Frequently Asked Questions

Some of the most sought-after locations include Marbella, Puerto Banús, Estepona, Mijas, Fuengirola and Benalmádena for their luxurious amenities, beaches, and golf courses.

The buying process in Spain has a few distinct differences from the Netherlands and Belgium. One of these differences is the option to reserve the property, but in order for this agreement to be legally binding, a reservation fee must be paid. This fee is typically around 3000 euros, but this depends on the price of the real estate and can be higher. If you choose not to exercise this option, you will lose the reservation fee. Often, the purchase agreement is a combination of a reservation document and a sales agreement. This means that if you do exercise the option and have paid the first installment as stated in the agreement, the option will automatically turn into a final purchase agreement.

If you own a property in Spain, you will also need to apply for a tax identification number (NIE), or Numero de Identificación de Extranjeros. This number will continue to be needed for tax returns. Your legal advisor will support you in obtaining this number.

When the purchase agreement is passed by the notary, you will need to consider approximately 3% to 4% of the registered purchase price for notary, laywer and registration fees. These costs will be charged by the notary based on an estimate. Once the property is officially registered, a final settlement will be made and any over or under charged amount will be adjusted. We recommend our clients to budget for approximately 13% to 14% in total additional costs (incl. all other taxes) when making a purchase. This will prevent any later disappointments.

If you are considering buying a property in Spain and would like to use financing, there are several options available. It is possible to finance up to 70% of the purchase price with a maximum term of 30 years, provided you are not older than 75 years. In Spain, a mortgage is granted on the basis of a valuation report of the property, where income data and a BKR report must also be provided to the bank. In general, the bank finances 60% to 70% of the purchase price, with a term of 30 years. When the deed of purchase is executed at the notary, you must take into account about 3% to 4% of the purchase price in notary fees, attorney fees and registration fees. In the financial world, the Euribor interest rate is used to set mortgage rates, among other things. Spanish banks use the 12-month Euribor. Annually, the mortgage rate for a Spanish mortgage is reset based on the state of the 12-month Euribor. The Euribor rate can be seen as the bank’s cost price, on top of which a margin is calculated for risk and profit. These margins vary from bank to bank and are usually 3% to 4%. A standard mortgage with a term until age 75 and financing up to 70% of the purchase price is possible, with repayment on an annuity basis.

* This information is subject to changes, always consult a specialist.

Of course, there will also be costs in Spain such as utilities, municipal taxes, and in most cases, community fees. The amount of community fees depends heavily on the amenities present in your surroundings and which you share ownership or use with your co-owners. These could include shared parks and gardens, swimming pools, and other facilities. Common areas such as hallways, a gallery, and an elevator are also included. Income tax and wealth tax are entirely dependent on your assets and potential income in Spain. Non-residents are required to appoint a tax representative, who can be a private individual or a company. However, it is advisable to appoint a specialized administration office for this task. The standard tax return fee is around 200 euros. This office can receive your tax returns, make all declarations and payments, and answer any questions regarding your property in Spain. This way, you do not have to worry about the tax matters of your home and can enjoy your property in Spain.

Taxes for Spanish residents are likely to be very low if they purchase a new permanent residence within three years. However, if the new residence is cheaper, they will have to pay 19% on the profit (after certain deductions). If a Spanish resident sells their vacation home for a profit, they will also have to pay 19% on the profit (after deductions), even if they reinvest it in a new vacation home. Non-residents of Spain have also been subject to paying 19% on the sale profit since January 1, 2007. The capital gain is calculated as the difference between the purchase price and the sale price, which is then adjusted for maintenance and renovation costs. The purchase price is also adjusted for inflation using an indexing system. The buyer is required to withhold 3% of the sale amount and pay it directly to the tax office using a 211 form as a prepayment for this tax. This way, the responsibility for payment is placed on the buyer. If the seller does not pay this prepayment to the tax office, the buyer will be responsible for paying the capital gains tax. Residents and non-residents who transfer property acquired in or before 1994 may be eligible for a reduction in capital gains tax, which can even result in a complete exemption. For example, if you owned your house for more than two years on December 31, 1996, you are entitled to a 11.11% reduction for each year before that date.

* This information is subject to changes, always consult a specialist.

When purchasing from a project developer, you will be charged 21% IVA (VAT). However, if you purchase from a private seller, the rate is reduced to 8% (transfer tax). When buying a newly built house from a project developer (house & land), the IVA rate is only 10% for the entire purchase. However, if you buy the land first and later have a house built on it by a project developer/contractor, you will still be charged 21% IVA. The 10% rate only applies to the new construction. If you decide to also build a garage at the same time, the 10% IVA rate applies to that as well. However, if you are adding a pool or garage to an existing house, you will be charged 21% IVA. For standalone renovations (that do not exceed 25% of the cadastral value), the IVA rate is 21%. For larger renovations, the rate is reduced to 10%.

IVA: Impuesto sobre el Valor Añadido

When buying a new holiday home, the buyer will be charged IVA. If the holiday home is primarily for personal use, the buyer will not be considered an IVA entrepreneur and will not be able to reclaim the IVA paid to the Tax Authority. However, if the holiday home is purchased for rental purposes through an accredited rental agency, the buyer will be classified as a VAT entrepreneur and must register with the Spanish Tax Authority to obtain an IVA number. As an IVA entrepreneur, the buyer can reclaim the IVA paid on the purchase and operation of the holiday home from the Spanish Tax Authority. In most cases, the full IVA can be reclaimed. However, it is important to note the buyer’s personal use of the holiday home. There are two scenarios to consider: First, if the owner enters into a rental agreement with a rental agency for their own holiday home, they will be considered a “regular” guest. In this case, the rental agency must charge IVA to the owner. Since the stay in the holiday home is a private matter, the owner will not be able to reclaim the IVA from the Tax Authority. However, the deduction of pre-tax on the purchase and operation of the holiday home remains intact. Requests for refunds must be submitted to the foreign tax authority no later than 6 months after the end of the calendar year in which the IVA was paid. To avoid any issues with the Spanish tax authorities and for more information, we recommend making an appointment with a tax advisor in a timely manner. They can provide guidance on your tax obligations for your Spanish property. Taxation related to the purchase of a property in Spain is always tailored to the specific fiscal position of the buyer.

* This information is subject to changes, always consult a specialist.

Luxury villas with sea views, apartments in gated communities, and penthouses with modern amenities are popular with investors due to their high demand and potential returns.

Luxury villas with sea views, apartments in gated communities, and penthouses with modern amenities are popular with investors due to their high demand and potential returns.

People also include location, proximity to amenities such as golf courses and beaches, quality of construction, fiscal aspects of buying property in Spain, and potential rental income.

Some trends include a growing interest in sustainability and energy efficiency, an increase in luxury real estate developments with exclusive amenities, and an increased demand for homes with outdoor spaces such as terraces and gardens.

Some of the advantages include the mild climate throughout the year, the cultural and leisure facilities, the easy accessibility via airports such as Malaga, Alicanta and Valencia Airport and the attractive lifestyle that the region offers.

Tax rates in Spain

When purchasing a new home you must pay 10% VAT (IVA). For an existing home, transfer tax (ITP) of 7-11% (different per province) is due on the reference value (land registry) or the purchase price.

After the property has been purchased, you must pay the following taxes annually:

• Real estate tax (IBI): 0.30 – 0.70% of the cadastral value (usually considerably lower than the market value)
• Income tax (IRNR): you must submit an annual income tax return (even if the property is not rented). The rate for non-EU residents is 19%. When renting, you pay a rate of 19% income tax on the net rental income (interest charges deductible). A fixed income applies for the period of vacancy (or self-occupation) (percentage of cadastral value, usually 1.1%. Rate is 2% if the cadastral value has not been updated in the last 10 years).
• Wealth tax: is levied on the net assets (debts are therefore deductible). Rates may differ per province and are 0.2% – 3.5%. Reference date is December 31 of a tax year. The tax-free amount (also different per province) amounts to an average of € 400,000 – € 700,000.

Foreigners (from the EU) may rely on the most favorable arrangement, so the exemption is always €700,000. Wealth tax can – under certain conditions – be avoided by purchasing the property through a Dutch BV.

Sale of holiday home in Spain

When selling a holiday home in Spain, tax must be paid on the realized profit. This concerns the so-called land value tax (plusvalia municipal), which is often limited to a few thousand euros. In addition, capital gains tax is payable at 19%. This is due on the sales value (-/- costs -/- purchase value -/- transfer tax -/- notary costs -/- renovation costs). It is wise to keep all invoices.

Income tax 2023 Spain

Regular income from work and pension is progressively taxed according to the table below. Entrepreneurial income and income from real estate (including rent) also fall under regular income.

• up to 12,450:19%
• 12,450 – 20,200: 24%
• 20,200 – 35,200: 30%
• 35,200 – 60,000: 37%
• 60,000 – 300,000: 45%
• 300,000 > : 47% (varies by region)

The top rates may differ per region, in Madrid they are 45.5% but in Cataluna even 48%. . The most affordable region is Andalucia with 48.2% and the most expensive is Valencia with 54%. There is a general tax-free threshold of €5,550, which may be higher based on family composition. This mainly depends on the number and age of children still living at home.

For non-residents outside the EU (such as the United Kingdom) the percentage is 24%.

Capital gains tax 2023

The capital gains tax taxes “investment returns.” These include dividends, interest on banking products and income from (life) insurance, but also profits on the sale of real estate (sometimes exempt).

• 0 – 6,000: 9%
• 6,000 – 50,000: 21%
• 50,000 – 200,000: 23%
• 200,000 > 26%

For non-residents within the EU the rate is 19% and for non-residents outside the EU 24%

Wealth tax 2022 in Spain

• 0 – 167,000: 0.2%
• 167,000 – 334,000: 0.3%
• 334,000 – 668,500: 0.5%
• 668,500 – 1,337,000: 0.9%
• 1,337,000 – 2,674,000: 1.3%
• 2,674,000 – 5,348,000: 1.7%
• 5,348,000 – 10,696,000: 2.1%
• 10,696,000 > 3.5%

The above are rounded amounts (for readability). There is a general exemption of €700,000 for residents and non-residents plus another €300,000 for residents with their own home and applies per person. Each Spanish “autonomous” region can determine different tax brackets and exemptions.

Wealth tax 2023 by region

The Regional Government of Andalusia has announced that the wealth tax in Spain will be abolished in the Andalusia region with effect from September 21, 2022. Due to the changes in the law, the residents of Andalusia do not have to pay wealth tax, regardless of the size of their assets.

Inheritance tax and gift tax in Spain

Inheritance tax and gift tax vary considerably per region. There are regions that have reduced inheritance and donation rates virtually to “zero.” The exemption amounts to €100,000. Take into account a rate of 34% on the excess. Because you live in the Netherlands, you must pay inheritance tax (or gift tax) on your worldwide assets in the Netherlands. The levy in Spain can be deducted from this.

The regional rates only apply to residents. This national rate starts at 7.65% and rises to 34%, depending on the size of the inheritance / donation. The highest rate applies from €797,000. Depending on the family degree of the recipient of the assets, a multiplication factor applies, which is partly determined by the amount of the assets. Depending on the wealth and family level, the tax rate can be up to 81.6%!

Under the European Inheritance Regulation, Dutch law applies (if you live in the Netherlands).

Foreign assets and living in Spain

If you live in Spain, you must submit an income tax return in March if you have assets abroad that exceed €50,000.

Corporate tax in Spain

The corporate tax rate in Spain is 25%. For new companies, the rate is a maximum of 15% for the first 2 years.

Sales tax in Spain

The sales tax in Spain is 21%, the reduced rate is 4% or 10%. There is a lower rate of 10% for new-build homes.

Transfer tax in Spain

The transfer tax in Spain is fairly high at a rate of 6% – 11%.

* This information is subject to changes, always consult a specialist.