HomeGLOSARIO JURÍDICO

Annual Real Estate Tax (IBI)

This tax is very similar to the local rates or community charge that you pay to the local authorities in your home country. All property owners, both resident and non-resident, have to pay the tax annually to the local administration that covers the area where the property is located. The tax can be paid by standing order from your Spanish bank account and this is probably the most convenient method if you are a non-resident since late payment will result in surcharges being added to your bill.

*Please, go to our Conveyancing Guide for more details. CLICK HERE

Aval

Guarantee requested by the bank to approve a mortgage application.

Basura-Tasa de Tratamiento y Recogida de Basura-(Rubbish Collection Tax)

This tax is paid to your local authority to cover the costs of rubbish collection and disposal. It is usually paid twice a year and it is advisable for non-residents to arrange payment by standing order from a Spanish bank account. If your property is newly constructed your local town hall may not immediately bill you for the tax. Sometimes it can take up to a year for them to send you notification, at which point they will backdate your payment to the original purchase date.

*Please, go to our Conveyancing Guide for more details. CLICK HERE

Boletines

Document issued by JUNTA DE ANDALUCÍA authorising water & electricity connections.

Capital Gains Tax (impuesto sobre rentas derivadas de transmisiones de bienes inmuebles)

This is a tax that both residents and non-residents have to pay on the profit obtained when they sell a property or any assets in Spain. The tax rate at the moment (2023) is 19% of the profit. That is, if you bought a property in 2010 for 250.000 euros and now sell it at 300.000 euros, you would have to pay a 19% of 50.000 euros.

When the vendor is a non-resident, the buyer has the obligation to retain a 3% of the price and pay it to the Tax Office on behalf of the vendor on account of the Capital Gains Tax. If there is no profit in the sale, the Tax Office will refund the full amount to the vendor. If there is a profit but it is less than the retention, the difference will be refunded and if the profit is more than the retention amount, then the vendor will have to pay the difference to the Tax Office.

*Please, go to our Conveyancing Guide for more details. CLICK HERE

Certificado de Final de Obra

Certificate which is issued by an architect confirming that the building meets the design specifications.

Cheques Bancario

Banker´s Draft.

Community Fees

*Please, go to our Conveyancing Guide for more details. CLICK HERE

Completion

A property purchase reaches formal completion when the Sales Contract (Escritura de Compraventa) is signed by both the purchaser and the seller in the presence of a Notary Public (Notario). A Notary is a public official who certifies that contracts are legal by checking that all the formalities involved in the transaction have been complied with. At this point the agreed sum is paid and possession of the property is handed over to the buyer.

Comunidad de Propietarios

In Spain you and your neighbours form a legal body that is known as the Comunidad de Propietarios, which is similar to the residents’ associations you may have dealt with in your home country.

Contrato de Reserva (Reservation Contract)

Once your estate agent and lawyer have discussed the purchasing terms and conditions with the seller and an agreement has been reached, the next step is to formalise this verbal understanding through a written contract. This document is known as the Reservation Contract (Contrato de Reserva) and should be signed by both you or your representative and the seller.

Depósito de Reserva (Reservation Deposit)

It is standard practice in Spain for this Reservation Contract to be accompanied by a sum of money which is paid by the buyer to demonstrate to the seller that there is a real intention to purchase. This money is known as a Reservation Deposit (Señal de Reserva) and usually amounts to between €3,000 and €12,000. Once this deposit has been paid, the property is taken off the market and the price is frozen for a specified period of time; usually about between 15-30 days.

Contrato Privado de Compraventa (Private Purchase Contract)

Once the reservation period of 15-30 days has passed, a Private Purchase Contract must be signed to confirm the purchase. This contract is accompanied by the payment of a deposit which is usually 10% of the purchase price although in the case of new properties it can amount to 30% of the purchase price.

Datos Registrales

Property Register Data.

Depósito de Reserva (Reservation Deposit)

It is standard practice in Spain for this Reservation Contract to be accompanied by a sum of money which is paid by the buyer to demonstrate to the seller that there is a real intention to purchase. This money is known as a Reservation Deposit (Señal de Reserva) and usually amounts to between €3,000 and €12,000. Once this deposit has been paid, the property is taken off the market and the price is frozen for a specified period of time; usually about 30 days.

Escrituras (Title Deeds)

These documents firstly act as evidence that the person selling the property actually owns it, and secondly set out any rights or obligations that affect the property. If you are selling, then valuable time can be saved if your title deeds can be obtained by us at an early stage. If you have a mortgage then your bank or building society might be holding your title deeds. We will need to know your mortgage account number and the name and address of the lender. Some lenders charge a fee to send out your deeds but this will normally be added to your mortgage account.

First Occupation License (Licencia de Primera Ocupación)

It is a license to occupy the dwelling. It is a paper, which proves that the conditions of the building license (Licencia de Edificación) have been observed. The purpose of this license is to check that the building has been constructed in accordance with the building license and to ensure the applicant registers the property with the tax office. By Law, utilities cannot be connected without a first occupation license.

Gestoría

A “gestoría” is a licensed administrative office specialized in obtaining official authorizations, permits, licenses etc…

IBI (Annual Real Estate Tax)

This tax is very similar to the local rates or community charge that you pay to the local authorities in your home country. All property owners, both resident and non-resident, have to pay the tax annually to the local administration that covers the area where the property is located.

*Please, go to our Conveyancing Guide for more details. CLICK HERE

Inheritance Tax

This tax is payable on inheritance of property by spouses, children or any other party who receives part of the deceased’s Spanish estate.

*Please, go to our Conveyancing Guide for more details. CLICK HERE

ITP (Stamp Duty)

ITP (Impuesto sobre Transmisiones Patrimoniales) is roughly equivalent to UK Stamp Duty and is levied at between 7% and 8% of the purchase price depending on the Autonomous Region (Comunidad Autónoma) involved. However, it should be noted that the above does not apply to newly built properties but just to privately owned or resale properties. The tax is paid by the buyer after the final exchange of contacts to the Tax Collection Agency (Agencia Tributaria).

IVA (VAT)

Value Added Tax (Impuesto sobre el Valor Añadido or IVA) and documentary stamp duty (Impuesto sobre Actos Jurídicos documentados or IAJD): These taxes do apply to newly built properties and are paid the first time a property is sold normally by the developer (comprador) of the property. The IVA rate is 10% of the selling price and the AJD is fixed between the 0.5% and 1.5% of the selling price depending on the Autonomous Region (Comunidad Autónoma) involved. If a deposit is given before signing the Sales Deed (Escritura de Venta) a 10% IVA tax will apply. IVA is paid directly by the seller to the Tax Collection Agency (Agencia Tributaria) and AJD is paid by the buyer after completion of the purchase.

Land Registry (Registro de la Propiedad)

A Central body that retains records of who owns the land, and under what conditions.

Land Registry Fees

The fees of the Property Registry for registering your Escritura in the Register will be assessed on a scale fee related to the Escritura value. As a rule of thumb, 80% of what the notary charges.

Legal Fees

These fees usually amount to about 1% of the purchase price + VAT, but your legal costs could increase if complications arise during the transaction. Your lawyer should be able to give you a detailed estimate of the costs that are likely to ensue from your particular case.

Licencia de Primera Ocupación (First Occupation License)

It is a license to occupy the dwelling. It is a paper, which proves that the conditions of the building license (Licencia de Edificación) have been observed.

The purpose of this license is to check that the building has been constructed in accordance with the building license and to ensure the applicant registers the property with the tax office.

By Law, utilities cannot be connected without a First Occupation License.

Municipal Tax on Property (Plusvalía)

This tax is paid to the local administration and is based on the increase in the value of the land since it was last sold. Logically, as the beneficiary of this increase in value, the seller has to pay the Plusvalía.

NIE Numbers

By law all foreigners who have assets in Spain must have an NIE. This is your reference number with the Spanish Inland Revenue and you need it to complete your annual Income Tax and Capital Gains Tax returns. It is also essential when you open a bank account, buy or sell property, apply for a loan or mortgage, or even take out an insurance policy. Spanish Notaries are now insisting that non-resident purchasers produce an NIE certificate before they will allow them to sign the completion contracts. If you do not have an NIE this can cause unexpected delays to completion at the last minute.

*Please, go to our Conveyancing Guide for more details. CLICK HERE

Nota Simple

Extract from the property register showing: – wether the property has debts – the current owner – the boundaries – the total square meters of the land ando f the house, if there is one. – How the land has been classified: rústico o urbano – The rights that other may have on property, Duch as public paths/roads, water or sewage lines.

Notario (Notary Public)

A Notario is an official of the State who makes sure that the formalities associated with the purchase are properly complied with. He/She puts on record the fact that the title deed recording the sale/purchase… has been signed on his/her presence and understood by the parties concerned.

Notary Fees

This fee is fixed by an officially established scale which takes a number of different factors into account including the price of the property. The scale ranges from about €500 for lower priced properties to €2.000 for more expensive purchases.

Plusvalía (Municipal Tax on Property)

This tax is paid to the local administration and is based on the increase in the value of the land since it was last sold. Logically, as the beneficiary of this increase in value, the seller has to pay the Plusvalía.

POA or Power of Attorney (Poder)

This formally allows another person (either your lawyer or somebody else that you trust) to sign on your behalf. You can have this document prepared while you are in Spain by making an appointment with the Notary who will oversee all the formalities. Alternatively, a power of attorney can be signed before a Notary Public in your home country. This power of attorney will have to be in both Spanish and English language (double column) and then legalised for use in Spain by having an Apostille certificate attached to it under the terms of the Hague Convention.

Private Purchase Contract (Contrato Privado de Compraventa)

A private purchase contract is essentially the same as contracts you will have signed as part of the transaction to buy property at home. It creates a binding agreement between you and the seller, establishes a completion date and sets out the terms and conditions of the sale. Some terms may not be explicitly mentioned in the contract because they are implied by the law governing transactions of this kind. The Private Purchase Contract is usually signed between two and four weeks after the Reservation Contract.

Property Owners’ Imputed income Tax (Impuesto sobre la Renta)

This is a tax that must be paid by non-resident property owners every year. Resident owners who can prove that their property in Spain is also their principal residence are exempt. Non-residents are taxed on income received in Spain at a flat rate of 24% (for residents out of the EU) or 19% (for residents in a EU country). Where no actual income exists the Inland Revenue will impute an income usually based on 2% of the value of the property (valor catastral) which is registered at the Land Registry (Catastro). On properties which have had their value revised in the last 10 years, this is reduced to 1.1%.

Property Registry Fees

The Property Registry (Registro de la Propiedad) will also charge you a fee for entering your title deeds in the register. They use a scale that is related to the price stated in the title deed to assess the exact amount to be charged. This usually comes to about 80% of the fees you pay to the Notary.

Reservation Contract (Contrato de Reserva)

Once your estate agent and lawyer have discussed the purchasing terms and conditions with the seller and an agreement has been reached, the next step is to formalise this verbal understanding through a written contract. This document is known as the Reservation Contract (Contrato de Reserva) and should be signed by both you or your representative and the seller.

Reservation Deposit (Depósito de Reserva)

It is standard practice in Spain for this Reservation Contract to be accompanied by a sum of money which is paid by the buyer to demonstrate to the seller that there is a real intention to purchase. This money is known as a Reservation Deposit (Señal de Reserva) and usually amounts to between €3,000 and €12,000. Once this deposit has been paid, the property is taken off the market and the price is frozen for a specified period of time; usually about 30 days.

Stamp Duty (ITP)

ITP (Impuesto sobre Transmisiones Patrimoniales) is roughly equivalent to UK Stamp Duty and is levied at between 7% and 8% of the purchase price depending on the Autonomous Region (Comunidad Autónoma) involved. However, it should be noted that the above does not apply to newly built properties but just to privately owned or resale properties. The tax is paid by the buyer after the final exchange of contacts to the Tax Collection Agency (Agencia Tributaria).

Title Deeds (Escritura)

These documents firstly act as evidence that the person selling the property actually owns it, and secondly set out any rights or obligations that affect the property. If you are selling, then valuable time can be saved if your title deeds can be obtained by us at an early stage. If you have a mortgage then your bank or building society might be holding your title deeds. We will need to know your mortgage account number and the name and address of the lender.

Transfer Tax (ITP/IVA)

7% of the purchase price; but when buying form the developer this is replaced by 10% IVA plus 1,2% Stamp Duty.

VAT (IVA)

Value Added Tax (Impuesto sobre el Valor Añadido or IVA) and documentary stamp duty (Impuesto sobre Actos Jurídicos documentados or IAJD): These taxes do apply to newly built properties and are paid the first time a property is sold normally by the developer (comprador) of the property. The IVA rate is 10% of the selling price and the IAJD is fixed between the 0.5% and 1.5% of the selling price depending on the Autonomous Region (Comunidad Autónoma) involved. If a deposit is given before signing the Sales Deed (Escritura de Venta) a 10% IVA tax will apply. IVA is paid directly by the seller to the Tax Collection Agency (Agencia Tributaria).