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									               SOLICITORS + LAWYERS + BARRISTERS

           Iustitia est constant et perpetua voluntas ius suum cuique tribuere

            IN SPAIN

                            Centro Comercial Filton – Local 31
                                 Avda. de la Asunción ,7
                                    LOS BALCONES

  Telephone:0034 966 722 864      FAX:0034 966 799 094 

                 Centro Comercial Filton – Local 31
                      Avda. de la Asunción ,7
                         LOS BALCONES

      Telephone: 966 722 864    FAX: 966 799 094

This book is intended to help you understand the process of buying a home in Spain, to
explain the terminology you will encounter and to give an indication of the obligations
of overseas home ownership. The guide does not attempt to cover all the legal and
financial points. It is, of necessity, both brief and general and is therefore no substitute
for proper professional advice.


Our basic advice is always consult a lawyer to purchasing new or resale property, even
when buying a timeshare. The Spanish legal system is very different from the English.
Your usual English lawyer knows English law, not Spanish law.

Unfortunately, very often people purchasing property in Spain take little or no legal
advice and are indeed quite “casual” about the purchase and about the signing of legal
documents. They may then find there is no title to the property, that it was built without
planning permission,… Whilst frauds are News, luckily they form a small part of the
many thousands of transactions which take place every year in Spain.

 Having instructed a solicitor to handle the purchase, you have the reassurance that all
the important aspects will be covered.
    1. The title of the property is checked.
    2. The person selling the property actually owns it.
    3. Whether there are any charges on the property.
    4. Building licenses and permissions are in order, where applicable.
    5. And finally the terms an conditions stipulated by the seller are checked for

A report of the findings is then compiled for you to consider, before deciding whether to
proceed with the purchase. If you proceed your solicitor will then arrange:
- The transfer of the title into your name.
- For the fees and taxes to be paid.
- For the title to be registered with the government land registry.

Please also note that the Spanish Notary Public (Notario) – in front of whom all land
transfers in Spain have to be signed – is not there to give legal advice to either the buyer
or the seller. His function is to witness the signature of the title deeds and to deal with
certain administrative matters.

When you have found a property which you want and you have agreed the price with
the seller before you pay a deposit or sign a document reserving the property that is the
time to see a solicitor.

Two basic types of document could be offered to you by the seller or the state agent.
One is simply an “option to purchase”. This is exactly what is says, you pay for the right
to be able to buy the property. The money you hand over will be lost if you do not
exercise the option within the deadline given you and even if you do decide to buy you

may find that the money paid for the “option” may or may not go towards the total price
of the purchase.
Second, and better document to clinch the deal is a private contract of purchase and sale
(contrato privado de compraventa). This is a document which set out all the terms and
conditions of the purchase. There might be terms which are not mentioned in the
document but implied by law regulating those aspects of the transaction. Although, if in
doubt they can be expressly stated. (You should have a copy of the contract translated
into English).

A private contract of purchase and sale should cover:

 - Seller: The contract must fully identify the seller.
 It is essential to ensure that the seller is either the registered owner of the property or
someone who is acting in behalf of him (her) by a Power of Attorney.

 - Purchaser: The contract must fully identify the buyer. You should make clear if you
are going to buy the property in your name, or in the name of yourself and your
wife/husband, or in the name of a company,…Otherwise you may find that later you
may not be able to register the property as you would like.

 - Property: The contract must accurately describe the property being sold.
      If the building has not yet been completed you should demand from the seller a
performance bond which will guarantee the return to you of any money which you pay
him, plus interest at 6% p.a. (or an interest rate according to the law).
      You should make sure that the seller has the correct licenses to build and that the
 house if new, has a licence for habitation.

 - Price: The contract has to contain the full price of the purchase: the deposit that you
have paid and the payments by stages and also deadlines for payments. You must be
careful here since you have to forfeit what you have paid in advance cannot complete
your side of the bargain.
     The price should also state whether it includes any fixtures and fittings.
     Last payment. You should take care to agree that you do not make your last
payment except in exchange for the seller signing the “Sale and Conveyance Deed”
(Escritura de Compraventa) over to you.


La Escritura is the title document (Title Deed) proving who is the owner of the property
and containing a detail description of the property itself. It is, under Spanish Law,
necessary for the Escritura to be signed by the seller and the purchaser before a
Spanish Notary Public (Notario) in order to make it legally binding.- This will be
handle by your solicitor -. Do ensure that the person signing as seller is the one who can
transfer valid title.

The Notario, or Notary, is an official of the State who makes sure that contracts are
legal. He keeps the original document in his files in case any questions arise later. The
Notario is a public official, not a private lawyer. His duty is to certify that the contract
has been signed, the money paid, and the purchaser and seller have been advised of their
tax obligations.

If you can not be in Spain to complete before the Notary you can appoint your lawyer to
sign on your behalf by giving him a Power of Attorney executed before a Notary Public
in the U. K. and then legalised with an apostille.

After the Escritura has been signed in front of the Notary, your lawyer arranges for it to
be presented to the appropriate Land Registry (Registro de la Propiedad) and for the
payment of the Land Registry Fees. Take in mind that before the Deeds are presented to
the Land Registry, your lawyer will pay the taxes on your behalf. Without the payment
of the taxes it is impossible to register the Deeds.

The Land Registry is an extremely important office for the property purchaser, nearly
all land in Spain is registered. Any mortgage on the property must be registered there,
and the true owner of the property is listed. Once it has been registered no one can make
a valid claim to have a better title than you unless such title has been registered before

Several months can elapse before the process of registration is concluded, but as soon as
your lawyer is notified that the deeds are ready he will have them collected, check them
and then forward them to you.

Registration and Notary’s fees are usual payable by the purchaser unless the parties
agree otherwise.


A poder general or general power of attorney is frequently used in Spain. The power
comes in a standard form, which lists all the actions that can be carried out by the
holder. These include buying and selling property, handling bank accounts, spending
and receiving money, taking out a mortgage or other loan, and just about anything that
the person himself can do with his assets.

The form contains a clause declaring that all of these actions shall be taken for the
benefit of the granter of the power.

There are also other forms of power of attorney, limited to carrying out certain specific
actions in the name of the granter, such as signing a contract for the sale of a specified
property at a given price, during a given time period, after which the power lapses.

But the general power of attorney is the one most used, simply because situations
change and unforeseen complexities arise in any transaction. This can mean that the
holder of the power is unable to act because the power does not mention a specific
circumstance that has arisen, such as signing at the bank to obtain the money transfer
from abroad.

The wide powers of the general power of attorney avoid these problems. In an
international property market, it often finds that a seller or a buyer cannot be physically
present at the moment of signing a purchase deed at the Spanish Notary, so he gives his
lawyer or some other trusted person a general power of attorney to sign for him.

Once the deed is accomplished, the granter can revoke the power of attorney, again at
the Notary, and all goes on as before.

What are the taxes and legal implications?

       You should allow approx. 10% of the purchase price to cover these costs. They
are broken down as follows:

NEW PROPERTY                                              RESALE PROPERTY

7% IVA (VAT)                                                7 % Transfer tax
1% Legal rights      (Stamp duty)                           1% Notary fees
1% Notary fees                                              1% Plus Valia (Land tax)
1% Plus Valia (Land tax)

It is impossible to give tax advice without detailed knowledge of your personal
circumstances. You should therefore treat this guide as no more than background
reading designed to give you some idea of the structure of the tax system in Spain.

We can accept no responsibility for any action that you take or fail to take as a result of
reading this document.

The Spanish Authority responsible for the collection of taxes is the Agencia Tributaria
(Hacienda). This is organised on a provincial basis. In each province there is a main
office of Hacienda. And in some cases there are also one or more sub-provincial


Impuesto sobre actividades patrimoniales (I.T.P.)

All sales of second hand dwelling houses (i.e. re-sales) carry Transfer Taxes. It is
generally 7% of the declared value of the property as expressed in the Escritura de
Compraventa (Title Deed).

Impuesto sobre el valor añadido (I.V.A.)

This is the Spanish equivalent of V.A.T. It is paid instead of Impuesto sobre actividades
patrimoniales in the case of a new building (when you buy from a promoter rather than
the private individual).

It is charged at the rate of 7%.

Impuesto sobre actos jurídicos documentados (A.J.D)

In addition to VAT you will also have to pay a document tax or stamp duty at 0,5 % (in
some cases 1% depending on the province you buy) of the purchase price.


The other tax on property sales is “arbitrio sobre el incremento del valor de los
terrenos”, the municipal tax on the increase in the value of the land since its late sale.
This is usually call the plusvalía for short, and it can vary widely.
In the case of a purchase in a new urbanisation there has been a little increase in value
because a short time has passed since it was developed, the tax can be very low. But if
you buy a house with several square metres of land, which has not changed hands for a
long time, the tax can be much higher.

Normally, when it is a second hand property is paid by the vendor. It is a new property,
then often is paid by the purchaser.

Land registry fees.

They are not strictly taxes but rather administrative fees but, for the sake of
completeness, are referred in this part of the book.

These vary according to the locality, type and value of the property.

Notary’s fees.

Again they are no exactly taxes but something you have to consider.
They vary depending on the value of the property and various other factors. Allow 1%
of the price of the property for initial planning purposes.


Impuesto sobre bienes inmuebles (IBI or SUMA)

The annual real estate tax on your Spanish property must also be paid every year. The
amount of the tax is calculated by reference to the “valor catastral” (official value of the
property) registered in respect of all properties in Spain. It can vary widely from town to
town for the same type of property because it is a municipal tax. This tax is raised every
year, as a result of inflation.

If you are non resident, the best solution for you is to have the tax “domiciliado” (as a
direct debit) in your bank. This is a standing order to the bank to pay the tax – and you
can include any other municipal charges as well. You obtain a form at the bank that
authorises them to pay the tax bill. You are thus assured that your taxes are paid when
they are due, the same as the telephone, water and electric bills.

In general terms, IBI will cost less than taxes on a similar property in the U.K.

Tasas y cargas.

Some Municipalities raise additional taxation in relation to the services they supply to
people in the area. These may include rubbish collection, cleaning of the streets and
beaches, etc.

Municipalities also have the right to raise a charge for the use of a vehicle in their area.
Not all do so.

The amount of these tasas y cargas is not generally high.


Impuesto sobre la renta de las personas físicas

Income tax.
A person non resident in Spain for tax purposes must still make an annual declaration
for income tax.

The Spanish authorities are only concerned (in the case of non residents) with the
income you derive from activities in Spain, not your world-wide income.

Typical examples of this will be interest on any money you have on deposit with a
Spanish bank or income you derive from letting your apartment or house.

Tax on the Notional letting value of your property.

In addition to the ordinary tax return, which you must submit in appropriate cases. You
will in all cases be required to make a tax return in respect of the notional letting value
of your property.

This tax return has to be made whether you have actually let the property to anybody or
not. Any property owner will possibly think that why pay income tax when there is no
income. The reason for this tax to be in force is that the Tax Authority assigns an
imaginary income, or imputed income, or notional letting value to the property,
regardless of the owner actually deriving an income from the property.

The tax base is the valor catastral, the local assessed value of the property which can be
found on a I.B.I. (annual real estate tax) receipt. The percentage then to be applied is of
25% of a 2% of the valor catastral, in other words, 0,5% of that value

If you have actually let the property to anybody or not, then the money you have
received will have been declared in your ordinary income tax return.

Impuesto sobre el patrimonio. (Property Wealth Tax).

The name “wealth tax “ may not sound like proper legal terminology, but it is an
adecuate translation of the Spanish name, as it is exactly that, a tax on all your assets
and property, your total wealth.

This tax started in 1978 as a special measure to force many Spanish citizens who has
been hiding their wealth, especially property, to bring these assets into the open.

The base for calculating the tax is the higher of either the assessed value (town Hall
value), the assessed value by the tax Authority or the declared price shown on the Title
Deed when the property was purchased. This real value is almost always the base for
calculating the Property Wealth Tax.

Impuesto sobre el incremento del patrimonio (Capital Gains Tax)

Anyone who buys property in Spain today will be liable to pay Spanish capital gain tax
when he sells his flats or villa in the future. This is for residents and non residents alike.

Residents pay a maximum of 20% and their capital gains are calculated as part of their
Spanish income tax.

Non residents pay a flat rate of 18 %. Buyers from no resident sellers are required to
withhold three percent of the total purchase price and pay it directly to the Spanish Tax
Agency, thus making sure that the seller does not take the money and run.

The prices used to calculate the tax liability are those declared in the Title Deed.


The Spanish Tax Authorities until recently required any person who had dealings within
Spain but who was not a full time resident in Spain to appoint a fiscal representative.

A fiscal representative is a person who undertakes on behalf of the tax payer all dealings
with the Spanish Tax authorities. The appointment of a fiscal representative is the only
way in which you can be sure that the Spanish Tax Authorities, unable to contact you
because you are not in the country, do not take damaging and expensive action against
you to collect any sums of taxes which they allege to be due.

N.I.E. (Número de identificación para extranjeros)

There is a new Law as of the 1st. January 2003 that status “any foreigners purchasing a
property in Spain now need a NIE (National Identification Number for Foreigners)”.

A NIE is needed to hold a Spanish insurance policy, to open a bank account, to buy or
to sell property and to pay any taxes. It is necessary for practically any transaction in


As you may know a will is not exclusively about making sure that the right people will
inherit you without disagreement or problems. It is a formal declaration of intention
made by a person in his life-time of his wishes concerning the disponsal of his property
after his death.

There are many doubts that non-residents have about the distribution of their goods in
Spain when they die. If you are in this situation we strongly recommend you always
make a will for the goods you own on Spanish territory because this way you
simplificate the administration of your heritage for your children or each other person,
that has a direct interest on your heritage. Then you can decide the distribution of your
Spanish assets.

If a foreigner dies in Spain without having made a will, his estate can be disposed of
under the Spanish law of compulsory heirs.

There are two different ways of successions:
   - Testate Succession which arises when the deceased person has expressed his
       wishes in the form of a will.
   - Intestate Succession which arises when a person dies intestate. In this case, the
       statutory law rules will govern the distribution of the intestates´ estates upon the
       assumption that people who die intestate would have wished to make provision
       for beneficiaries. Because you did not make these important decisions while you
       were capable, these decisions are left up to the Spanish Laws.

Three types of Spanish wills:
- The first is known as an open will. This is the normal and more suitable kind of will
for most people. Its contents must be known to the Notary who is responsible for
ensuring that the will is a legal and properly drawn up document.
The will is individual and personal. If you don not understand or speak Spanish fluently,
you will need a translation into English or the language of your home country or it can
be signed in two columns in presence of a Notary. That means, in Spanish language and
in the language of your country.
 The original of the will be kept in the Notary’s office and will be registered in the
“Registro de Ultimas Voluntades” (Spanish Central Registry of Wills) which is situated
in Madrid. The Notary will give you a copy of the will.

- If you wish the content of your will to remain a secret, you can have your lawyer draw
up a closed will. You then take the will to a Notary who seals the envelope and signs it
along and then files and records it as for open will.

- You can make what is known as holographic will, in your own handwriting, but this
has to be authenticated as genuine before a judge, which means more time, trouble and


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