In Spain restrictions do not exist on the fact that a foreign person or non-resident in Spanish territory to buy a property (apartment, house, office, parking ...), where the alien will have exactly the same rights as a Spanish citizen to acquire a property. The same applies if a foreigner, and owner wants to sell a property. However, it will be necessary to consider some specific particularities so that the legal transaction can held properly notarized and then register with the Land Registry.
As is the case when the purchase is between individuals, the sale of real estate requires public deed before notary to be registrable at the Land Registry. This operation result the clearance of capital gains tax on one hand, and on the other, the settlement of the transfer tax and Stamp Documents (ITPAJD) or IVA depending on whether it is a property of the second hand, or of new work. If you are interested on further knowledge on spending and taxes that all purchase entails, we recommend reading our post on “What costs arise from the sale of a home?”
The particularities analysed here depend whether the buyer is non-resident or foreign, or conversely, the seller is.
The Personal Income Tax Law, Article 9 considered resident and therefore not subject to the specific then comment, those who:
• Staying more than 183 days a year in Spain.
• Have the core of their business in Spanish, directly or indirectly territory.
• They are married to a legal resident and not legally separated, with children under age habitually resident in Spain and depend on such person.
Foreigners or Spanish non-residents should take into account the following considerations:
• Case in which the buyer person is foreigner or Spanish non-resident:
The buyer will be required, prior to the conclusion of the public deed character, to obtain an Identification Number (NIE), which can be requested in Spain, in the Foreign Office or the General Commissariat for Immigration, or in the Spanish consular offices located in the country of residence of the applicant, considering that in said request other documents must be attached, namely a printed-standard application duly completed and signed, the original and a passport photocopy or identity card, and a communication of economic, professional or social reasons which justify the application in question.
Besides the above, it is recommended that the non-resident foreigner who intends to acquire a property for sale should proceed with opening a bank account in Spanish territory, since by the same means of payment of the purchase price will be credited as payment of taxes derived from the operation.
Upon fulfilment the above conditions, the non-resident may acquire by purchase the desired property, enjoying the same property rights as a Spanish citizen.
• Situation where the selling party is foreigner or non-resident Spanish:
In this circumstance will also be required to the foreigner or non-resident Spanish to obtain an Identification Number (NIE), so the seller must have such identification to transfer the property of their property.
For the seller who is not resident in Spain, the transaction is subject to the following taxes: Income Tax Non-Resident (IRNR) and the Tax on the Increase in Value of Urban Land (IIVTNU or surplus municipal).
Notwithstanding the foregoing, and in order to ensure their tax obligations, the general rule is that the sale of real estate located in Spanish territory by foreign non-resident, the purchaser/Spanish buyer is obliged to retain the price 3% of the price of the sale at the time of granting the public deed and must enter that 3% of the value of the property, within a period not exceeding one month, to Treasury, through the model 211, as payment on account of tax Non-resident income Persons (IRNR). This general rule has an exception, being such that such retention should not be performed by the buyer in the event that the seller certifies with a certificate issued by the tax agency that is subject to Income Tax of Individuals applies (income tax) or corporation tax (IS). The buyer must give the voucher and proof of payment to the seller, who within a period not exceeding four months, should declare the capital gains obtained through the model 210, and in each case, part of it can be returned or alternatively the remaining pending taxation will have to be paid.
In addition, regarding the municipal surplus value tax that every seller must pay when selling their property to a third party if there is an increase in land value, it should be noted that on this occasion the buyer should be careful to retain to the price of the sale the amount corresponding to the municipal increased value in order to declaring and paying the tax, all within the maximum period of one month. This is so because if the seller does not liquidate the capital gains tax, the sold property responds to tax payment, all with obvious prejudice to the buyer.
Therefore, although the liquidation of the IRNR and the Municipal Capital Gain is the duty of the selling party, the obligation is imposed on the buyer in the first case, and the recommendation in the second case, to retain the amounts resulting from both taxes because of the foreign element and because if this deposit is not made by the buyer, the property transferred will be the one that will be affected by the payment of the resulting amount, resulting in the buyer being ultimately injured.
It is advisable that everything that has been explained above it is recorded in the contract of signing the parties signed before the sale, and then remember that the last responsibility will fall, eventually, on the property. For that it is relevant that all agreements are properly translated, as well as being advised by a lawyer in order to obtain maximum protection and security and also to the effect that all parties are informed in advance, thus avoiding sterile discussions in the Notary, as the duty to retain the IRNR is absolutely mandatory. We recommend you reading our post about "What is the engagement contract? "
Do you have more questions? Need our lawyers to draw a contract of deposit or advise you throughout the process of buying a home? Contact us for visiting our office or use any of the online legal services we offer on our website.