Increase in Transfer Tax on Resale Property Purchases

Many of our clients tell us that they have been advised by other professionals that Spanish Taxation is likely to decrease in coming years and that Inheritance Tax (IHT) should not be an issue.

However, this may not be the case, with the on-going financial crisis still affecting the Spanish economy where there has been a certain amount of pressure placed upon autonomous regions to try to combat the lack of funds by raising Taxes. The Andalusian Region has increased Taxes including those on resale property purchases, and other regions of Spain such as The Balearic Islands and Asturias have followed suit.


Spanish Resale Property Transfer / Purchase Tax


Prior to 2012 in Andalucía if you were purchasing a resale property you had to pay a 7% Tax on the purchase price. As of the 1st January 2012, the Tax on the purchase of resale properties up to €400.000 has risen to 8%, on the amount above €400.000 you have to now pay 9% and if you are buying for over €700.000 then the Tax on that amount rises to 10%.


In essence Taxes on resale purchases have not decreased, but have in fact increased overall.


As we have previously written, over the past 12 months alone in Spain both residents and non-residents have experienced the following increases;- 


* Capital Gains Tax (CGT) Increased


* Wealth Tax Reintroduced


* Non Resident Income Tax Increased


* Spanish Resident Income Tax Increased



How can Wincham help?


An effective solution to the IHT problem in Spain is to purchase the property into a UK Private Limited company which the purchaser’s would own as Shareholders. A UK company is not an offshore company as is a company of Gibraltar or the Isle of Man, which would be charged an annual Tax by Spain of 3%.


Contrary to popular belief there may be no property Purchase Tax payable on this transaction, unlike other property transactions in Spain. 


Should you wish to sell the property in the future then there are 2 methods of doing so as the property can be sold independently by the Company or the shares in the Company can be sold to the purchaser which may save the Purchase Tax for the buyer and 3% Withholding Tax to the seller. 


It is always necessary to consider every case on an individual basis and our trained Consultants can advise on the best structure to adopt for your own circumstances of Spanish property ownership. Please call to speak to one of our Consultants on the numbers below or visit our website for further details and to obtain your ‘free of charge’ Spanish Inheritance Tax illustration demonstrating your potential Tax liability and the savings you could make by not purchasing in your own name but a UK Limited Company structure.


Telephone UK Head office :                 +44 (0)1260 299 700

Telephone Spain Head office:                   0034 965 830 991


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