DIRECT SALE OF REAL ESTATE
Resident individual
Capital gains
Capital gains obtained in the transfer of real property are taxed at different rates: 19% for gains up to €6.000, 21% for gains between €6.000-€50.000, 23% for gains between €50.000- €200.000 and 26% for gains above €200.000. Transfer of assets affecting the development of economic activities are taxed as capital gains, following personal income tax rules.
VAT / transfer tax
Generally, the transfers of used buildings and rural land are exempt from VAT and are therefore subject to transfer tax. Real estate transfers are taxed at a rate of 6-11%, dependent on the Autonomous Community in which the property is located.
The applicable VAT rates are 10% for the transfer of new or substantially refurbished residential real estate and 21% for other types of real estate. The transfer of second-hand properties is exempt from VAT, but subject to transfer tax. Nevertheless, if the intended use of the property implies having the right to totally or partially deduct VAT, it is possible to waive the VAT exemption if the seller qualifies as an entrepreneur for VAT purposes. In that case a reverse charge mechanism applies.
Stamp duties
The transfer of a property that is subject to VAT is also subject to stamp duty at a rate of 0.5%-2.5%, dependent on the location of the property and type of transfer. Stamp duty is paid by the buyer.
Tax on increase of value of urban land (IIVTNU)
A tax on the increase of the value of urban land will accrue on the transfer of urban land. The taxpayer is the seller. It is a deductible expense for income tax purposes and the maximum tax rate is 30%, dependent on the municipality in which the real estate is located.
Deferral of tax
Capital gains that result from the transfer of the taxpayer's main residence may be exempt, where the total amount is reinvested in the acquisition of another main residence, or in the restoration of a property that will be their main residence.
Losses
Losses are offset against other capital gains. If there are still losses, these can be offset against the positive balance between capital gains and capital losses up to a maximum of 20%. If there are still losses, the taxpayer has the following four years to offset them.
Non-resident individual
Non-resident individuals are treated in the same manner as resident individuals. However, the tax rate for capital gains is 19%.
The person acquiring the building is obliged to withhold 3% of the agreed payment. For the seller, the withholding acts as a payment on account of the capital gains tax arising from the transaction.
Resident company
Capital gains
Capital gains realised by a Spanish resident company on the transfer of Spanish property are subject to Spanish corporate tax, at a general tax rate of 25%.
VAT / transfer tax
Generally, transfers of used buildings and rural land are exempt from VAT and subject to transfer tax. Real estate transfers are taxed at a rate of 6-11%, dependent on the Autonomous Community in which the property is located.
The applicable VAT rates are 10% for the transfer of new or substantially refurbished residential real estate and 21% for other types of real estate. The transfer of second-hand properties is exempt from VAT but are subject to transfer tax. Nevertheless, if the intended use of the property implies having the right to totally or partially deduct VAT, it is possible to waive the VAT exemption. In that case a reverse charge mechanism will apply.
Stamp duty
The transfer of a property subject to VAT is also subject to stamp duty at a rate of 0.5%-2.5%, dependent on the location of the property and type of transfer. Stamp duty is paid by the buyer.
Tax on increase of value of urban land (IIVTNU)
A tax on the increase of the value of urban land will accrue on the transfer of urban land. The taxpayer is the seller. It is a deductible expense for corporate tax purposes and the tax rate, up to a maximum of 30%, depends on the municipality in which the real estate is located.
Losses
Capital losses realised on the transfer are fully deductible. Tax losses can be carry-forward without time limitations.
Non-resident company
The tax rate for capital gains of non-resident companies is 19%. Taxation will be applied on an operation by operation basis, so that there is no compensation between capital gains and losses.
INDIRECT SALE
Resident individuals
Capital gains
Personal income tax will be levied on the sale of shares at a tax rate of 19%-26%. The tax rate applies on the difference between the acquisition and sale price of the shares.
VAT / transfer tax
If a company acquires at least 50% of the shares in a so-called ‘real estate company’, then the acquisition will be subject to either VAT or transfer tax. A company will qualify as a ‘real estate company’ where more than 50% of its assets are real estate properties that are not linked to a professional activity. The purchaser must obtain the control of the real estate company, or, alternatively, if they already had such control, it must be increased.
Losses
Losses are offset against other capital gains. If there are still losses, these can be offset against the positive balance between capital gains and capital losses up to a maximum of 20%. If there are still losses, then the taxpayer has the following four years to offset them.
Non-resident individual
Non-resident individuals are subject to income tax for non-residents at a flat rate of 19%. The taxation in Spain may be limited if a double taxation treaty between Spain and the state of residence of the individual is in force.
Resident company
Capital gains
Generally, capital gains obtained from the selling of shares of companies in which at least a 5% interest has been held for more than a year (or with an acquisition value of over EUR 20 million) are exempt from corporate income tax. However, the exemption for capital gain is limited to 95% of the income. Thus, the effective tax rate on capital gains would be 1.25%.
Losses
Tax losses can be carried forwards with no time limitations.
VAT / transfer tax
If a company acquires at least 50% of the shares in a ‘real estate company’, the acquisition is subject to VAT or transfer tax. The company qualifies as ‘real estate company’ where more than 50% of the assets are real estate properties not linked to a professional activity. The purchaser must obtain the control of the real estate company or, alternatively, if they already had such control, it must be increased.
Non-resident company
Non-resident individuals are subject to income tax for non-residents at a flat rate of 19%. The taxation in Spain could be limited if a double taxation treaty signed by Spain and the state of residence of the individual is in force.
INTRA-CONCERN DIRECT TRANSFERS (SPANISH REAL ESTATE TO SPANISH COMPANY)
Intra-concern transfers are taxed on the same principles as transfers to outside concerns. Nevertheless, transfer pricing rules do apply to transfers between related parties. The price of the transaction should therefore be based on the arm's-length principle.
SPANISH REAL ESTATE TO AN EU-COMPANY TRANSFER
If the transferor’s home jurisdiction is within the European Union, the liability to tax on the capital gains may be avoidable.
