Spain Non-EU Property Tax: How Much Will You Pay?

Buying property in Spain is a dream for many international investors. However, if you are a non-EU resident, understanding the tax implications is crucial. Spain has specific rules for non-European Union buyers, and recent government proposals could significantly affect the total taxes payable. In this article, we explain the current situation, the taxes involved, and key strategies for managing your investment effectively.

Current Taxes for Non-EU Property Buyers in Spain

When a non-EU resident purchases property in Spain, there are several taxes to consider. These vary depending on the property type, its location, and your residency status. Here is an overview:

Property Transfer Tax (ITP)

For resale properties, non-EU buyers are required to pay ITP, which ranges from 6% to 10% depending on the autonomous community. This tax is calculated based on the purchase price of the property and is paid when the transaction is formalized.

In Andalucia, transfer tax for second hand property at the present is 7% of property’s value.

There might some tax benefits if you:

• Are buying your permanent home and it worth less than 150.000€ (tax rate 6%)
• Are buying your permanent home and it worth less than 150.000€ on a village classified at risk of depopulation (tax rate 3,5%)
• Are disabled, if you are under 35 and you are buying your permanent home, etc.

Value Added Tax (VAT / IVA)

For new properties, a 10% VAT applies to the purchase price. This is mandatory and is payable to the Spanish tax authorities. Additionally, there may be a stamp duty (AJD) of 0.5–1.5% when formalizing the deed at a notary.

Annual Non-Resident Property Tax

Even if you do not live in Spain, non-EU property owners must pay an annual Impuesto sobre la Renta de No Residentes (IRNR). This is calculated based on the deemed rental value of the property, usually around 1.1% to 2% of the cadastral value (if the property’s tax value/cadastral value has been updated in the last 10 years then tax rate is 1,2% otherwise is 2%), with a flat rate of 19% for non-EU residents.

Local Property Taxes (IBI)

All properties in Spain are subject to the municipal Impuesto sobre Bienes Inmuebles (IBI). This tax varies by town or city and is based on the cadastral value. Rates typically range from 0.4% to 1.1%, and it must be paid annually.

Wealth Tax (Impuesto sobre el Patrimonio)

Non-EU buyers may also be subject to wealth tax if the total value of assets in Spain exceeds certain thresholds. This varies by region and can reach up to 3.5% of net assets.

Proposed Government Changes

Spain’s government has proposed a new law that could increase taxes for non-EU buyers significantly. The draft project suggests that some taxes could reach up to 100% of the normal rate for non-European property buyers. While this law is not yet in effect (and it is very unlikely this draft will ever be approved as it is discriminatory, racist, and against the spanish constitution and eu regulations), it highlights the importance of planning ahead and seeking professional advice. Buying property without understanding these changes could result in unexpected high costs.

Why Non-EU Buyers Need Expat Tax Advice in Spain

Navigating property taxes as a non-EU resident can be complex. Apart from the regular taxes, there are additional considerations:

• Inheritance and estate planning: Spanish law includes forced heirship rules. Without a proper will, your property could be distributed differently than you intend.
• Capital gains tax: If you sell your property in the future, non-residents must pay 19% on profits from the sale.
• Regional differences: Spain’s autonomous communities have their own tax rules, which can change rates and exemptions.

Seeking professional expat tax advice in Spain ensures that your purchase is fully compliant and optimally structured. Property Law Spain guides non-EU buyers through the process, from tax planning to legal compliance.

Tips to Minimize Tax Liability

Even though taxes for non-EU buyers can be significant, careful planning can help manage costs:

1. Work with a Spanish lawyer: Ensures all taxes and legal requirements are addressed correctly.
2. Evaluate residency options: Becoming a tax resident may offer certain advantages, including more favorable tax treatmen
3. Consider regional differences: Tax rates vary between autonomous communities; choosing the right location can reduce costs
4. Cross-border planning: If you own property in multiple countries, planning helps avoid double taxation.
5. Document everything: Proper records reduce disputes and ensure compliance with Spanish law.

Protect Your Investment

Understanding Spain non-EU property tax is essential before purchasing property. With multiple taxes, regional differences, and potential government changes, professional advice is crucial. At Property Law Spain, we provide tailored guidance to non-European buyers, ensuring that your property acquisition is legally sound, tax-efficient, and aligned with your long-term goals.

Taking the time to plan and consult experts can save you from unexpected costs and legal complications.

Protect your investment today with Property Law Spain.