Summary: Non-resident property owners in Spain face two layers of taxation: purchase taxes (Transfer Tax or VAT+Stamp Duty) and ongoing annual obligations (Non-Resident Income Tax, local rates and wealth tax). Total purchase-related taxes typically represent 10–14 % of the purchase price. EU/EEA residents benefit from lower annual tax rates than buyers from outside the European Economic Area.
Purchase Taxes: Resale Properties
When purchasing a resale property in Spain, the buyer pays the Transfer Tax (ITP), which is levied by and varies between Spain's autonomous communities:
- Andalusia (Costa del Sol): 7 % (reduced standard rate effective from 2021).
- Valencian Community (Costa Blanca): 10 %.
- Catalonia: 10 %.
- Madrid: 6 %.
- Balearic Islands: 8–13 % on a sliding scale based on purchase price.
- Canary Islands: 6.5 %.
Purchase Taxes: New-Build Properties
New-build properties purchased from a developer are subject to a different tax regime:
- VAT (IVA): 10 % of the purchase price for standard residential properties.
- Stamp Duty (AJD): 0.5–1.5 % depending on the autonomous community. In Andalusia, the rate is 1.2 %.
Notary and Land Registry Fees
Notary fees in Spain are set by regulated tariffs. For a property valued at 500,000 euros, notary and Land Registry fees combined typically total between 1,800 and 3,000 euros.
The 3 % Withholding on Resale Purchases
When purchasing a property from a non-resident vendor, Spanish law requires the buyer to withhold 3 % of the purchase price and pay it directly to the Spanish Tax Agency (AGENCIA TRIBUTARIA) on account of the seller's Non-Resident Income Tax on the capital gain. This obligation falls on the buyer, and failure to comply can result in the buyer being held jointly liable for the seller's tax debt.
Annual Tax Obligations for Non-Resident Owners
- Council Tax (IBI): annual municipal tax calculated as a percentage (0.4–1.3 %) of the cadastral value. Paid to the local council.
- IRNR on deemed rental income: if the property is not rented out, a deemed income of 1.1 % of the cadastral value is taxed at 19 % (EU/EEA residents) or 24 % (all others).
- IRNR on actual rental income: net rental income is taxed at 19 % for EU/EEA residents (who may deduct costs) and 24 % for others (no cost deduction permitted).
Wealth Tax
Spain levies Wealth Tax on the Spanish assets held by non-residents. The individual exemption is 700,000 euros. Rates range from 0.2 % to 3.5 % on net taxable wealth above the threshold, varying by autonomous community. Some regions such as Madrid have historically bonified this tax, though regional tax rules are subject to change.
Capital Gains on Sale
When selling a Spanish property as a non-resident, the gain is subject to Non-Resident Income Tax at 19 % for EU/EEA residents and 24 % for all others. The taxable gain is the difference between the acquisition price (adjusted for costs and improvements) and the sale price. Municipal Capital Gains Tax (plusvalia municipal) is also payable by the vendor.
Frequently Asked Questions
Can EU residents deduct property expenses from rental income?
Yes. EU and EEA residents can deduct costs directly associated with generating rental income, including mortgage interest, insurance, community fees, IBI, depreciation and repair costs. Non-EU residents are taxed on gross rental income with no deductions permitted.
When is the annual IRNR declaration due?
The annual Non-Resident Income Tax return (Form 210) for deemed rental income must be filed between 1 January and 31 December of the year following the tax year in question. Actual rental income must be declared quarterly.
Is there inheritance tax in Spain for non-residents?
Yes. Non-residents inheriting Spanish assets are subject to Spanish Inheritance Tax (ISD). Rates and exemptions vary significantly by autonomous community. Some regions such as Andalusia have introduced near-total exemptions for close relatives.
What is the double taxation treaty position?
Spain has double taxation treaties with most major countries, including the United States, the United Kingdom, Mexico, Colombia and many other Latin American nations. These treaties typically limit the extent to which the same income can be taxed in both countries. Consulting a tax advisor familiar with both jurisdictions is strongly recommended.
Need help navigating Spanish property taxes? Our team works alongside specialist tax advisors with deep expertise in non-resident property taxation. Request a tax consultation.
