Tax in Spain. To determine whether you may pay only the 2% transfer tax in Spain, we must analyse article 25 of the Legislative Decree 1/2009 of 1 September, which presents the approved consolidated text for the Autonomous Community of Andalusia’s provisions on assigned taxes. This law allows a reduced Spanish tax rate on onerous real estate transfers involving real estate to be resold by professional real estate companies or promoters.
1. Under the modality of onerous real estate transfers and stamp duties, a 2% transfer tax rate is applied in Spain on the acquisition of a dwelling by a natural person carrying out an economic activity to which the adjustment regulations of the General Chart of Accounts of the Real Estate Sector are applicable, provided that the following requirements are met:
a) The natural person or legal entity includes the dwelling as a current asset on its balance sheet.
b) The purchased dwelling is transferred within the next five years from the acquisition, and such transfer is subject to the Spanish transfer tax.
2. The provisional payment is calculated as the difference between the application of the general rate and the reduced rate set forth in the previous article under the terms set out in article 5 of the Consolidated Text on the Law on Tax on Property Conveyance and Documented Legal Acts, approved by the Legislative Royal Decree 1/1993 of 24 September.
3. That that the requirements set out in section 1 of this article are being met must be proven in accordance with the following criteria:
a) The status of a taxpayer to whom the adjustment regulations of the General Chart of Accounts of the Real Estate Sector are applicable must be proven by a certificate of registration under the corresponding section in accordance with the National Classification of Economic Activities. This certification must be presented with the tax payment. Registration from the corresponding register of the Government Department of Economy and Finance can serve as a substitute for this certification.
b) The fact set out in paragraph a) of section 1 of this article requires that the taxpayer stipulate in the document which formalizes the transfer that he/she intends to include the real estate in its current assets.
The provisions in the preceding paragraph shall be understood without prejudice to the administrative verification thereof.
c) The requirement set out in paragraph b) of section 1 of this article shall be understood to have been fulfilled at the time that the notarial sales deed is executed.
1. Certification of the registration in the corresponding section in accordance with the National Classification of Economic Activities
With regards to the requirement set forth in section 3 a), the acquisition must be performed by a natural person or legal entity carrying out an economic activity in Spain to which the adjustment regulations of the General Chart of Accounts of the Real Estate Sector are applicable, as approved by the Order from the Ministry for Economy and Finance of 28 December 1994 (Official State Gazette number 3, 4 January 1995). The Register of Professionals and Businessmen of the Junta de Andalucía, to which the regulations refer, is being established, so companies need to offer the following proof:
– If the Spanish Tax on Economic Activities (IAE) is paid by means of the tax return of aforesaid tax (form 840), current certification from the registrar under the corresponding section of the IEA may be requested using form 01 on Application of Certificates (Tax Office).
The section of the IEA that allows concluding that the adjustment regulations of the General Chart of Accounts of the Real Estate Sector applies to the professional or business real estate agent are: Group 833, subgroup 833.2 (promotion of buildings) and group 861.1 (renting apartments).
If the company is registered under section 833.2, it must fulfil the requirements set out in section 3.a) of article 25.
2. Inclusion in the current assets
Article 25.2 b) sets out that the taxpayer must indicate in the document which formalizes the transfer his/her intention to include the dwelling in the current assets, without prejudice of subsequent administrative verification thereof. Such a formal requirement is regulated in a positive sense as a guarantee that the dwelling will be included in the company’s current assets.
Therefore, it is important that the company proves that it has included the purchased dwelling in its current assets and intends to resell it within the legally established period of time.
In all tax periods in which the company has been registered under section 833.2 of the Tax on Economic Activities and proves by any legal means that it will include the dwelling in the current assets and resell it within the legally established period of time, the company may apply the 2% tax rate of onerous real estate transfers, provided that the company complies with the requirements set out in article 25 of the Legislative Decree 1/2009 of 1 September, which presents the approved consolidated text for the Autonomous Community of Andalusia’s provisions on assigned taxes.
Additional articles under the subject “Tax in Spain” can be found here.
You can find additional legal and tax information at the micro website conveyancinginspain.com if you wish to purchase or sell your property in Spain.
Do you need Spanish tax advice? Do you have a legal inquiry? Contact one of our professionals, English-speaking lawyers or accountants in Spain now!
María Teresa Arcos, lawyer in Marbella
Wim Lamers, accountant (economista) in Marbella
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