Service
Property Purchase in Spain
We are here to help you every step of the way when you buy a property in Mallorca - to simply and clearly explain the processes, paperwork, taxes and fees involved. However, we would recommend that you employ the services of a local lawyer whom speaks your language.
The following lawyers have compiled this guide for our clients:
Fabregat, Perulles, Sales
HQ: León XIII, nº25, 1º 2ª,
E-08022 Barcelona
Spain
Tel: +34 932 054231
Fax: +34 934 189535
Email: fps@fabregat-perulles-sales.com
Website: www.fabregat-perulles-sales.com
The Buying Process in Spain
What stages are there in the completion process?
First of all the property is selected and the terms agreed on. Once the property is selected, it must then be secured. This can be done through private contracts between the two parties. It is customary that 10% of the purchase price is paid at this time.
On completion a deed of conveyance "escritura pública" must be signed by both parties under notarial supervision. According to applicable regulations in Spain, the Notary' intervention is mandatory since laws require that contracts which object is a real state property shall be formalized by means of a public deed, being the Notary the only authorized person by Spanish laws to cause such document.
In this respect, the notary's function consists in recording (notary's attestation) certain circumstances connected with the legal status of the parties, the date and the statements made. Such evidences are recorded in a public deed which is simply a document evidencing the parties agreements as well as the notary's attestation of the same.
Who pays the legal fees? By law, the seller pays notary's fees, unless agreed otherwise -which is almost every time- and are fixed by law on the basis of a scale.
It should be stressed that such public deeds are the sole documents which shall be filed before the Land Registry (the civil servant in charge of the registration of all acts and legal actions caused upon the properties by their registered holders).
Who pays the fees? The buyer pays the register' fees, which are also fixed on the basis of a scale.
Legal Advice in Spain
It is advisable to appoint a local lawyer, who speaks the purchaser's language who will carry out a title search, and advise the purchaser on all aspects of the investment. Lawyer's fees are between 1-2% of the purchase price of the property.
It will be a period of time between the signature of the above said private agreement and the signature of the public deed. In the meantime the lawyer will verify the following:
First of all, look at the Land Registry, being the data therein recorded significantly relevant as per the legal status of the property.
Hence, through the Registry we may first find out whether the holder of the registered property is actually the selling party.
It is also necessary to verify whether the property is levied by any liens and/or encumbrances (seizure, mortgage, easement, beneficial use, etc.).
Secondly, we shall refer to the Cataster as the public body gathering the physical data of properties. Accordingly, prior to the acquisition of a rural or unconstructed property, it is highly advisable to carry out a preliminary research and verifying the physical characteristics (area) for the purposes of avoiding later legal actions conducted to meet the legal reality (as stated by the Land Registry) with the material reality (as stated by the Cataster), being highly advisable as well to assess the feasibility of constructing within those rural properties.
Finally and prior to acquiring the property, we may approach the Town Council in order to ascertain if the property is subject to a town-planning proceeding and to precisely acknowledge the city description of the property.
Taxation in Spain
Hereinafter, we may summarize the main taxes connected with the transactions above described as well as the new developments introduced by the Tax Reform coming into force on January 1st 2007.
New developments introduced by the Spanish tax reform introduce by the Spanish act 35/2006 of 28th November about the Income Tax, and Partial Reform of the Companies Income Tax, Non-Residents Income Tax and Net Worth or Property Wealth Tax introduce come into force on January 1st 2007.
The new developments regarding the Non Residents Income Tax have a clear aim: to comply the EU-Freedoms by conferring an equal treatment of Residents and Non Residents on Income taxation. Upon this new regulations the Capital Gains Tax has been reduced from 35% to 18% for non residents but increased for residents from 15% to 18%. The withholding provision that non-residents pay when selling property in Spain has been also reduced from 5% to 3%
a) In first place, there are certain taxes which are accrued upon the simple fact of holding an immovable or a right vested upon the same.
In this respect, we may focus on the Net Worth Tax, Property Income Tax and the Real State Tax.
i) Net Worth Tax or Property Wealth Tax ("Impuesto sobre el patrimonio").
This tax is levied upon the assets of individuals each December 31st on an annual basis. Such tax may be levied upon the following individuals:
- Spanish and foreign individuals domiciled or regularly residents in Spain (personal obligation), provided that taxable base figures exceeds a yearly amount stated by the Government. (Spanish residents)
- Individuals with a permanent residence outside the Spanish territory and holding properties or rights which may be enforced in Spain shall be levied with such tax regarding said properties and rights regardless of their net gains value. (Non residents in Spain)
The non-resident owner of a property in Spain will be taxed on the value of the real estate on account of wealth tax. The base is taxed according to a sliding scale (between 0.20% to 2.5%). The taxable base will be the highest of the following values: a) The cadastral value; b) The value estimated by the tax authorities; c) The purchase price declared on the deed of conveyance.
* Property owned by a non-resident company When the owner of the property is a non-resident company, a special tax has to be paid and from 1996 the rate applicable is 3% of the cadastral value of the property (when there is no cadastral value, the same rule of the wealth tax is applicable).
ii) Property Income Tax ("Impuesto sobre la renta")
It covers the period starting from Jan. 1st to Dec. 31st. of each year, and is payable during the following year (only for urban properties). The general income rate for Non Residents Individuals is 24% (before the Tax Reform 25%) and is applied on the taxable base. This base, which is the estimated income, is obtained by multiplying the cadastral value of the property by 2%. In some cases the multiplier is 1,1%: when the cadastral value has been updated after Jan.1st 1994; when the property has no cadastral value or the owner of the property has not been notified of this value, in which case the value to be adopted is 50% of the purchase price declared in the title deed, or that assessed by the tax office, whichever is the higher.
It is important to know that, a non-resident seller is subject to a 3% tax withholding on account (before the Tax Reform 5%), so that the party acquiring the real state, regardless if the said party is resident or non resident is obliged to withhold a 3% of the purchase price and pay it to the tax office. Such withholding shall be deemed to the seller´s payment derived from the possible gains tax. If the seller's liability is less than 3%, the seller can claim it from the tax office. Capital gains tax is 18% (before the Tax Reform 35%) of the profit of the sale. This is one of the more important changes of the tax reform, whose aim is to reach an equally treatment between residents and non-residents taxation according to the European Commission requirements.
New taxation for capital gains obtained from assets acquired before the 31st December 1994. (Personal Income Tax; Non residents Income Tax)
The gain obtained by the transmission of an asset owned before 31st December 1994 shall be divided in two parts: the gain obtained since the acquisition of the property until the 19th January 2006 and the gain obtained since the 20th January 2006 until the date of transmission.
To the gain obtained until the 19th January 2006 shall apply different coefficients depending on the length of ownership of the real state until the 31 December 1996. The coefficient shall be the result obtained by the multiplication of the number of years since the acquisition of the real state until the 31st December 2004 by a percentage of 11.11%. Consequently capital gains obtained from a real state owned before the 31st December 1986 shall be exempt from the Non Resident Income tax.
To the gain obtained since the 20th January 2006 until the date of transfer shall not apply any coefficient but the tax rate of 15 % until 31st December 2006 and the tax rate of 18% from the 1st January 2007.
iii) Real State Tax ("Impuesto de Bienes Inmuebles")
The Real State Tax is directly imposed by local authorities although its management is jointly conducted by State Government and town councils
The taxable base of the IBI shall consist in the "cadastral" value, being immovable properties classified as rural or city properties and, moreover, such groups shall distinguish between lands and constructions.
The term granted in order to calculate the Real State Tax shall coincide with the calendar year and the payments thereto shall be made at the beginning of such calendar year, meaning January 1st.
b) We shall now approach those taxes connected with typical transactions within the real state sector, as sale and purchase agreements.
In this respect we may focus on the Tax on Property Transfers (including a brief reference to VAT).
iv) Tax on Property Transfers (Impuesto de Transmisiones Patrimoniales)
The taxable base is the actual value of the transferred property or the right which is being assigned, for example: within a property sale it would be the value of such property.
This tax is accrued upon the date of the levied act, meaning as the execution date of the sale and purchase deed and shall be paid within one month term since said deed execution date or transferring act.
Such tax liable subject is the property recipient (meaning that, following the above property sale, purchaser shall pay such tax), being self-obliged to clear said tax within the above term, bearing in mind that Tax Authorities shall not require its payment.
Regarding immovable properties, applicable regulations settle a tax rate of 6% although many Autonomous Community rule their own rate, being of a 7% in Catalonia and the Balearic Islands.
Tax rate for movable properties is of 4%.
¿When should this tax be paid?
- Provided that the selling party is an individual and such property was within his personal patrimony.
- Provided that purchaser performs certain activities which shall not entitle a total deduction of the VAT received, without prejudice of the selling party legal status.
Coordination between the VAT and the Tax on Property Transfers and Documentary Juridical Acts.
Transactions subject to VAT shall not be subject to ITP, since VAT is levied upon corporation transactions while e ITP and AJD is levied upon non-corporation transactions.
On the light of the above, we may summarize the following particularities.
- Hypothesis ALWAYS subject to VAT and, therefore, subject to Documentary Juridical Acts (being its tax rate of 0,5 % up 1 % of the consideration, not including the VAT fee).
a) In the event of the sale of a building site, being the seller either a businessman or a professional.
b) In the event that such sale implies the first delivery of the building site plus a building construction carried out by a developer, provided that such building has (i) never been used or (ii) used for a maximum term of two years.
c) In the event that such sale implies the first delivery of the building site plus a building construction carried out by a corporation, a businessman or a professional, provided that purchaser is the person already using such building without prejudice of the term of such use.
v) Tax on the Value Increase of Urban Lands. ("Plusvalía munipal")
In all cases there is a surplus value tax "plusvalia" (not to be confused with capital gains tax payable by the seller on the profit made when selling the property). By law, "plusvalia" is paid by the seller, and is a municipal tax on the increase in value on the land only. However, it may be subject of negotiation between buyer and seller. Such direct local tax is not periodically accrued, but instantaneously, being exclusively managed by town councils.
The taxable base shall be the difference between the acquisition value of the property and the value at the time of the sale.
Such increase is calculated after applying a percentage to the property value as of its sale (which shall determine the accrual date).
Town councils shall state the exact amount to be paid.
Payment of such tax shall be made within a 30 days term upon the accrual date, which is the transaction date.
c) Other taxes/expenses
Garbage collection tax. To be paid to the local authorities.
Community Fees These are fees to be paid to the Community of Owners for services and maintenance of communal areas, when the property is located in a development or condominium.
Financial aspects
As per the financial aspects of a real state acquisition it is quite necessary to mention the bank financing, usually implying to levy a security on the property object of the acquisition.
Self-financing. Foreign investments.
Spanish operative regulations on transactions, payments and bank transfers with foreign countries relies on the following principles:
1.- Freedom of transaction between residents and non-residents, as well as to international payments and bank transfers connected thereto.
2.- Mandatory requisites and standards regarding international payments and bank transfers may be summarized as follows:
- As a general principle, an obligation of using banking entities in order to carry out the above mentioned payments, transfers, etc.
- Spanish citizens ordering or receiving international payments or bank transfers shall declare them.
- Monetary authorities may subsequently demand information regarding residents transactions carried out with foreign countries.
External financing. Mortgages.
To such an extent, we may distinguish two concepts which are often confused regarding mortgages, although we may find them unquestionably connected.
Therefore, we must keep in our minds that a mortgage refers to a warranty usually assumed by a debtor, according to which an immovable (being the pledge connected with movable assets) property is subject to the effective fulfillment of the vouched obligation.
The above implies a previous condition, which is the existence of a guaranteable credit, as may be, for example, the loan of a certain amount of money.
In this respect, we must clearly differentiate that such mortgage is the warranty required by most banking entities in order to secure the collection of the borrowed amount.
The functioning of the mortgage institution is relatively simple, hence its common use. In fact, such right effectiveness and origin is only subject to its registration before the Land Registry. On the other hand, such warranty, entitles the mortgagee to act against the immovable property, requesting its sale by means of a public auction and therefore collecting the outstanding amounts through such auction price.
Ownership
Are there different methods of ownership? Apart from individual ownership, one or more companies can own a property. Owning companies can be Spanish, from countries with double taxation agreements with Spain or offshore or a combination of these.
A Spanish company can be expressly founded in order to buy a property.
The special tax regime for holding companies introduced in 2003 disappears from the tax period beginning the 1st January 2007 so this companies , so this companies will be taxed by the general Company tax
Residence Permits
Is it necessary to have a residence permit? No, it's not necessary for EEC citizens or citizens coming from the Swiss confederation. For non-EEC citizens, if they want to reside permanently in Spain, they would need to obtain a special visa at the Spanish consulate in the country of origin that allows them to apply for a residence permit.
It is important to know that in order to be able to buy a house and pay taxes here in Spain it is absolutely necessary to have a NIE (foreigner identification number), that should be obtained before the Police Office. In order to obtain such NIE, either the interested person applies for it personally, either a power of attorney granted to a lawyer or assistant, as well as a notarised copy of the passport or identity card is needed in order to apply for it. It takes about one month time.
Professional advice:
The laws and people's personal circumstances continuously change. These questions and answers are only general, and we strongly recommend that you contact a professional lawyer or financial advisor.
The above information is intended only as a guide and is subject to errors, omissions and changes. Their accuracy is not guaranteed.
The following lawyers have compiled this guide for our clients:
Fabregat, Perulles, Sales
HQ: León XIII, nº25, 1º 2ª,
E-08022 Barcelona
Spain
Tel: +34 932 054231
Fax: +34 934 189535
Email: fps@fabregat-perulles-sales.com
Website: www.fabregat-perulles-sales.com
The Buying Process in Spain
What stages are there in the completion process?
First of all the property is selected and the terms agreed on. Once the property is selected, it must then be secured. This can be done through private contracts between the two parties. It is customary that 10% of the purchase price is paid at this time.
On completion a deed of conveyance "escritura pública" must be signed by both parties under notarial supervision. According to applicable regulations in Spain, the Notary' intervention is mandatory since laws require that contracts which object is a real state property shall be formalized by means of a public deed, being the Notary the only authorized person by Spanish laws to cause such document.
In this respect, the notary's function consists in recording (notary's attestation) certain circumstances connected with the legal status of the parties, the date and the statements made. Such evidences are recorded in a public deed which is simply a document evidencing the parties agreements as well as the notary's attestation of the same.
Who pays the legal fees? By law, the seller pays notary's fees, unless agreed otherwise -which is almost every time- and are fixed by law on the basis of a scale.
It should be stressed that such public deeds are the sole documents which shall be filed before the Land Registry (the civil servant in charge of the registration of all acts and legal actions caused upon the properties by their registered holders).
Who pays the fees? The buyer pays the register' fees, which are also fixed on the basis of a scale.
Legal Advice in Spain
It is advisable to appoint a local lawyer, who speaks the purchaser's language who will carry out a title search, and advise the purchaser on all aspects of the investment. Lawyer's fees are between 1-2% of the purchase price of the property.
It will be a period of time between the signature of the above said private agreement and the signature of the public deed. In the meantime the lawyer will verify the following:
First of all, look at the Land Registry, being the data therein recorded significantly relevant as per the legal status of the property.
Hence, through the Registry we may first find out whether the holder of the registered property is actually the selling party.
It is also necessary to verify whether the property is levied by any liens and/or encumbrances (seizure, mortgage, easement, beneficial use, etc.).
Secondly, we shall refer to the Cataster as the public body gathering the physical data of properties. Accordingly, prior to the acquisition of a rural or unconstructed property, it is highly advisable to carry out a preliminary research and verifying the physical characteristics (area) for the purposes of avoiding later legal actions conducted to meet the legal reality (as stated by the Land Registry) with the material reality (as stated by the Cataster), being highly advisable as well to assess the feasibility of constructing within those rural properties.
Finally and prior to acquiring the property, we may approach the Town Council in order to ascertain if the property is subject to a town-planning proceeding and to precisely acknowledge the city description of the property.
Taxation in Spain
Hereinafter, we may summarize the main taxes connected with the transactions above described as well as the new developments introduced by the Tax Reform coming into force on January 1st 2007.
New developments introduced by the Spanish tax reform introduce by the Spanish act 35/2006 of 28th November about the Income Tax, and Partial Reform of the Companies Income Tax, Non-Residents Income Tax and Net Worth or Property Wealth Tax introduce come into force on January 1st 2007.
The new developments regarding the Non Residents Income Tax have a clear aim: to comply the EU-Freedoms by conferring an equal treatment of Residents and Non Residents on Income taxation. Upon this new regulations the Capital Gains Tax has been reduced from 35% to 18% for non residents but increased for residents from 15% to 18%. The withholding provision that non-residents pay when selling property in Spain has been also reduced from 5% to 3%
a) In first place, there are certain taxes which are accrued upon the simple fact of holding an immovable or a right vested upon the same.
In this respect, we may focus on the Net Worth Tax, Property Income Tax and the Real State Tax.
i) Net Worth Tax or Property Wealth Tax ("Impuesto sobre el patrimonio").
This tax is levied upon the assets of individuals each December 31st on an annual basis. Such tax may be levied upon the following individuals:
- Spanish and foreign individuals domiciled or regularly residents in Spain (personal obligation), provided that taxable base figures exceeds a yearly amount stated by the Government. (Spanish residents)
- Individuals with a permanent residence outside the Spanish territory and holding properties or rights which may be enforced in Spain shall be levied with such tax regarding said properties and rights regardless of their net gains value. (Non residents in Spain)
The non-resident owner of a property in Spain will be taxed on the value of the real estate on account of wealth tax. The base is taxed according to a sliding scale (between 0.20% to 2.5%). The taxable base will be the highest of the following values: a) The cadastral value; b) The value estimated by the tax authorities; c) The purchase price declared on the deed of conveyance.
* Property owned by a non-resident company When the owner of the property is a non-resident company, a special tax has to be paid and from 1996 the rate applicable is 3% of the cadastral value of the property (when there is no cadastral value, the same rule of the wealth tax is applicable).
ii) Property Income Tax ("Impuesto sobre la renta")
It covers the period starting from Jan. 1st to Dec. 31st. of each year, and is payable during the following year (only for urban properties). The general income rate for Non Residents Individuals is 24% (before the Tax Reform 25%) and is applied on the taxable base. This base, which is the estimated income, is obtained by multiplying the cadastral value of the property by 2%. In some cases the multiplier is 1,1%: when the cadastral value has been updated after Jan.1st 1994; when the property has no cadastral value or the owner of the property has not been notified of this value, in which case the value to be adopted is 50% of the purchase price declared in the title deed, or that assessed by the tax office, whichever is the higher.
It is important to know that, a non-resident seller is subject to a 3% tax withholding on account (before the Tax Reform 5%), so that the party acquiring the real state, regardless if the said party is resident or non resident is obliged to withhold a 3% of the purchase price and pay it to the tax office. Such withholding shall be deemed to the seller´s payment derived from the possible gains tax. If the seller's liability is less than 3%, the seller can claim it from the tax office. Capital gains tax is 18% (before the Tax Reform 35%) of the profit of the sale. This is one of the more important changes of the tax reform, whose aim is to reach an equally treatment between residents and non-residents taxation according to the European Commission requirements.
New taxation for capital gains obtained from assets acquired before the 31st December 1994. (Personal Income Tax; Non residents Income Tax)
The gain obtained by the transmission of an asset owned before 31st December 1994 shall be divided in two parts: the gain obtained since the acquisition of the property until the 19th January 2006 and the gain obtained since the 20th January 2006 until the date of transmission.
To the gain obtained until the 19th January 2006 shall apply different coefficients depending on the length of ownership of the real state until the 31 December 1996. The coefficient shall be the result obtained by the multiplication of the number of years since the acquisition of the real state until the 31st December 2004 by a percentage of 11.11%. Consequently capital gains obtained from a real state owned before the 31st December 1986 shall be exempt from the Non Resident Income tax.
To the gain obtained since the 20th January 2006 until the date of transfer shall not apply any coefficient but the tax rate of 15 % until 31st December 2006 and the tax rate of 18% from the 1st January 2007.
iii) Real State Tax ("Impuesto de Bienes Inmuebles")
The Real State Tax is directly imposed by local authorities although its management is jointly conducted by State Government and town councils
The taxable base of the IBI shall consist in the "cadastral" value, being immovable properties classified as rural or city properties and, moreover, such groups shall distinguish between lands and constructions.
The term granted in order to calculate the Real State Tax shall coincide with the calendar year and the payments thereto shall be made at the beginning of such calendar year, meaning January 1st.
b) We shall now approach those taxes connected with typical transactions within the real state sector, as sale and purchase agreements.
In this respect we may focus on the Tax on Property Transfers (including a brief reference to VAT).
iv) Tax on Property Transfers (Impuesto de Transmisiones Patrimoniales)
The taxable base is the actual value of the transferred property or the right which is being assigned, for example: within a property sale it would be the value of such property.
This tax is accrued upon the date of the levied act, meaning as the execution date of the sale and purchase deed and shall be paid within one month term since said deed execution date or transferring act.
Such tax liable subject is the property recipient (meaning that, following the above property sale, purchaser shall pay such tax), being self-obliged to clear said tax within the above term, bearing in mind that Tax Authorities shall not require its payment.
Regarding immovable properties, applicable regulations settle a tax rate of 6% although many Autonomous Community rule their own rate, being of a 7% in Catalonia and the Balearic Islands.
Tax rate for movable properties is of 4%.
¿When should this tax be paid?
- Provided that the selling party is an individual and such property was within his personal patrimony.
- Provided that purchaser performs certain activities which shall not entitle a total deduction of the VAT received, without prejudice of the selling party legal status.
Coordination between the VAT and the Tax on Property Transfers and Documentary Juridical Acts.
Transactions subject to VAT shall not be subject to ITP, since VAT is levied upon corporation transactions while e ITP and AJD is levied upon non-corporation transactions.
On the light of the above, we may summarize the following particularities.
- Hypothesis ALWAYS subject to VAT and, therefore, subject to Documentary Juridical Acts (being its tax rate of 0,5 % up 1 % of the consideration, not including the VAT fee).
a) In the event of the sale of a building site, being the seller either a businessman or a professional.
b) In the event that such sale implies the first delivery of the building site plus a building construction carried out by a developer, provided that such building has (i) never been used or (ii) used for a maximum term of two years.
c) In the event that such sale implies the first delivery of the building site plus a building construction carried out by a corporation, a businessman or a professional, provided that purchaser is the person already using such building without prejudice of the term of such use.
v) Tax on the Value Increase of Urban Lands. ("Plusvalía munipal")
In all cases there is a surplus value tax "plusvalia" (not to be confused with capital gains tax payable by the seller on the profit made when selling the property). By law, "plusvalia" is paid by the seller, and is a municipal tax on the increase in value on the land only. However, it may be subject of negotiation between buyer and seller. Such direct local tax is not periodically accrued, but instantaneously, being exclusively managed by town councils.
The taxable base shall be the difference between the acquisition value of the property and the value at the time of the sale.
Such increase is calculated after applying a percentage to the property value as of its sale (which shall determine the accrual date).
Town councils shall state the exact amount to be paid.
Payment of such tax shall be made within a 30 days term upon the accrual date, which is the transaction date.
c) Other taxes/expenses
Garbage collection tax. To be paid to the local authorities.
Community Fees These are fees to be paid to the Community of Owners for services and maintenance of communal areas, when the property is located in a development or condominium.
Financial aspects
As per the financial aspects of a real state acquisition it is quite necessary to mention the bank financing, usually implying to levy a security on the property object of the acquisition.
Self-financing. Foreign investments.
Spanish operative regulations on transactions, payments and bank transfers with foreign countries relies on the following principles:
1.- Freedom of transaction between residents and non-residents, as well as to international payments and bank transfers connected thereto.
2.- Mandatory requisites and standards regarding international payments and bank transfers may be summarized as follows:
- As a general principle, an obligation of using banking entities in order to carry out the above mentioned payments, transfers, etc.
- Spanish citizens ordering or receiving international payments or bank transfers shall declare them.
- Monetary authorities may subsequently demand information regarding residents transactions carried out with foreign countries.
External financing. Mortgages.
To such an extent, we may distinguish two concepts which are often confused regarding mortgages, although we may find them unquestionably connected.
Therefore, we must keep in our minds that a mortgage refers to a warranty usually assumed by a debtor, according to which an immovable (being the pledge connected with movable assets) property is subject to the effective fulfillment of the vouched obligation.
The above implies a previous condition, which is the existence of a guaranteable credit, as may be, for example, the loan of a certain amount of money.
In this respect, we must clearly differentiate that such mortgage is the warranty required by most banking entities in order to secure the collection of the borrowed amount.
The functioning of the mortgage institution is relatively simple, hence its common use. In fact, such right effectiveness and origin is only subject to its registration before the Land Registry. On the other hand, such warranty, entitles the mortgagee to act against the immovable property, requesting its sale by means of a public auction and therefore collecting the outstanding amounts through such auction price.
Ownership
Are there different methods of ownership? Apart from individual ownership, one or more companies can own a property. Owning companies can be Spanish, from countries with double taxation agreements with Spain or offshore or a combination of these.
A Spanish company can be expressly founded in order to buy a property.
The special tax regime for holding companies introduced in 2003 disappears from the tax period beginning the 1st January 2007 so this companies , so this companies will be taxed by the general Company tax
Residence Permits
Is it necessary to have a residence permit? No, it's not necessary for EEC citizens or citizens coming from the Swiss confederation. For non-EEC citizens, if they want to reside permanently in Spain, they would need to obtain a special visa at the Spanish consulate in the country of origin that allows them to apply for a residence permit.
It is important to know that in order to be able to buy a house and pay taxes here in Spain it is absolutely necessary to have a NIE (foreigner identification number), that should be obtained before the Police Office. In order to obtain such NIE, either the interested person applies for it personally, either a power of attorney granted to a lawyer or assistant, as well as a notarised copy of the passport or identity card is needed in order to apply for it. It takes about one month time.
Professional advice:
The laws and people's personal circumstances continuously change. These questions and answers are only general, and we strongly recommend that you contact a professional lawyer or financial advisor.
The above information is intended only as a guide and is subject to errors, omissions and changes. Their accuracy is not guaranteed.
