Capital gains tax for non-residents in Spain
Capital gain tax from the sale in Spain is 24% for non-residents, however if you are resident in any other country of the European Union, Iceland or Norway the rate is 19%.
In addition, since 2015, any person residing in a country of the European Union or the European Economic Area that has an agreement for the exchange of tax information with Spain may benefit from the exemption for reinvestment of a habitual residence. This new habitual residence does not need to be in Spain.
Capital gains tax for residents in Spain
When you sell your Spanish property capital gains tax will be due on the gain, after all your expenses have been deducted. If you are a Spanish resident, of the first 6,000€ you pay 19%. From 6,000 – 50,000€ your tax is 21%. And above 50,000€ your capital gains tax is 23%. You will also have to add in other gains and investment income when calculating the tax due.
Spanish tax office guide in english
If you are a Spanish resident and the property has been your main home for at least three year you do not pay capital gains tax if one of the following are true:
1. You are over the age of 65.
2.The full proceeds of sale (i.e. the selling price) are reinvested in a new main home within two years.
There is also a local tax known as the “plusvalía” and raised in urban areas on the growth in the value of land, and which is allowed as a cost of disposal in calculating the mainstream capital gains tax.
For EU residents, the gain would be taxable in the home country, but under the terms of the double tax treaty, any tax paid in Spain by EU residents can be credited against the tax due in the home country.
Taxes on death
If you die owning the property, or gift it during your lifetime, Spanish succession tax will apply, regardless of your residence position. If non-resident in Spain or you have lived here for less than five years as a declared resident, the State rules will apply, and these are not generous – spouses and children are entitled to a deduction of just under 16,000€ per beneficiary, and pay tax at progressive rates from 7.65% to 34% on the excess. Taxes are much higher for unrelated individuals, such as unmarried partners or stepchildren.
If Spanish resident, each Autonomous Region can set its own rates and exemptions, and in some Regions, succession tax has been significantly reduced, whilst in others, it is still significant. Taking advice from someone who understands the Spanish implications can help you mitigate taxes.
Spanish SL Companies
Generally a client who has structured the ownership of their property, using a Spanish SL, will have done so as they have been lead to believe that this method will protect them against Inheritance tax in Spain. This is not so, as in Spain, it is the beneficiaries who have to pay the taxes on death and not the deceased’s Estate. This means that whether the non Spanish domiciled beneficiaries are inheriting the shares and assets of the SL Company, or the property directly, then Inheritance Tax will still have to be paid in Spain.
Please note that the laws in Ibiza change very often and although I have done all I can to correctly interpret the law the above is in no way full legal advice, but my interpretation of the law, and it does not substitute the legal report of a lawyer.