Taxes on the real estate propery for non residents

I) Taxes on the adquisition

A) Second hand property

ITP: 10% of the price.

Tax form: 600

Tax deadline: one month from the date of adquisition (deed’s date).


B) New building:

VAT: 10% of the price. VAT is paid to the seller, who must issue an invoice charging it.
AJD: 1,2% of the price

Tax form: 600
Tax deadline: one month from the date of adquisition (deed’s date).


C) If a loan is needed and is guaranteed with a mortgage

AJD: 1,2% of the loan plus interests plus responsabilities

Tax form: 600
Tax deadline: one month from the date of the loan concession (deed’s date)


D) Other expenses: Notary, real state register, loan expenses…


II) Taxes on the sale


A) Income tax


1. Capital gains

The capital gain is the difference between the cost price and transfer value of the property.

The cost price is the real cost price of the property, plus all costs and taxes, excluding interests, paid by the transferor. The cost value is corrected by the application of an updating coefficient.

The transfer value is the real price of the agreement. Any costs or taxes related to the transfer paid by the seller can be deducted, basically plusvalia and intermediary agent’s fees.

Depending on the date of adquisition (before 1996), there will be some reductions on the capital gains.

Tax rate: 21%

Tax form: 210
Tax deadline: four months from the date of sale.


2. Withholding tax.

The person who adquires the real estate is obliged to withhold 3% of the price. This amount is a payment on account of capital gains tax arising from the transaction. If the amount retained is greater than the tax liability, the seller can ask for the refund of the difference.

Withholding tax rate: 3%

Tax form: 211
Tax deadline: one month from the date of sale.


3. Plusvalia municipal

It is a municipal tax on the increase of the value of the land since its last sale. The amount can vary widely and basically depens on the tax rate set by the local government and the date when it was adquired.

Tax form: It depens on every townhall
Tax deadline: one month from the date of sale.


III) Taxes during the ownership


A) Income tax


1. Leased property

General rule. The taxable income is the gross income received from the tenant excluding the Value Added Tax.

Rule for residents in another European Union member state. The taxable income is the profit of the rental. That is, gross income minus the expenses that are directly related to the leased property. A certificate of tax residency issued by the tax authorities of that State is needed.

Tax form: 210
Tax rate is 24,75%
Tax deadline

General deadline. Within the first twenty calendar days of the months of April, July, October and January in relation to the income whose accrual date falls within the previous calendar quarter.

Direct debit payment of the tax debt: in the case of electronic filing between the 1 and 15 of the months of April, July, October and January, the payment can be paid by direct debit on the 20th

With zero charge: from 1 to 20 January of the year following the accrual year for the declared income.

With a refund due: as of 1 February of the year following the accrual of the income declared and within a period of four years from the end of the period for filing the return and depositing the withholding. The deadline for filing the self-assessment will be understood to conclude on the date it is filed.


2. Not leased property

Presumption of incomes. The taxable income is the 1.1% of the rateable value of the building (valor catastral) (2% if the rateable value has not been revised or changed since 1 January 1994).

Tax form: 210
Tax rate is 24,75%

Tax deadline: during the whole calendar year following the accrual date.
Direct debit payment of the tax debt: In the case of electronic filing until 23 December, payment can be made by direct debit .


B) Local taxes

IBI. Municipal real estate tax. It is a yearly tax. It is a low tax rate over the rateable value of the building.

Tax deadline: It depens on every townhall. In Barcelona, in July or by direct debit in four instalments
C) Wealth Tax

It is a tax on the wealth of a non resident individual and corporations that is situated in Spain. Tax base is the value of the real estate property minus the debts specifically related to the property (loans for the adquisition). The value is the greater of the three following ones: The adquisition price, the rateable value and the value checked by the tax Agency.

Net tax base: The taxable base will be reduced, by means of an exempt minimum, in 700,000 Euros.

Obligation to file: Filing is mandatory for taxpayers whose tax return requires them to make tax payments. Also, those with assets and rights valued at over €2,000,000 are obliged to file a return, even if they have no tax charge to pay.

Tax rate: from 0.2% to 2,5% of the net tax base.

Tax form: 714
Tax deadline: From May the 1st to June, the 30th


IV) Double taxation avoidance

Spain has signed double taxation agreements with most ot the countries of the world in order to avoid double taxation on the same earnings.

In those agreements, all of them based on the OECD model tax convention on income on in capital, it is ruled where a tax must be paid, the maximum amount of that tax and how the tax payments done in one country can be deducted in the tax residence country.

It is extremely important, for a non resident taxpayer, to be advised by a tax advisor of his tax residence country about how and when a tax paid in Spain will be deducted in his tax return, according to the double tax convention and the internal law.