Spanish Property Taxes

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Spanish Tax Overview

The following information is provided by Property Tax International and is intended as a reference guide only.

The Spanish tax authorities tax non-resident property owners on their Spanish sources of income only and are liable to a number of other property related taxes outlined below. An individual is considered resident for taxation purposes if s/he spends 183 days or more in any tax year (calendar year) in Spain.

Spanish Taxes payable when purchasing a property

  • Spanish Transfer fees – rates vary depending on the region where the property is located. Typically vary from
    6% - 7%.
  • Spanish Stamp Duty – varies from 0.5% - 1.1% of the title deeds price for second-hand properties.
  • Spanish IVA (VAT) – Increased to 8% in June 2010 (previously 7%). Applicable on the title deed price of a
    new build property being sold by a property developer.

VAT is not applicable on second-hand properties but a Transfer Fee may apply.

Ongoing property taxes payable in Spain

Spanish Rental Income Tax – a recent ruling by the European Court of Justice forced Spain to change how non-residents were taxed on rental income which came into effect on the 1st of January 2010. Prior to 2010, non-residents were taxed at 24% on their gross income without any allowable deductions. The new ruling allows EU residents to deduct allowable expenses when calculating taxable income.

The new system requires a quarterly income tax return to be submitted by the 20th day the month following each calendar quarter e.g. April 20th, July 20th, October 20th and January 20th. An annual balancing return is no longer required.

Under Spanish legislation a tax is levied on unoccupied or lifestyle properties. Deemed Rental Income is charged at 24% - calculated at either 1.1% or 2% of the property’s rateable value. The Spanish deemed rental income tax return must be filed by the 31st December each year.

Spanish Wealth Tax

Rates vary from 0.2% - 2.5% and are levied on your net assets located in Spain as at 31st December each year.

Tax returns must be filed between 1st May & 20th June. Calculations were based on the property type and the higher of:

  • • The purchase price
  • • The assessed value set by the Tax Authorities or The rateable value

NB: In January 2009 Spanish Wealth Tax was abolished.

Spanish Local Property Taxes

Spanish local property taxes or rates vary from 0.4% to 1.1%. Factors such as whether the property is located in an urban or rural setting and in what region of Spain will determine the rate of property tax. Tax payments are due in September to November each year.

An annual charge for drainage and refuse collections is also payable.

Other applicable taxes are as follows:

Spanish Capital Gains Tax (CGT)

Spanish capital gains tax increased to 19% from 18% (2007-2009). CGT is payable on the profits earned from the sales after allowable deductions. Under the Spanish tax system the purchaser of a property must withhold a 3% Public Treasury Tax of the purchase price and transfer to the tax authority within one month of the sale.

The payment is to cover any possible tax liabilities the seller may have incurred. The seller is obliged to submit a CGT return and should the 3% withholding tax be more than the actual CGT due a Spanish tax rebate would apply.

Spanish Inheritance Tax (IHT)

Spanish Inheritance Tax rates vary from 7.65% - 34% and are applied accordingly based on a variety of factors including the relationship between the deceased/ donor, the inherited amount and financial position of the receiving party.

Property Tax International specialise in the preparation and filing of Spanish income tax returns for non-resident property owners.

Worldwide Income

Tax residents often taxed on their worldwide income (including rental income from an overseas property investment). Spain has a double tax treaty with a substantial number of countries around the world. Most double tax treaties provide relief for taxes paid in one country against tax due on the same income in the taxpayer’s tax resident country.

It is advisable that you check with your resident tax authority if a double tax treaty exists and what income is covered by the treaty.

While Property Tax International Limited makes every effort to ensure that the information contained herein is accurate, we take no responsibility or liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon. The information provided above is intended as a guide only.


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