Buying property in Spain — whether as a non-resident investor or as a resident private client — triggers tax decisions at four moments: acquisition, ongoing ownership, exploitation (rental or own use) and exit (sale or succession). At each moment several taxes compete — state, regional and municipal — and each ownership vehicle (individual, Spanish company, foreign company, holding) yields a different net outcome.

Acquisition

VAT or Transfer Tax? As a rule, VAT (IVA) applies when the seller is a VAT taxable person (developer, entrepreneur) or when the parties validly exercise the waiver of the VAT exemption on second and later transfers. Transfer Tax (ITP) applies when the transfer is VAT-exempt without waiver. The choice is not always available and depends on the parties’ activity. Rates: VAT 10% (residential) or 21% (land, commercial premises and non-annexed parking); ITP 6% – 11% depending on the autonomous community.

Stamp Duty (AJD). Where the transfer is VAT-taxed with waiver, Stamp Duty applies at the regional rate (0.5% – 1.5%).

Municipal plusvalía. The buyer can contractually pass the cost back to the seller, without prejudice to the statutory taxpayer.

Acquisition vehicle. Non-resident individual vs. Spanish SL vs. foreign company: this changes ongoing taxation, the exit and the succession. Case-by-case analysis. The foreign holding → Spanish SL → property structure is frequent but requires valid economic motive and substance.

Ownership and exploitation

Imputed real estate income (non-residents). For non-rented urban property: 1.1% or 2% of the cadastral value as deemed annual income on Form 210, taxed at the non-resident rate.

Rental income. Real estate income tax base, with deductible expenses (interest, IBI, condominium fees, 3% depreciation). Rate: 19% (EU/EEA) or 24% (rest of world). EU/EEA residents may deduct expenses; non-EU residents are taxed on gross income. Quarterly Form 210.

Recurring taxation. Municipal property tax (IBI, 0.4% – 1.3% of cadastral value by municipality), refuse collection fee and, where applicable, Wealth Tax (Impuesto sobre el Patrimonio) if the base exceeds the exempt minimum. Some autonomous communities allow a 99% – 100% rebate; others tax wealth in full.

Exit

Sale. Capital gain subject to non-resident income tax at 19% (with a 3% withholding by the buyer under Art. 25.2 TRLIRNR) or to PIT for residents on the savings tax scale. Municipal plusvalía applies on the increase in the value of the land, under both objective and real methods (Constitutional Court 182/2021).

Cross-border succession. Inheritance and Gift Tax where the heir or the decedent is non-resident: EU Regulation 650/2012 applies on the succession itself; on the tax side, CJEU C-127/12 and Additional Provision 2 of the ISD Act permit applying the most favourable regional legislation.

Frequent structures

Direct ownership (non-resident individual). Simple, linear tax-wise, no corporate cost. Suboptimal for multiple properties or asset-protection objectives.

Spanish SL as vehicle. Allows consolidation of several properties, expense deduction, dividend planning. Additional cost: 25% Corporate Income Tax on profit, withholding on dividends repatriated under treaty. Substance is required to avoid look-through treatment.

Foreign company holding Spanish property. Possible with economic justification. Risk: 3% annual special tax on Spanish real estate held by entities resident in non-cooperative jurisdictions (Art. 40 TRLIRNR).