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OTHER SOLICITORS: |
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REAL ESTATE AGENTS: |
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| This general info
is based in our experience and knowledge of the Spanish law and
has been prepared in a very simple way so you can understand how the
process works.
To buy or sell a property in Spain may become a difficult task,
especially when it comes to properties with legal problems, burdens,
charges or rustic properties. Our aim is to make the process of buying
and selling as easy as possible for you.
As experienced property solicitors we take care of all the matters
related to your transaction and we make sure that your purchase is safe
providing you with our Title Insurance System Service to make
sure that everything is guaranteed. |
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Selling |
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Once you have signed the
reservation agreement, which normally is non refundable you will be
asked by your lawyer for the following documentation:
a) Copy of the Title Deeds (escritura).
b) Copy of the latest Impuesto Sobre Bienes Inmuebles (IBI)
receipt (Real Estate Tax).
c) Copy of your last Spanish Income Tax Declaration (form 214
if non-resident).
d) Copies of all utility service bills (water, electricity,
gas, telephone…).
e) Community charges receipt.
f) Copy of the mortgage Title Deeds. If you applied for a
mortgage when you bought the property.
Once all the checking on the property has been done, and both parts
are happy the lawyers fix a date to go to completion at the notary.
According to Notarial Rules, the notary has the obligation to check
the registration of the property being sold, before the signing of the
deed. Additionally, he must fax the new title deed immediately to the
property register once the title deeds have been signed.
Furthermore, you should be aware that Spanish law states that the
real market value must be declared in any new escritura, and provides
sanctions if they find a value has been under declare.
You should also bear in mind that, unless you are tax resident in
Spain it is now the buyer's responsibility to lodge 3% of the purchase
price with the Spanish tax authorities on behalf of the Seller.
The tax authorities retain this deposit until they have assessed the
taxes, including capital gains tax, that are owed to them by the Seller.
Once the Seller's tax position has been assessed, any surplus funds
should be returned to the Seller. The authorities may take up to a year
before returning any money.
Once you have sold the property and signed the title deeds you will
have to notify the correspondent suppliers to transfer the electricity,
water and rubbish collection charges from your name. You will also need
to notify the Town Hall that you no longer own the property. Finally,
you will need to make your Spanish tax declarations in order to recover,
if any, the unused balance of the retention paid to the Spanish tax
authorities.
There is an important difference between the way in which the Spanish
and other countries collect their taxes.
In Spain it is your responsibility to obtain a tax form, to complete
the form and to calculate the amount of taxes that you owe to the State
and to submit the form to Hacienda with the appropriate amount of tax
payable.
The taxes that you have to take into account are:
 | Plusvalía Tax (Plusvalía Tax is a Municipal Tax on
the increase of the value of the land over the years) |
| Capital Gain Tax |
A non-resident seller is liable for payment of a 18% Capital Gains
Tax on the profit of the sale of their property unless it was bought
before January 1st 1987. However, most of the people are not aware that
there are exemptions available for those who have owned their property
since 1994 and before.
In the typical example of the sale of property, the price used to
calculate the tax liability is the same declared in the Title Deed.
If you have under declared the value in your Title Deed on purchasing
property you can, therefore, build up a large and entirely artificial
Capital Gain which will be taxable unless you now take action to
remedy the situation.
A vendor will be able to mitigate his tax exposure by three
different ways:
| Reductions on when the property was purchased |
| Reductions on the inherent costs of the purchase, works done on
the property and others |
| Extensions and improvements done on the property |
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Company formations |
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| Do you need a Spanish
Company to start your business in Spain or as a non-trading holding
Company for your property in Spain?
To set up a Spanish Limited company the following steps need to be
fulfilled:
 Obtain a Name certificate from Mercantile Registry
confirming Name availability
Open up a Bank Account in the Company's Name and
deposit the Share Capital.
Prepare the Company's Articles of Association
(Escritura).
Obtain a temporary tax code (CIF) from the Tax
Office and register your company's trading activity in Spain at the
Hacienda (Tax Office).
Pay Stamp Duty at 1% of the initial share capital.
Register the company with the Merchandise Registry.
It is essential that your Spanish SL Company is properly
maintained as under Spanish law all companies are required to submit
the (VAT) quarterly returns, complete various standard Inland Revenue
(Hacienda) Forms, have a Spanish registered office for official and
service of process mail. |
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Wills |
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| It is absolutely
essential for you to have a Spanish Will if you have a property, bank
accounts or any other assets of value in Spain. The Will is the legal
and executive document that appoints those who will inherit your Estate.
If a person should die intestate in Spain (without a Spanish Will) the
trouble way of going through the process of making your English Will
effective in Spain, or making the Probate for the inheritance in Spain,
will be significantly delayed than the simple method of proving a
Spanish Will. Without such a Will your heirs could had been in troble
registering the assets at their names and being able to access funds in
bank accounts, and, in the worst case your Spanish Estate could even
pass to the Spanish Government. For Wills and testamentary
dispositions to be valid and effective in Spain without needing any
other additional legal requirements they must be Notarised or Granted
before a Public Notary. Otherwise, privately made Wills need to be sent
to Court, after the death of the testator, for a Judge to approve them
as legitimate. This is why you must have a notarised will and
testament.
Once the will and testament is authorised by the Notary, its
existence is communicated to the Registro de Actos de Ultima Voluntad
in Madrid which is the Central Registry were all Wills and
Testaments officially granted in Spain are registered, and in the event
of the death of the testator, any inheritor may be able to obtain,
through this Central Registry, the details of the existence and
whereabouts of the particular Will.
Notarised Wills and Testaments in Spain are legal documents kept
in public notarial records, accessible only by the inheritors.
In Spain, each person needs an independent Will. Spouses cannot do
Joint Wills. If you are married (whether or not you have property in
joint names), each one of you should make a separate Will. |
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