Like any other country there are particular taxes attached to buying a property, or a business in Spain. The actual taxes involved will be the same for a business or a private property in the initial purchase, and then the maintenance and running costs and annual taxes will be different, due to the nature of the activity to be committed with in the premises. The purchases taxes that you will have to pay, will defer if you are buying a second-hand resale property or a business transfer, compared to a new build or an off-plan property.
In order to buy a property in Spain you must acquire certain paperwork that registers you partly in the Spanish system. Once you have the corresponding paperwork. Then you are able to go to completion with your purchase. It is estimated that you should have an additional 10-15% of the purchase price and on top of it to cover of the buying costs. In terms of only the taxes you will be paying the indirect and direct taxes that will be calculated based on current tax percentages, the property market, and the price of the property at which you buy it.
The taxes you will need to pay will include VAT, stamp duty, transfer tax, and non –resident tax retention.
New builds and off-plan taxes are slightly different, because certain taxes have never been paid on the property, as the property has never been owned or lived in before.
• IVA (VAT)
This is the indirect added value tax, which is payable on most items brought, whether big or small. The IVA in Spain for new properties is 10%. For Plots and Commercial Premises is 21%.
• AJD –Actos juridicos documentales (stamp duty)
This is an indirect tax concentrated on the property value. It is applied to any and all land/property transactions and it is calculated on the property value, so its purchase price and location.
Re-sale/second hand property taxes tend to be quite inclusive of other taxes, so you do not have to several different taxes it is included in one. This makes it easier, but it may also seem a lot.
• ITP –Impuesto sobre transmisiones patrimoniales (transfer tax)
This is an indirect tax of application instead of VAT which is charged to any and all land transaction, where the forth coming owner is not the first owner, this doesn’t include a developer, because while they may own the property, they do no use it and the sole purpose is to sell it when completed. It is a self-assessed tax based on the valuation of the house.
• Non-resident retention tax
If the vendor of the property is not a resident in Spain then the buyer is to retain 3% of the purchase price payable to the Spanish tax office (Hacienda) to cover the vendor’s capital gain liability taxes.
It is and vital aspect of purchasing a property that all the taxes are paid upon completion, otherwise there will be large fines to face in the future. The fines will not only be the amount missing, but with built up interest.
It is advisable to seek consultation to ensure that you pay exactly what you need to without paying too much. In order to pay taxes in Spain you are to have funds in the a Spanish bank account to are slightly more than need make sure all the taxes are cleared and what is left will be returned.
ABAD LAWYERS and ACCOUNTANTS have vast experience in dealing with the process and giving a smooth experience for all involved.