Spain’s thriving Real Estate sector continues to attract investment from both domestic and international funds. However, the process of property transaction can involve numerous tax and legal formalities that can delay the transaction for interested parties. This guide will provide all the necessary information to ensure a successful outcome in this transaction. 

National context 

Real Estate transactions in Spain have maintained an upward trend, consolidating in 2024. Last year, more than 715,000 operations were registered, which was the second-best figure in the last seven years, only surpassed by 2022, when 717,000 sales and purchases were reached. According to the Ministry of Housing and Urban Agenda, the 12% increase in 2024 significantly improves the sector’s growth forecasts. 

Correspondent legislation 

Real Estate transactions in Spain are subject to numerous taxes and legal procedures. Therefore, the following regulations are noteworthy: 

  • Mortgage Law and Regulations: regulate the property registry.  
  • Value Added Tax Law (VAT).  
  • Law on Transfer Tax and Stamp Duty (ITP-AJD).  
  • Law Regulating Local Treasuries (IBI).  
  • Tax on the Increase in Value of Urban Land (IIVTNU or ‘plusvalía municipal’). 

Taxation of the transaction 

Main taxes related to Real Estate transactions in Spain are VAT and ITP, whose applications depends on property category: 

  • VAT: only applies to newly built homes. The withholding amount is 10%. 
  • ITP: a tax on buying and selling second-hand property. The tax rate varies in each autonomous community. For instance, it is 6% in Madrid and Navarra, and 13% in the Balearic Islands. 

Consequently, the seller must assume the IIVTNU, which must be paid within 30 working days from the day following the signing of the public deed. This tax, of a municipal nature, has rates ranging from 5% to 30%, depending on the local regulations. The same applies to IBI, the annual payment of which is also regulated by the municipalities.  

Additional procedures 

Among the complementary procedures is the cancellation of mortgages, if applicable, and the Land Registry must be notified to record that the property is free of encumbrances. 

Similarly, it is recommended that the purchasing company supervise the proper declaration and withholding of taxes by the seller. 

Conclusion 

The sale and purchase of Real Estate in Spain represents a lucrative opportunity for investors seeking to expand in the domestic market. However, implementing these operations necessitates proper legal and financial management. Therefore, following the guidelines described in this guide will facilitate the process and ensure regulatory compliance. 

Professional services in the sale and purchase 

The numerous fiscal and legal processes involved in these operations are substantial. If you are interested in the efficient management of legal processes related to the sale and purchase of Real Estate, please contact us using the form below. 

About Auxadi 

Auxadi offers international accounting, tax, payroll, and Corporate Legal Services to multinationals and funds in over 50 jurisdictions, with 22 wholly-owned subsidiaries worldwide. Our experience and global presence allow us to provide tailored tax solutions, ensuring efficient management in compliance with local tax regulations.    

Contact us today and discover how we can facilitate your international expansion. 

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Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance, payroll, transfer pricing, and corporate legal services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 26 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.

All information contained in this publication is up to date on 2024. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.