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Spain is one the most popular countries for foreigners buying houses and apartments in Europe. Spanish and foreign citizens pay annual real estate tax, wealth tax and income tax. Investors are charged capital gains tax and tax on rental income. Companies pay corporate tax of 25–28%.

Spanish taxes, %

VAT 10–21
Title transfer tax 6–10
Registration fees
(including notary fees)
0.5–2.0
Council tax 0.405–1.166
Wealth tax 0.2–2.5
Capital gains tax 20–24
Inheritance tax 7.65–34.00
Income tax 20–47
Corporate tax 25–28

Transaction and registration taxes

When buying property, the seller pays the agency fee and the buyer covers notary and registration fees (0.5–2.0% of the property value) as well as VAT (impuesto sobre el valor anadido or IVA).

It is advisable to establish a company to purchase and own a commercial property since in this casу the owner can apply for refund of VAT within a month.

When buying property in a new residence, there is only 10% VAT. Land for construction and commercial property are charged 21% VAT.

There is also a stamp duty (Actos Jurídicos Documentados or AJD) which equals 1.5% for new residence buyers and 1.8% for commercial property buyers.

Property transfer tax (impuesto de transmisiones patrimoniales or ITP) is charged for pre-owned property and varies by region.

ITP rates in Spain's autonomous regions,
%

Álava
(Basque Country)
6.0
Andalusia 8.0–10.0
Aragon 7.0
Asturias 8.0–10.0
Balearic
Islands
8.0–10.0
Biscay
(Basque Country)
6.0
Canary
Islands
6.5
Cantabria 8.0 or 10.0
Castile
and León
7.0
Castilla-
La Mancha
8.0
Catalonia 10.0
Extremadura 8.0, 10.0
or 11.0
Galicia 7.0
Gipuzkoa
(Basque Country)
7.0
La Rioja 7.0
Madrid 6.0
Murcia 7.0
Navarre 6.0
Valencia 10.0

Capital gains tax (impuesto sobre la venta de inmuebles) is levied on the difference between acquisition and selling prices and ranges from 20% to 24% (in 2015). It is advisable to keep the electronic and paper copy records of all payments associated with it as tax deductions may be possible. From 2016, capital gains tax decrease to 19–23% for individuals.

Capital gains tax

Taxable amount,
EUR
Rates,
%
2015 2016
Under 6,000 20 19
6,001–50,000 22 21
Over 50,000 24 23

Property sellers also pay tax on the increase in value of urban land (Impuesto sobre el incremento de valor de los terrenos de naturaleza urbana or IIVTNU). Its rate varies by municipality. This is how to calculate this tax, for example, in Barcelona:

Tax period 4 years
Price increase
(per year)
2.8%
(11.2% in 4 years)
Property price €500,000
Taxable value €56,000
(=500,000 × 11.2%)
Tax rate 20%
Tax amount €11,200
(€56,000 × 20%)

Ownership, income and wealth taxes

Resident and non-resident owners in Spain pay annual wealth tax (impuesto sobre el patrimonio). It is calculated on net wealth and ranges from 0.2% to 2.5%. Only net assets exceeding €700,000 are taxable and tax for the previous year is paid in June. Taxable items include real estate, income from professional activity, bank deposits, ad hoc income, luxury items (jewelry, fur coats, sports cars, yachts, private jets), art and antiques.

Wealth tax rates, %

Taxable income
over 700,000 EUR
Rate,
%
Maximum amount,
EUR
Under 167,129 0.2 334
167,130–334,253 0.3 836
334,254–668,500 0.5 2,507
668,501–1,337,000 0.9 8,523
1,337,001–2,673,999 1.3 25,904
2,674,000–5,347,998 1.7 71,362
5,347,999–10,695,996 2.1 183,670
Over 10,695,996 2.5

General income tax (impuesto sobre la renta) for residents in 2015 are 20–47% and will be lowered in 2016 to 19–45%. Non-residents are charged income tax (impuesta de la renta de no residentes) at 24% for non-EU citizens and 19% for EU citizens.

General income tax

Rate bands,
EUR
Rates, %
2015 2016
Under 12,450 20 19
12,450–20,199 25 24
20,200–35,199* 31 30
35,200**–
59,999
39 37
60,000
and above
47 45
* 33,999 for 2015
** 34,000 for 2015

Property rental income for non-residents is charged as net income. For example, if their income is €20,000, they are charged 24%, or €4,800. Tax base can be decreased by 2–3% per year through amortization.

Non-residents who do not have any source of revenue in Spain pay taxes on estimated rental income even if they do not let their property. In this case, they are taxed 24% on 2% of the property’s cadastral value (or on 1.1%, for cadastral values amended after 1 January 1994). Income must be declared before 30 June each year. For example, if the non-resident’s property has a cadastral value of €200,000, their tax base is €2,200 and they pay €528 tax.

Occasionally income tax and wealth tax must be declared by more than one person. When real estate is registered to two or more owners, they are considered separate tax payers and must submit separate declarations even if they are married.

Real estate owners pay municipal real estate tax (impuesto sobre bienes inmuebles) which varies by region from 0.405% to 1.166% of the cadastral value. Payment schedules are also regional. As a general rule, the sum payable on Spanish real estate ranges from €200 to €800 per annum.

Municipal real estate tax rates, %

Albacete 0.40500 Logrono 0.58300
Alicante 0.84700 Lugo 0.71500
Almeria 0.49000 Madrid 0.60424
Avila 0.57200 Malaga 0.72320
Badajoz 0.91300 Murcia 0.79970
Barcelona 0.82500 Ourense 0.54000
Burgos 0.46200 Oviedo 0.83160
Caceres 0.82500 Palencia 0.60280
Cadiz 1.11100 Palma 0.80800
Castellon 0.88000 Pontevedra 0.70400
Ciudad Real 0.98000 Salamanca 0.79200
Cordoba 0.76090 Santander 0.52700
Cuenca 0.68000 Saragossa 0.64911
Girona 0.88600 Segovia 0.49400
Granada 0.74030 Seville 0.93170
Guadalajara 0.66000 Soria 0.45760
Huelva 1.16600 Tarragona 1.02080
Huesca 0.97200 Tenerife 0.68750
Jaen 0.66000 Teruel 0.67100
La Coruña 0.59500 Toledo 0.42000
Las Palmas 0.73700 Valencia 1,07100
Leon 0.86900 Valladolid 0.67580
Lleida 0.66500 Zamora 0.62480

Corporate tax (impuesto sobre las utilidades de sociedades) is 25% for small and medium-size enterprises with income below €300,000 and 28% in all other cases. From 2016 corporate tax rate is 25% for enterprises of all sizes.

Inheritance tax

Inheritance tax (impuesto de sucesiones) in Spain is taxed at 7.65% on the first €7,933 of the total amount and can reach 34% and more for inheritance over €797,555 (depending on the degree of relationship).

Disclaimer: the information in the above article is for reference and may be subject to change over time. Persons interested in exact calculations should contact a certified tax specialist in this country before purchasing property.