The Spanish Barter is a contract whereby one of the contracting parties undertakes to give a thing to receive another (Article 1538 of the Spanish Civil Code).
There are several important characteristics of the barter agreement:
- Each party transmits the ownership of an object (property);
- The contract is bilateral or mutually binding, and there are reciprocal obligations between the parties;
- With an onerous contract, goods are exchanged with a given value. Remember that if a party does not transfer an asset, it could meet the criteria of a donation.
At Arcos & Lamers Asociados, our Spanish law firm in Marbella, we take cases in which individuals desire tax advice about the barter of real estate.
In general terms, the legal costs and taxation involved in the exchange of properties can include the following:
- Transfer tax for both parties (unlike the contract of sale, in which only the purchaser is required to pay the transfer tax);
- Local plusvalía tax, again for both parties
- Potential capital gains tax for each party, depending on the value of the bartered properties;
- Special cases in which a party is a company (subject to VAT) and there is an exchange of land for future building (this is another issue);
- In the event that a party is not a tax resident in Spain, there is a 3% withholding tax over the market value of the property. This 3% withholding tax should be considered as a down payment for a potential Spanish capital gains tax.
Since barters involving real estate require the acquisition of a title deed granted before a Notary Public and the corresponding registration of the properties at the Land Registry, the parties must also be aware of the corresponding Notary and Land Registry fees.
Additional information on property transactions may be obtained at the following micro web site: Conveyancing in Spanje.
Previouse post´s at the web site from this English speaking Spanish law firm in Marbella under the wording “Spanish property” can be found here.
Do not hesitate to contact our office for further advice if you own a house and wish to exchange it for another.
Félix Ruiz, Lawyer in Marbella
- Lawyer in Spain, Lawyers Costa del Sol, Property Lawyer in Marbella, Spanish law firm,