being poorly advised. Residents The time to process the on your behalf by a gestor (form and non-resident foreigners alike application will depend on of tax agent/official normally need such a number to carry the local police station that involved in property transfers out any activity in Spain which deals with the application in Spain to deal with payment of has tax consequences. Delays and can vary between issuing taxes and registration of deeds).
in obtaining this ID number can on the same day or a few have serious consequences and subsequently result in postponed completion dates.

A beginner's guide to purchasing property in Spain
As in the United Kingdom, the offered to him and that it purchase of Spanish property contains all the appropriate is usually achieved in two clauses for his protection. stages; a form of preliminary We can review the contract, contract and later by signature explain its terms to you and of a completion deed. Here, negotiate with the seller should however, the similarity ends. it be necessary to request any The preliminary contract used amendments or additions for in England, for example, is your protection. Completion very different from the types takes place in the presence of of contract used in Spain.
a local Notario (Spanish Public Official) and with signature In Spain there is no one single of the purchase deed (Escritura form of preliminary contract used for all sales and the different types may vary greatly in content Once the deeds are signed, the relevant taxes must be paid before the deed can be duly Before signing any paperwork, registered at the local land the buyer should ensure that registry where the property he understands the document A beginner's guide to purchasing property in Spain
may be of interest if the buyer has not decided whether or not Once a price is agreed a verbal to purchase the property as it contract exists and you may then would give him the possibility be invited by an estate agent or of withdrawing from the sale by seller to sign a document usually forfeiting the fee paid.
entitled contrato privado de compraventa. Such a document frequently consists of a printed New ("off plan") properties
form with sections completed by When purchasing a new property the agent. There are many such from a developer, you would contracts in operation, some be invited to sign their purchase being more favourable to the contract and that there is little buyer than others. room to negotiate the terms. Nevertheless, we always advise It is advisable not to sign any buyers to have the terms and document without first having conditions checked by an it checked by an independent independent lawyer to ensure solicitor of your choice and/or that there are no onerous clauses prior to any surveys and legal of which you are unaware and to checks being carried out on negotiate, where possible, with the developer the addition of any special clauses should this be Once signed, these contracts are needed to protect your interest.
binding. In such cases the other party can force you to complete The contracts in use include the sale and it is not always contratos de arras (reservation possible to get out of the contract contracts) and contratos de simply by forfeiting your deposit.
compraventa (sale contracts).
Provision is made for deposits In some cases the sellers and stage payments to be held, may offer you an "option to in specially-designated bank purchase" (contrato de opción accounts, for the protection of de compra) whereby the buyer the buyer; the developer or seller pays a fee to have the right to also has an obligation to provide purchase a property rather than bank guarantees or an insurance entering into a formal purchase policy to protect such deposits agreement. These contracts and payments.
essential in the event of a resale. A buyer should be given the bank Without this it could be difficult guarantee or insurance certificate These would be carried out by or impossible to re-sell the with details of the amount of your independent lawyer, if money in question.
appointed, before you enter into any private contract (stage 1). Always ensure your lawyer Licence of First Occupation
has checked that the property Your lawyer will verify that the complies with local regulations The Licence of First Occupation, person selling the property to and is not in breach of planning Licencia de primera ocupación, is you is the registered legal owner. laws. Should you fail to do so, a licence issued by the Town Hall This is not always the case and, in you could discover that your which is granted once building Spain, unregistered property still property did not have or had not works have been completed, exists. Your legal representative been built in line with the consent and allows buyers to live in a can also verify the description of granted. The ultimate sanction property. If one is not issued the property and any charges and for such non-compliance would it could be an indication of be demolition of the property at underlying legal problems.
The Notario will also ask for a This licence confirms that the land registry search against the property has been completed property, however, this will and that complies with the be carried out and provided at The Aval Bancario (Bank original building licence issued completion (stage 2). Guarantee) and insurance to build the property and that contract were established by the property is habitable and law in 1968 with the intention of fit for use.
protecting buyers acquiring off Spain, in common with most plan property. The developer It is possible to complete a European countries, has strict must guarantee the return of purchase without this Licence planning laws. Many buyers the deposited amounts plus but without it you may be unwittingly fail to check that interest, through an insurance unable to have access to their property does not fall foul contract or by a bank guarantee, utilities at the property and be of the planning regulations and if construction work does not an impediment to obtaining a can find themselves in difficulties commence or finish within the mortgage other than one with their local town hall. agreed timescale.
offered by the developer.
Regulations vary from town to These monies should be held in a Our advice to clients is not to town and co-ownerships so, if special bank account opened for complete the purchase without in doubt, check with your local this purpose and separate from such a licence.
town hall. The same applies if the developer's general account. you wish to make changes to your property once you have Charges and unpaid bills
It should be expressly stated in bought it. If you fail to get the the contract including specific Your independent lawyer should appropriate planning permission, clauses regarding the guarantee carry out the aforementioned you will not have the correct and the deposit.
land search and checks to see paperwork which would be

Legal checks continued
if there are any encumbrances, This has resulted in many high mortgages, seizures or other profile cases and scandals in limitations or any debts arising recent times and numerous from a failure to pay the dwelling protests against the Valencian tax (IBI) or communal charges.
regional government which has been taken to the If the property forms part of a co-ownership, he should also request a certificate issued by the However, this only affects land administrator of the community designated as rural land and, of owners as proof that the therefore, if you buy a house seller has made all payments re built on land legally designated communal charges due to that as urban land this should not date or completion. A buyer can be a problem.
sign a deed of sale without this but it would be at his own risk.
Another check to be carried out if you are buying near the seaside Coastal laws and land grab
is to make sure that the Spanish Coastal law (Ley de Costas) In Valencia the so called passed in 1988 does not affect "land-grab" law (Ley Reguladora your property. This was approved de Actividades Urbanísticas), with the aim of protecting permits private developers to act the Spanish coastline and of as urbanisation agents with the providing public access to this. power to force land owners to Therefore, it prohibits sell their land at low prices or to construction within certain pay high charges for installation limits and also establishes some of an infrastructure. limitations on the actual buildings.
A beginner's guide to purchasing property in Spain
Escritura de Compraventa The second stage of a transfer In general, a Spanish Notario will electronically of the sale; he of ownership is completion not advise upon or explain the will not, however, deal with the formalised by signature of the contents of the deeds in advance actual registration of the deed on deed of sale. Spanish law requires to a buyer. Buyers are therefore behalf of the buyer. Your lawyer that this deed be executed in the advised to take independent should organise payment of the presence of a Notario in Spain.
legal advice from suitably necessary taxes before the deed experienced lawyers before any can be sent to the land registry On completion, any deposit such document is signed. Be for registration. paid should be taken as part of very wary of a mere translation the purchase price. The balance of any document as this may be The sale is deemed to have taken of monies will be due and from insufficient or even inaccurate. place at this completion stage the date of signature the buyer It is unlikely to contain an but registration of the deed at will be the legal owner of and explanation of the actual legal the land registry is a key element responsible for the property.
meaning and implications of completion as any buyer will of clauses or references to not have the benefit of protection For many, it is not convenient or particular Spanish laws. from potential third party claims possible to go to Spain to attend A translator cannot and is not until the actual registration the Notario's office just to sign employed to identify missing formalities are concluded.
the Spanish deed of sale. In such clauses which should be added circumstances, they can grant for the buyer's protection nor If taking a mortgage to purchase power of attorney to a third to explain the legal implications the property your lender will party, who could be a friend, of the documents they translate.
normally deal with the payment their lawyer or a gestor, for of the taxes and registration of example, to sign the deed of sale The original signed deed is the deeds to make sure that they in their name and on their behalf.
retained by the Notario in his register their interest and charge archives and an official copy on the property, however, your In the case of properties forming (copia auténtica) of the same lawyer will be able to supervise part of a multiple development is produced which is then this and confirm the actual such as an apartment block, sent to the land registry registration for you.
the Notario will also draw up for registration, recording estatutos de la comunidad or ownership of the property co-ownership rules. These in the name of the buyer and are often lengthy and new owner. The Notario can inform the land registry A beginner's guide to purchasing property in Spain
Power of attorney To avoid having to travel to Spain Unless the buyer is happy with (paper or waxed) impressed purely for the signature of the this or there is any specific reason over the ends of the ribbon to deeds, buyers may opt to sign behind it we advise our clients prevent the possibility of pages a Spanish or bilingual power to avoid such generic powers being substituted without of attorney in the UK, Poder which are open to misuse so breaking the seal or binding. notarial de compraventa, in the that they are better protected The notary may also impress presence of a Notary Public.
and with greater control of the his seal on each individual page. powers granted.
Once notarised, if the deed is to The requirement for it to be be used in Spain, it will need signed in the presence of a UK Before a power of attorney can to be legalised. Notary arises as a result of the be used in Spain it also needs to Spanish legal requirement that be duly legalised by the Foreign a power of attorney be signed and Commonwealth Office with in the presence of a Notario; the apostille in accordance with An Apostille is an official this public official confirms the The Hague Convention. legalisation certificate applied identity of the person granting to documents by the Foreign and the power of attorney and the Commonwealth Office (FCO) legality of the document.
so that they will be valid for Notarisation is the act of a international use and recognised A power of attorney or proxy notary public and is authenticated in member states without further appoints a third party (often by his signature and official seal, legalisation in accordance with a friend of the buyer who is certifying the due execution in his the 1961 Hague Convention. conveniently resident in Spain presence of a deed, contract or or more commonly a gestor, other document or verifying a fact Notarisation of documents to be agent or lawyer) to sign the deed of which the notary public has used overseas or for certifying of sale on behalf of the buyer certain knowledge eg the identity document copies is a frequent in the Notario's office at a time of the signatory. This formality requirement. Once a document convenient to the Notario and is often required for documents has been notarised by a Notary which are to be used overseas or Public, it may need to be for certifying document copies as legalised. In the UK, this means We would normally advise that authentic copies.
that the Notary's signature any power of attorney be as and seal are certified by the specific as possible and that it In the case of a power of Foreign and Commonwealth should contain details of the attorney, the document must be Office. Once satisfied as to property to be bought together executed (signed) in the presence such authenticity an apostille with the price (or at least the of the notary who will in turn (legalisation certificate) will be maximum that you are prepared confirm that it was duly signed attached to the document.
to pay for the property) so in his presence and he will also that you are protected. We sign, stamp and/or seal the If the country in which it will be often see very broadly drafted deed. Though the practice is less used is not party to The Hague powers of attorney where the common today, the notarised Convention, the notarised person granting the power gives deed and attachments may be and apostilled may need to be authority to his representative to bound or sewn with ribbon or legalised by the Consulate of buy any properties at any price. tape, with the notary's wafer seal said country.

A beginner's guide to purchasing property in Spain
The structure or title is an future but it is also important There have been numerous important aspect of the purchase to bear in mind that they would different options in the past being to be considered at the earliest be joint owners with rights of by way of an off-shore company stages, before any contracts are ownership and allowing property which would have a higher tax entered into. The reason for this to pass directly to children burden in Spain, a SL (Spanish is that a change of ownership on death of an owner could limited liability company) or structure at a later date, though take control (and potentially an English limited company. not necessarily impossible, may profits on sale) away from a All have tax implications.
be an expensive exercise as the surviving spouse.
Spanish tax authorities normally The company vehicle has for tax any transfer of ownership Every case is different and a long time been put forward when property changes hands.
requires specific legal and tax as the panacea to reduce any advice both in the UK and Spain; potential Spanish inheritance tax liability, however, there are some UK domiciled owners would need to consider any impact on important tax considerations to This is normally the most their potential UK tax liability.
be taken into account from a UK common way of purchasing perspective and so it would be property in Spain where the Ownership in life interest wrong to assume that this is the actual owners register the (usufructo) could help reduce a best vehicle to purchase a property in their personal names. future inheritance liability but Spanish property.
UK tax advice would be required Only in very specific cases, The property could be bought before this structure is put in might it be advisable to purchase in a sole name, jointly with a place re Spanish property to a property through a company spouse/friend, with children or ensure that it did not impact rather than in an individual's by a group of people.
negatively on UK tax liability.
name and it would be necessary to study all the available options A possible disadvantage to to establish whether this was an buying the property in a sole appropriate choice.
name is the potential future The decision to purchase inheritance tax liability on the a property in the name of whole value of the property a company is a complex upon the owner's death. issue and would need to be Including a spouse or children investigated looking at the as registered joint owners may particular circumstances of help reduce this liability in the the individual case.

Inheritance laws It is always prudent to plan ahead courts have applied Spanish law one's home but, in common law and consider how overseas laws to distribute a deceased English jurisdictions, including for UK could affect your estate once owner's assets. This therefore nationals, they are different legal you are gone in order to protect needs to be considered at the concepts and can significantly your loved ones. Fortunately, in earliest stage possible by impact on their tax liability. general, English law can apply existing or potential non-Spanish to the succession of an English owners of property in Spain. Many people relocating abroad national who has property An important point to consider ("ex-pats") from the UK do not is domicile and residence.
necessarily consider this before they leave the UK but it is worth This, however, is by no means Domicile and residence
considering certain key factors as definitive or entirely clear cut and a UK ex-pat's continuing liability the law applying to such an estate In many countries the terms to UK tax will depend on his can be open to debate. Indeed, "residence" and "domicile" are residence, ordinary residence in certain cases, the Spanish interchangeable referring to and domicile status. A beginner's guide to purchasing property in Spain
In the UK, many factors affect Domicile of dependency:
Expert, specialist tax advice is domicile but broadly speaking, Children aged under 16, essential in order to be certain this is considered to be where you would acquire a "domicile of of a person's position both at have your fixed and permanent dependency" which is the same home and abroad.
home to which (when absent) as their parents' but the child's you intend to return. Entirely domicile of origin is still the A person's country of domicile distinct from nationality or domicile acquired at birth (or on and their residence, whether residence, you can only have adoption) and not necessarily these are both the same or one domicile at any given time.
where the child is born. Once entirely different locations, can over the age of 16, the child can impact considerably on their Domicile of origin: In English
also acquire a domicile of choice.
liability to taxation. law, everyone has a domicile of origin which is usually that of Residence: The definition of
their father (if their parents were residence is no less complicated married when they were born) for tax purposes and once again or the domicile of their mother, varies from country to country. if not. This remains their domicile One of the criteria taken into of origin throughout their lives account in the UK is a person's and cannot be changed. physical presence within the UK during a particular tax year. Domicile of choice: It is possible,
There are general guidelines however, for a person to acquire regarding this and, if present for a "domicile of choice" by moving 183 days or more, they will be to live abroad with the intention deemed resident. Some countries of settling there and making it also determine residency by their permanent home for the reference to other factors, such rest of their life. This would as home ownership, family and usually involve consciously financial interests. Ordinary severing many of their ties to residence in the UK, however, their domicile of origin. People requires habitual residence in often mistakenly believe that the UK and confusingly a person they have changed domicile can be resident without being when, legally, they have not.
ordinarily resident and vice versa.

A beginner's guide to purchasing property in Spain
As previously stated, in general, do not conflict with each other Spain or to have them notarised English law will usually apply and that they deal with the assets but they must be validly executed to the succession of an English in each country without one Will in accordance with English law.
national who has property in inadvertently revoking the other.
Spain but this is not set in stone. We would advise that any clause What is certain is that whether This helps to avoid complications relating to Spanish property is or not the owner is resident regarding the particular law carefully drafted by a specialist in Spain, all real, immovable that will apply to the succession Spanish property lawyer in property situated in Spain will and should minimise potential order to avoid any potential always be subject to Spanish problems at a later date. future problems regarding the inheritance tax and the tax rate interpretation of the English can be as high as 81.60%. English Will or Codicil
Will or Codicil in Spain.
Property owners can deal with In practice, for an English On death, it is usually necessary the devolution of their Spanish national, the Spanish authorities to provide certified or sealed assets either in an English Will will normally accept a valid copies and translations of the or Codicil or in a Spanish Will.
English Will or Codicil that English Will or Codicil and the deals with the disposal of English Grant of Probate. For It is essential that the Testator Spanish assets.
this reason, it is usually more ensures that any Wills made in cost-effective to have a short different countries/jurisdictions There is no need to formally Codicil dealing with overseas such as both England and Spain, register a UK Codicil or Will in property to translate rather than a potentially lengthy these formalities, signature Life interest or Usufructo
tax planning Will. It may of the Spanish Will can take also be necessary to provide place in the presence of a This is the right of enjoyment and a Certificate of English law. UK Notary Public. In such use of a property whilst not the circumstances, it must then legal owner of the real estate. Spanish Will (bilingual)
be legalised at the Foreign and Commonwealth Office The person who benefits from Many people opt instead to in the UK for use abroad and this has the right to enjoy the make a Spanish Will dealing sent to the Wills Registry in use of the property for life eg with their Spanish assets.
Madrid for registration. this could be a spouse in second A Spanish Will is normally Gift of property in Spain
signed in the presence of a On death, the life interest Notario Público in Spain, It is also possible to dispose expires and absolute ownership who notarises the Will, of Spanish property by way of the property reverts to its retains the original and of a lifetime gift (inter vivos). legal owner eg children from registers it at the Madrid Tax advice would be required a first marriage. UK tax advice both in the UK and Spain would be required before such regarding the taxation a structure be put in place to Where it is not convenient of the gift.
ensure that this does not have a or possible for a Testator to negative impact on UK estate travel to Spain to complete and tax liability.
There are numerous differences their criteria including not land registry and tax costs in between legal procedures in the only the loan to value amount the region of 1% 1.5 times the UK and Spain but the major factor but have also established a amount of the mortgage would is that Spain operates within a more conservative valuation be incurred.
notarial system. Consequently, system allowing for potential all documentation in relation depreciations and personal As in any country, tax must to mortgages and property unfortunately be paid in Spain must be signed in the presence also. Many people find the of a Notario.
A mortgage on a property could property tax is lower than reduce any future tax liability (eg their average rates or council Spanish mortgage interest is inheritance or annual wealth tax) taxes payable in Britain. mostly based on the Euribor, but it would increase costs at the The following are the principal the base interest rate set by the time of purchase as notarial, taxes to be aware of.
European Central Bank. Various types of mortgages are on offer including fixed, variable or mixed interest rates whilst interest-only mortgages are not as common in Spain as in the UK.
Another aspect to consider is the personal liability that the person taking the mortgage offers. The borrower not only engages his responsibility with regard to the mortgage and monies borrowed with a guarantee provided by the property in Spain but also is personally liable with his worldwide assets. There are different proposals being considered at present in Spain on this topic with a potential move towards real estate guarantees only so a change in this area is something to look out for. Lending criteria are constantly changing in accordance with the vacillations of the housing market. In current times of recession, lenders have considerably tightened up A beginner's guide to purchasing property in Spain
income Tax
town and is normally 0.4% to In the Canary Islands, a special 1.3% of the aforementioned tax known as IGIC is applied at If property is let, income cadastral value. a standard rate of 7%. This is tax (impuesto sobre la renta) the Impuesto General Indirecto may be due in Spain. This Canario. A special duty on imports must also be declared in the Wealth Tax - El impuesto
and certain goods in the Canary UK by UK residents and an sobre el patrimonio
Islands is also payable. The allowance granted for the tax El impuesto sobre el patrimonio recent tax reforms introduced a paid in Spain.
was abolished in Spain in 2008 special VAT consolidation regime but reinstated in 2011.
applicable to corporate groups.
The Spanish tax year follows the calendar year, running Individuals have an allowance from 1 January to 31 December. Stamp duty - impuesto de
of 700,000€ each.
The declaration and payment actos jurídicos documentados
is due annually within the month This tax applies to both new of January for the previous IVA - Impuesto sobre el Valor
property purchases where the calendar year.
Añadido (Spanish VAT)
property is purchased from the Spanish VAT (a sales tax or developer and to mortgages. For non-residents rental income value added tax in the UK) is It is calculated at the rate of in the is taxable at a flat rate of 20% called IVA - impuesto sobre el region of 1% of the value of the with limited deductions (2015). valor añadido. property for the purchase and 1% A tax specialist or accountant of approximately 1.5 x the value can assist with the tax return The standard rate of IVA is 21% of the mortgage.
process if required.
with reduced rates of 10% and 4% applying to certain goods Even if a property is not let, Transfer Tax (ITP) -
or services.
owners may find themselves Impuesto de transmisiones
being charged a deemed rental The 10% rate applies to goods income tax (Rendimientos del and services including the When purchasing a property Capital Inmobiliario) of 2% of the purchase of new properties. from an individual and not cadastral value (valor catastral) directly from a developer, or 1.1% if the cadastral value was In addition to the general regime, transfer tax applies to the transfer revised after 1 January 1994. there are special cases where and not Spanish VAT (IVA).
other Spanish VAT rates and rules IBI - Impuesto sobre
apply such as travel agencies, Transfer tax is regulated by each antiques and agricultural or regional government and varies livestock production. from 6% to 10% of the value of This is an annual local tax similar to rates and it is calculated on Some professional activities the cadastral value of a property are exempt from Spanish VAT The buyer is responsible for the (the rateable value or the such as financial and insurance payment and the payment is value for tax purposes that it institutions and agency due on completion and before is given by the tax office). commissions as well as doctor's registering the purchase deeds at The IBI varies from town to and dentist's fees. the land registry.
Capital Gains Tax (CGT)
up to the time of the sale, no urbana, due on a sale or - impuesto sobre la renta
capital gains tax is due.
inheritance of a property and de no residentes, ganancia
is payable by the seller or Capital gains tax for non residents is charged at 20% Capital gains tax in Spain is in 2015 on any gain made and It varies from town to town and payable on the sale of land or there is a retention of 3% of is calculated on the increase in buildings and is called impuesto the purchase price which any value of the urban land between sobre la renta de no residentes, buyer is, by law, obliged to the former acquisition date and retain and pay to the tax office the disposal of the property.
on account of CGT for a non It is also payable on the sale resident seller.
of shares and certain other personal property.
Inheritance tax is paid in Spain by each beneficiary and not On the sale of a principal This is a local tax, impuesto by the estate. Therefore residence where the seller sobre el incremento de valor beneficiaries are liable to pay has been habitually resident de los terrenos de naturaleza inheritance tax in Spain but A beginner's guide to purchasing property in Spain
only for the Spanish assets linked and start at 5% if paid that they will inherit.
within the following 3 months. The rate increases to 10% if It is relatively complicated to the IHT due is paid within the calculate and depends on the following 6 months, 15% if value of the estate, the degree within 12 months or 20% plus of relationship to the deceased interest thereafter. and the pre-existing wealth/ assets of the beneficiary Until the taxes are paid it is not (tax payer).
possible to register the change of ownership of the property at There are individual allowances the land registry nor to receive for each class of heir and the tax any funds deposited in a rate is progressive, these vary Spanish bank.
depending on the regional area. In the case of remote relatives There is no double taxation treaty or non-relatives, the final for inheritance tax purposes amount could be doubled between England and Spain but (the sum could be multiplied the Revenue does usually give a x 2 or more, up to x 2.4).
credit for inheritance tax charged by another country on assets The relevant co-efficient which situated in that country. takes into account the degree of relationship with the deceased Gift Tax (IHT)
and the beneficiary taxpayer's pre-existing net wealth If a lifetime gift is made, the (for non-residents, pre-existing beneficiary may be liable to pay net wealth is calculated only gift tax. Gift tax is determined on the basis of Spanish assets) by the local tax offices and may is applied to calculate the final vary depending on the area in inheritance tax liability.
which the property is located. Inheritance tax should be paid within 6 months of the date of death (otherwise further charges and interests may be charged). A further 6 months' extension can be requested, if necessary, within certain fixed timescales. The penalties for payments outside that period are time A beginner's guide to purchasing property in Spain
Tax summary table PAyABLE By
+ 20% of gross rents without any deduction on rental income income tax
Impuesto sobre la renta Owner of the property + 2% deemed letting income of cadastral (fiscal) value of property or 1.1% for certain properties for non-rented holiday homes IBI
Impuesto sobre bienes Inmuebles Owner of the property Contact the local Town Hall for details (local Council tax) Capital Gains Tax (CGT)
20% for non residents impuesto sobre las 3% of purchase price withheld by buyer and ganancias de capital paid directly to tax authorities. A further payment or refund may be required.
(local Capital Gains Tax) Seller Contact the local Town Hall for details PAyABLE By
Transfer tax
10% of value of property + in the region of 1% IVA - impuesto sobre 21% for commercial properties, parking el valor añadido spaces or purchases of building plots from a corporation or property developer 7% of value of property+ 1% stamp duty ITP (Impuesto de Approx. 6-10% of value of property depending transmisiones on the area where property is located Stamp duty
Impuesto sobre Buyer (new property only) In the region of 1% Actos Jurídicos Each beneficiary inheritance Tax (iHT)
Impuesto sobre Progressive rates - depending on relationship of sucesiones UK residents – do not forget to declare this to the beneficiary to deceased. Revenue also.
Donee (beneficiary) Allowances and % vary depending on the areas where the property is located.
In addition to tax, there are a number of expenses that will be due in any property transaction in Spain. These could include any or all of the following: Transfer tax (IVA/ITP) Land Registry fees Variable and usually up to 0.25% of value Variable and usually up to 0.5% of value of independent legal advisor:
Power of attorney in the uK:
+ Notarisation fee - Notary public Variable (depending on Notary public) + Legalisation (apostille) Foreign and Commonwealth office £41 approximately fee/rapid service Surveyor's fees (if required) Estate Agency commission Variable (usually in the region of 2% - 5%) A beginner's guide to purchasing property in Spain
Purchasing a home in the UK is a major undertaking, financially and emotionally; purchasing in another country with unfamiliar laws and language is equally stressful.
Remember!
+ Be sure you know what you + Never write anything on a contract unless you are sure that you understand fully both the content and legal implications of what you + Obtain independent legal advice before signing anything or making an offer . to ensure that the transaction proceeds as smoothly and efficiently as possible.
A beginner's guide to purchasing property in Spain
This booklet is not intended to
Our services are not limited to As, however, the booklet be a comprehensive guide to
dealing solely with the purchase contains only a brief summary buying Spanish property but
of property in Spain. Many of the main provisions of the merely aims to make the reader
ancillary matters may be dealt law concerning the purchase of aware of some of the more
with as required, such as setting property in Spain, we cannot be up Spanish property owning held responsible for any errors or companies and commercial omissions. Readers are therefore We can advise upon all aspects of companies, Spanish tax and advised to seek individual advice.
the transaction from preliminary inheritance planning, letting contract through to completion your Spanish property, etc.
For further information on our and can help the potential buyer services please contact us at to avoid the problems which Whether you are a private the address below: can arise from unsatisfactory buyer, a property developer contract conditions or the or you are planning to Slater and Gordon (UK) LLP unforeseen consequences of acquire business or commercial 58 Mosley Street Spanish inheritance law. premises in Spain, we can We liaise with the chosen take the worry out of the Notario in Spain at every stage of the transaction and aim to ensure that our client does not The information contained in sign any document without fully this booklet is believed to be understanding its contents.
correct at the time of printing. General guidelines and
5. Consider the exchange rate C. Before signing the
tips for buyers of property
implications – one-off and ongoing - and speak to foreign exchange companies Have the contents of this contract checked A. Before setting off for Spain
re options, as well as to and explained to you by 1. If possible, seek preliminary independent, specialist legal legal advice even before advisors, ensuring you are B. When you have found your
going to Spain. We would aware of the legal implications dream home
be pleased to assist from the and that the contract includes earliest stage.
1. If possible, inspect the any particular clauses or property carefully, including conditions you require, 2. Consider whether the loft and cellars, etc., as details of any items which you property should be purchased you would in the UK. Look consider to be included in the in a single name, in joint for evidence of damp, dry purchase price eg building names or in the name of a rot, subsidence cracks, materials on the property, company, bearing in mind woodworm, etc. If necessary furniture, etc., and a clear Spanish laws and taxes.
arrange to have a survey. indication of the boundaries of your property outlined, if 3. If you are to seek a mortgage The contract will state that possible, on a "plan catastral".
to finance the acquisition, you are purchasing the compare mortgage rates and property as seen and you may conditions, lending criteria, have no recourse against the D. Post contract and before
etc., of various lenders or seller at a later date for any the escritura de compraventa
mortgage brokers in the UK problems which arise.
is signed
and/or Spain to ascertain 2. Inspect the surrounding area 1. Deal with any mortgage in advance what you can for possible problems eg application in good time afford to buy (including eg unpleasant smells, noise, fees, renovation costs). Life rights of way across your 2. If a company is to be formed, assurance is usually essential property, etc.
deal with all formalities as with Spanish lenders though quickly as possible.
certain banks may offer 3. Ask at the Ayuntamiento special arrangements for (Town Hall) about any 3. Agree a completion suitable clients.
development plans for the date and arrange travel/ area (eg a motorway, 4. Find out which documents will airport, nuclear power be required to support your 4. Request the Notario and station, refuse tip, etc.).
loan application (some may your legal adviser to provide not be readily available).
4. Never make under the table in advance the following payments as this is illegal.
A beginner's guide to purchasing property in Spain
+ a certificado de no infracción Make sure the appointment urbanística" from the is made in good time and keep the appointment.
+ a draft deed of sale Ensure you know where the + a power of attorney, office is if going in person. + confirmation of the balance F. After the escritura de
of the purchase price plus compraventa has been signed
Notario's fees and taxes 1. Obtain temporary proof (so that monies will arrive of ownership (copia de la in Spain in good time).
5. Make sure the funds are 2. Obtain authentic copy of the transferred in full in good time deed of sale (copia auténtica") to your legal representative in due course.
and that all bank charges in the UK and Spain are deducted 3. Arrange for transfer of any at source, not from the goods and furniture to Spain, money transferred or that the bank drafts to be handed on completion are organised. 4. Consider asking a neighbour If there is a shortfall, it will or appointing a caretaker in delay completion. Spain to forward any post (to avoid missing notification 6. Arrange insurance on the of important documents etc), property in your name to inform you of any problems come into effect from the day or damage to the property you become the legal owner (to facilitate insurance claims (at completion).
and carry out urgent repairs).
7. Open a Spanish bank account 5. Arrange to connect to facilitate payment of bills, utilities, set up direct debits etc, by direct debit. (domiciliaciones bancarias) and arrange for bills to be E. Signature of the escritura
sent to your home address de compraventa
This takes place at the Notario's office in person or by power of attorney. NIE Application Form NIE Application FormSlater and Gordon UK (LLP), 58 Mosley Street, Manchester M2 3HZ. Tel: 0800 916 9083 Fax: 0161 383 3636Please complete a form for each applicant (a) Date and (b) Place of birth (a) Passport number and (b) Expiry date Purpose of applicationeg. house purchase (principal residence or second home), inheritance, relocation to Spain Do you need assistance with: Spanish legal conveyance documents? Power of attorney (at completion)? Spanish bank account? Spanish mortgages Spanish inheritance law? Do you have an English or Spanish Will? A beginner's guide to purchasing property in Spain
A beginner's guide to purchasing property in Spain
Primary contacts
Lindsay Kinnealy
Principal Lawyer, International Property Telephone: 0800 916 9083 Susana Lajusticia
Senior Associate, International Property Telephone: 0800 916 9083 Slater and Gordon UK (LLP) is authorised and regulated by the Solicitors Regulation Authority.
Slater and Gordon have offices nationwide. If you think we could help, visit

Source: https://www.slatergordon.co.uk/media/5388700/buying-property-in-spainrebrand2015awe.pdf