What is iva in Spain account. VAT in Spain (value added tax). Grounds for paying VAT
VAT and the activities of private entrepreneurs
VAT, value added tax, which corresponds to the Spanish concept of IVA (Impuesto de Valor Añadido), is one of the mandatory components indicated in the invoices issued by individual entrepreneurs in the course of their activities, as well as one of the types of mandatory payments for which it is necessary to report to tax inspectorate. It is an indirect tax applied to any product or activity from which a profit can be made. The amount of tax is collected by a self-employed entrepreneur from each client when he sells the relevant product, performs work or provides a service, in order to subsequently transfer it to the state treasury. The VAT amount must be indicated on each invoice issued to the client. It is calculated based on the tax base (amount of income), which is understood as the “net” amount of the invoice. Autonomo is obliged to submit quarterly reports on value added tax to the tax office.
Depending on the type of activity carried out by entrepreneurs, different VAT rates are applied. There are 3 main types of tax:
1. minimum VAT (IVA superreducido).
Its size is only 4%. The minimum tax applies to essential goods and services. These include:
📌 the following food products: regular bread, frozen bread dough, milk, cheese, eggs, fruits, vegetables, legumes, root vegetables, herbs, grains;
📌 books, magazines, newspapers that do not contain advertising as the only or main component;
📌 maps, notes, drawing books and other items that can be used as educational materials, with the exception of electronic devices;
📌 medicines;
📌 vehicles intended for disabled people, wheelchairs and vehicles intended for transporting groups of disabled people;
📌 dentures, orthoses and implants;
📌 car repair services for people with disabilities and adaptation of vehicles for transporting people with disabilities;
📌 rent with the right to buy social housing within the framework of special public programs, including parking lots and utility rooms;
📌 remote assistance services, home assistance (nurses, etc.), day care centers and overnight shelters.
2. reduced VAT (IVA reducido).
The rate of this tax is reduced by 11% compared to standard VAT and is equal to 10%. It applies to the following categories of activities:
🔍 transportation of passengers and luggage;
🔍 activities of hotels, hostels, spa centers, restaurants;
🔍 sale of food and drinks for consumption at the point of sale;
🔍 services provided in the interests of owners of farms, agriculture, forestry and livestock: planting, sowing, grafting, cultivation, growing and harvesting, selection, care and fattening of animals;
🔍 cleaning services for public roads;
🔍 services for collection, storage, transportation, processing, restoration and removal of garbage and industrial and life waste, cleaning of state-owned sewage, deratization, wastewater collection;
🔍 entrance tickets to libraries, archives, document storage centers, museums, art galleries;
🔍 performing work on the reconstruction and repair of residential buildings;
🔍 rent with the right to buy residential premises, including parking spaces (maximum 2) and utility rooms;
🔍 amateur level sports shows;
🔍 exhibitions and fairs of commercial and trade type;
🔍 transfer of building management rights when the property has at least 10 premises (compartments).
3. standard VAT (IVA general).
Its rate is 21%. The general tax applies to goods and services that do not fall into the above two categories.
In addition, there are certain types of goods, works and services that are, in principle, not subject to VAT, here are some of them:
🔎 educational services provided by government organizations, as well as private legal entities authorized to do so by the state, its structural divisions and representative offices in the autonomies;
🔎 education of children and youth, up to the university level;
🔎 teaching foreign languages;
🔎 professional training and retraining of specialists, advanced training programs;
🔎 provision of medical care and sanitary services to citizens;
🔎 provision of services by professional specialists (individuals), including artists, composers, writers, translators, etc.;
🔎 provision of services for insurance, reinsurance and capitalization of funds;
🔎 intermediary services provided to individuals in the field of financial transactions;
🔎 affixing postage stamps and other distinctive signs confirming legality;
🔎 leasing of residential premises and land plots located outside urbanizations without buildings for purposes not related to construction.
Despite the centuries-old history of the state, the tax system of the Kingdom of Spain was created quite recently. It began with the reform of 1845, which unified the rules and procedure for collecting taxes within the country. The modern taxation system was created by the reform of 1977, and over the next decades was gradually modified to meet the requirements of the European Union. Currently, a single tax authority uniting various tax divisions is the State Tax Agency, created in 1992.
Tax collection in Spain occurs at three levels: state, regional and local.
VAT (IVA), income of legal entities and individuals (IRPF), as well as taxes related to the activities of commercial organizations (IS), are collected at the state level.
Property transfer tax (ITP), legal document tax (AJD), economic transaction tax (OS) are regional levies.
And local authorities are concerned with collecting taxes on vehicles (IVTM), economic activity (IAE), personal property tax (IBI), tax on urban land value gains (IIVTNU) and tax on construction and engineering works (ICIO).
Local authorities are responsible for collecting all taxes locally, transferring them then, depending on the level of funding needs, to the state or provincial treasury. Municipalities are allowed to determine their own tax rates, which, however, are limited by the state. To identify taxpayers, each legal entity or individual is assigned an identification number (NIE, NIF, or CIF).
The Tax Service has the right to request a previous tax return from any taxpayer for verification, therefore the mandatory storage period for entrepreneurs, organizations and residents is 4 years.
The main taxes in Spain currently are:
State level.
1. IVA – n Value Added Tax (IVA).
In legal terms, this is a consumption tax. From an economic point of view, this is a manifestation of solvency by the counterparty. Although the obligation to pay it lies with entrepreneurs, the tax provides this, in fact, it is consumers.
The scale of calculation of this tax for different types of income, from September 1, 2012, is 21%, 10%, 4% and 0%.
10% – public transport, some food products, medicines, new buildings and hotel services and catering.
4% – sale of essential products (bread, vegetables, fruits, milk, newspapers, books).
21% – everything else, based on the principle of excluding the previous three points.
VAT is included in the price of services and purchases in Spain. However, non-residents of the country have the opportunity to return part of it, since they are not subject to taxation. To do this, it is necessary to present the goods and receipts when leaving their country.
2. IRPF – income tax (autonomous and federal).
It is charged to residents of the country annually, based on a progressive scale. This tax is: subjective - since the financial condition of the taxpayer is taken into account, direct and personal - since it is paid directly by the person (it is not the property that is levied on it), and progressive - since it is paid on a progressive scale, increasing the tax rate as income grows (six levels in total, from 18 to 48%). Since 1999, individuals who have an income below 22,000 euros per year from a single source have the right not to submit a tax return. For other taxpayers, it is required to submit it by June 20 of the year following the reporting year.
3. OS – economic transactions tax.
This tax is paid when carrying out such actions as: establishment of a commercial company, its division, merger, liquidation, reduction or increase of the authorized capital, change of legal address.
4. Impuesto de Sociedades – tax on the activities of legal entities.
This tax is characterized by: proportionality, frequency, personality, and direct collection. It is about 30% throughout the country, with the exception of 28% in the Basque Country.
5. AJD is a tax on legally documented acts.
This tax applies to any documents certified by a notary. Moreover, its rate can be either variable or fixed. Acts drawn up on stamp paper are subject to a fixed tax. And for documents that will require, in the future, registration in the Trade Register, Industrial Register, or Real Estate Register, a variable tax rate is applied. The tax can range from 0.15% to 0.5%, and depends on the value indicated in the bill of sale.
6. ITP – property transfer tax.
It is calculated on the basis of the paid sale of property between individuals (sale of real estate, land, car). And besides this - those transactions on which VAT was not paid. The rate is 7-8% of the purchase and sale transaction amount. We strongly do not recommend artificially lowering the amount according to documents, since the Tax authorities may independently charge you additional tax, considering that the transaction amount is significantly lower than the market level.
Local level.
1. Impuestos sobre Vehículos de Tracción Mecánica – personal tax on the ownership of vehicles.
Direct tax administered by municipalities. They are the ones who manage it. Vehicles officially registered with the relevant authorities (buses, trucks, cars, scooters, motorcycles, tractors, semi-trailers, trailers) are taxed. This tax is paid directly by the owner of the vehicle.
2. IBI – property tax for individuals.
This tax covers the ownership of any real estate of natural, urban and rural objects, their use and concession agreements. The collection is carried out by authorities at the state and local levels. This tax levy is objective, since the quality and area of the property directly affects its value. Although, of course, the area where it is located is also taken into account. The tax rate is 2% of the cost of housing according to cadastral valuation. Paid annually.
3. ICIO is a tax on reconstruction, construction and their organization.
The tax is indirect and is administered by local governments. It is paid by legal entities and individuals, even if they are not the owners of the facility in which the work is being carried out, but who bear the cost of it. The rate is calculated at 4% of the invoice cost of expenses. 30 working days are allotted for payment from the date of commencement of work.
4. IAE – business activity tax.
Commercial activities of any legal entities and individuals are subject to taxation. Unlike other taxes, the amount of payments does not depend on the balance of assets. The tax is mandatory, direct, real and proportional. Income from creative and economic activities is taxed, except for forestry, fishing, agriculture and livestock breeding. Does not depend on the taxpayer's asset balance. In addition, the following are exempt from paying this fee: the first 2 years of entrepreneurial activity; autonomy administrations; scientific research public organizations financed from the budget; entrepreneurs with a turnover of up to 1,000,000 euros; seaports, Red Cross, associations for the disabled. For the cities of Melilla and Ceuta, the tax rate is halved for the first 5 years of business activity.
5. IIVTNU – tax on the increase in the value of urban land.
This tax is levied if there is an increase in the value of real estate. It is collected directly from individuals in the event of an increase in the cadastral value of their real estate. Tax is paid upon the sale of land or real estate, upon their inheritance, gift, or acquisition of ownership.
The Kingdom of Spain calculates taxes on non-residents on a general basis: IVA, ITP, AJD, IVTM, IBI.
In addition to the Tax Authorities, banking organizations also have the right to withhold from their clients in favor of the state:
– 18% on income received from savings, deposit and current accounts.
– 18% from income from the purchase and sale of shares and Investment funds and from transactions with insurance and 18% (from non-residents).
If there is an appropriate Double Taxation Convention, non-residents of the relevant countries who have provided a declaration of non-resident are exempt from the above withholdings from banks, and together with the property tax of non-residents, pay income tax at symbolic rates and in a simplified form.
Spain is one of the most popular countries among buyers of foreign houses and apartments in Europe.
Every year, Spaniards and foreign homeowners pay property and wealth taxes, as well as income taxes. Investors bear the cost of taxes on rental income and capital gains. Company owners lose a quarter of their profits through corporate taxes.
Tax rates in Spain, %
| VAT | 10 or 21 |
| Transfer tax property rights | 6–10 |
| Registration fee (including notary services) | 0,5 - 2,0 |
| Municipal tax for real estate | 0,405 - 1,3 |
| Wealth tax (real estate value over 700 thousand euros) | 0,2 - 2,5 |
| Capital gains tax | 19 |
| Inheritance tax | 7,65–34 |
| Income tax | 19–45 |
| Corporate tax | 25 (15 - for 2 years for new created companies) |
(if real estate For Rent) |
24 (19 for EU residents) |
| Real estate income tax (if real estate not for rent) |
24 from 2% or 1.1% from the cadastral value of the property |
At the time of buying
Taxes when purchasing real estate in Spain are paid by both parties: the seller and the buyer.
The seller pays a commission to the agency, and the buyer pays notarial services and pays registration fee in the amount of 0.5–2.0% of the cost of the object.
When concluding transactions with primary residential real estate, the buyer pays VAT (impuesto sobre el valor anadido or IVA) in the amount of 10%, when purchasing a land plot or commercial property - a rate of 21%. Along with VAT, the buyer pays stamp duty (Actos Jurídicos Documentados, AJD) - 1.5% of the value of the property.
If the object is purchased on the secondary market, the buyer will have to pay - property transfer tax. The rate varies from 6 to 10% and depends on the region. For example, in Andalusia, Valencia and Catalonia it reaches 10%. In some regions, a multi-stage calculation system is used. For example, in Extremadura, the cost of an object up to 360 thousand euros inclusive is taxed at a rate of 8%, from 360 thousand to 600 thousand euros - at a rate of 10%, then a rate of 11% is applied. Thus, out of the cost of an object equal to 500 thousand euros, 360 thousand are taxed at a rate of 8%, the remaining 140 thousand - at a rate of 10%. The final amount of the mandatory payment in this case will be 42.8 thousand euros.
ITP rates in regions of Spain, %
| Alava | 6 |
| Andalusia | 8–10 |
| Aragon | 7 |
| Asturias | 8–10 |
| Balearic Islands | 8–10 |
| Vizcaya | 6 |
| Valencia | 10 |
| Galicia | 7 |
| Gipuzkoa | 7 |
| Canary Islands | 6,5 |
| Cantabria | 8 or 10 |
| Castile - La Mancha | 8 |
| Castile and Leon | 7 |
| Catalonia | 10 |
| La Rioja | 7 |
| Madrid | 6 |
| Murcia | 7 |
| Navarre | 6 |
| Extremadura | 8, 10 or 11 |
When in possession
Owners pay municipal property tax(impuesto sobre bienes inmuebles, IBI). Depending on the region, rates range from 0.405 to 1.3% of the cadastral value. Although the tax is annual, it is paid quarterly. The average amount paid by property owners in Spain ranges from 200 to 800 euros per year.
Municipal property tax rates, %
| Avila | 0,57200 | Madrid | 0,60424 | |
| Alicante | 0,84700 | Malaga | 0,72320 | |
| Albacete | 0,40500 | Murcia | 0,79970 | |
| Almeria | 0,49000 | Oviedo | 0,83160 | |
| Badajoz | 0,91300 | Ourense | 0,54000 | |
| Barcelona | 0,82500 | Palencia | 0,60280 | |
| Burgos | 0,46200 | Palm | 0,80800 | |
| Valencia | 1,07100 | Pontevedra | 0,70400 | |
| Valladolid | 0,67580 | Salamanca | 0,79200 | |
| Guadalajara | 0,66000 | Zamora | 0,62480 | |
| Granada | 0,74030 | Santander | 0,52700 | |
| Girona | 0,88600 | Zaragoza | 0,64911 | |
| Cadiz | 1,11100 | Seville | 0,93170 | |
| Caceres | 0,82500 | Segovia | 0,49400 | |
| Castellon | 0,88000 | Soria | 0,45760 | |
| Cordoba | 0,76090 | Ciudad Real | 0,98000 | |
| Cuenca | 0,68000 | Tarragona | 1,02080 | |
| La Coruña | 0,59500 | Tenerife | 0,68750 | |
| Las Palmas | 0,73700 | Teruel | 0,67100 | |
| Leon | 0,86900 | Toledo | 0,42000 | |
| Logroño | 0,58300 | Huelva | 1,16600 | |
| Lugo | 0,71500 | Huesca | 0,97200 | |
| Lleida | 0,66500 | Jaen | 0,66000 |
Taxation of income from Spanish real estate has several features and depends on the status of the owner (tax resident or non-resident of Spain). A Spanish tax resident is a person who stays in the country for more than 183 days in a calendar year. The tax burden applies to all resident income received from sources throughout the world. For non-residents, only income received in Spain is subject to mandatory payments. Income must be declared by June 30 of each year.
When renting out real estate, non-resident income is taxed at a rate of 24% (for EU residents - 19%). The tax is paid quarterly. For example, if the annual rental income is 20 thousand euros, then at a rate of 24% per year you will need to pay 4.8 thousand euros. The tax base can be reduced through depreciation (2 - 3% per year).
If a non-resident does not rent out real estate, he is credited with income from his ownership in the amount of 2% of the cadastral value or 1.1% if the cadastral value was changed after January 1, 1994. A rate of 24% is applied to the amount received. For example, if the cadastral value is 200 thousand euros, the tax base is 2.2 thousand euros, then the amount of the mandatory payment at a rate of 24% will be 528 euros. The tax is paid annually at the end of December. If the owner was not the owner of the property for the entire year, or the property was leased for a certain period, then the amount payable will be calculated in proportion to the period of actual ownership of the property.
Rates income tax(impuesto sobre la renta) for residents in 2015 - 20–47%, in 2016 - 19–45%. The rate for non-residents is 24% (19% if the taxpayer is a resident of one of the EU countries).
If the value of assets exceeds 700 thousand euros, then you will also have to pay wealth tax (impuesto sobre el patrimonio). It is paid in June for the previous year and is calculated based on the net value of the property on a progressive scale: rates vary from 0.2 to 2.5%. “Wealth” means real estate, income from professional activities, bank deposits, sources of temporary income, luxury goods (jewelry, fur coats, sports cars, yachts, airplanes), art and antiques.
Wealth tax rates
Rates income tax(impuesto sobre la renta) for tax residents of Spain starting from 2016 - from 19 to 45%. The rate for non-residents is 24% (19% if the taxpayer is a resident of one of the EU countries).
Income tax rates in Spain
| Threshold, euro | Rates, % (2016) |
|---|---|
| 0 | 19 |
| 12 450 | 24 |
| 20 200 | 30 |
| 35 200 (34,000 in 2015) | 37 |
| 60 000 | 45 |
Analogue of income tax for legal entities - corporate tax(impuesto sobre las utilidades de sociedades). Its standard rate is 25%, for newly created companies - 15% (this rate will be valid for two years from the moment the company makes a profit). Companies whose profits exceed 1 million euros must also pay municipal tax (IAE). Tax rates depend on the type of economic activity of the company, the area of its commercial premises and other parameters established at the level of a particular municipality. Typically, the amount of mandatory payment for such companies is from 1 thousand to 4 thousand euros per year.
For companies resident in countries or territories that belong to an offshore zone and own or own any real estate in Spain or have property rights to use or own such property, a special payment has been established, which is calculated on the basis of the assessed value at a rate of 3% .
Mandatory payments when relinquishing ownership rights
When selling, tax is paid on the difference between the purchase price and the sale price - capital gains tax(impuesto sobre la venta de inmuebles). For non-residents the rate is 19%. It is always worth keeping electronic and printed versions of all invoices associated with the purchase of real estate, and then when selling, the payment can be partially reduced.
In this case, company income is taxed at a rate of 25% (or 15% for newly created companies during the first two years from the date of profit).
Also, real estate sellers pay a tax on the increase in the value of urban land (Impuesto sobre el incremento de valor de los terrenos de naturaleza urbana, IIVTNU). Rates depend on specific municipalities. For example, in Barcelona the mandatory payment is calculated as follows:
In Spain there is inheritance tax(impuesto de sucesiones). Rates range from 7.65% (for the first €7,933 of the total amount or value of the inheritance) to 34% for €797,555 or more. The further the degree of relationship, the higher the rate.
Please note that the above provides only basic information about taxes in Spain. Certified tax specialists in Spain will help you understand the nuances, determine the exact amounts of taxes and ways to optimize them. Tranio strongly recommends contacting them before entering into a transaction.
Taxes in Spain for legal entities
Spain is one of the most loyal European countries when it comes to doing business by foreigners. Current legislation allows residents (individual entrepreneurs) and legal entities of various forms of ownership to own commercial real estate and receive profit from it (the founders of which can be both residents and non-residents of the country).
Accordingly, when talking about commercial taxation, it is imperative to mention not only legal entities, but also individuals.
| Taxes | Legal entities | Individual entrepreneurs (Autónomo) | Individuals | |
| Residents | Non-residents | |||
| Income tax (Impuesto sobre Sociedades) |
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(Impuesto sobre Actividades Económicas) |
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| Personal income tax (Impuesto sobre la Renta de las Personas Físicas - IRPF) |
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| Tax on income of non-residents (Impuesto sobre la Renta de No Residentes (IRNR)) |
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| Real estate tax (Impuesto sobre Bienes Inmuebles (IBI)) |
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| Tax on the increase in the value of urban land (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU)) |
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| Tax on transactions with authorized capital (Impuesto sobre Operaciones Societarias (OS)) |
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| Property transfer tax (Impuesto sobre Transmisiones Patrimoniales Onerosas (TPO)) |
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| Tax on documented legal acts (Impuesto sobre Actos Jurídicos Documentados (AJD)) |
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| VAT (IVA) |
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Income tax in Spain – Impuesto sobre Sociedades
Income tax in Spain is often called corporate tax. It belongs to the class of direct taxes, and its payers are all commercial companies registered in Spain (S.L., S.A., S.L.N.E., S.L.U., etc.) and some other forms of legal entities.
Regardless of how the year ended for the company (with a profit, with a loss, or economic activity was completely suspended), an income tax return must be submitted to the tax authorities without fail.
The reporting tax period coincides with the calendar year, i.e. starts on January 1 and ends on December 31.
According to the tax calendar, tax calculations are made in July of the year following the reporting one. Actually, paying income tax in Spain and sending annual reports to the Trade Register (Registro Mercantil) marks the end of the reporting period.
The law provides for deductions and benefits that must be applied when calculating income tax in Spain. It is also allowed to compensate losses from profits of future years. However, it should be remembered that not all expenses are allowed to be taken into account when calculating tax. Fines for administrative or criminal violations, sanctions and expenses associated with offshore activities cannot in any case reduce the tax base.
Today, Spain has several income tax rates. New, newly registered companies apply a rate of 15% for the first two years of profitable activity. The general tax rate is 25%, and some associations, foundations and cooperatives apply special rates ranging from 10 to 20%.
Tax on economic activities in Spain – Impuesto sobre Actividades Económicas
This municipal tax affects all successful entrepreneurs and legal entities carrying out economic, professional or artistic activities in Spain. Like income tax, economic activity tax is a direct tax and is calculated and paid once a year.
While all companies and individual entrepreneurs are required to be registered in the economic activity tax register, only those whose net income (receipts from invoices) exceed 1 million € will file a declaration and, accordingly, pay tax to the budget, and then only starting from the third year of activity.
Tax calculation is quite complex, rates vary depending on the type of economic activity, the total area of commercial premises, the size of the municipality (the number of population is taken into account), the number of employees of the company or entrepreneur and some other variables. The total amount can range from several hundred to several thousand euros.
Spanish Personal Income Tax – Impuesto sobre la Renta de las Personas Físicas / IRPF
Personal income tax in Spain is an analogue of the income tax applicable to legal entities. In the case of commercial real estate, this tax is paid by:
- resident individuals registered as individual entrepreneurs who own commercial real estate, rent it out and make a profit;
- resident individuals who are founders or co-founders of a Spanish company and receive dividends.
Income from commercial real estate rental in Spain
In Spain, personal income tax is calculated on a progressive scale, with part of the tax collections transferred to the state budget, and part remaining in the budget of the autonomy in which the entrepreneur or commercial firm operates. Applicable rates vary from region to region. You can read about choosing a region and coast for buying property in Spain.
The diagram shows how deeply the tax authorities reach into the pockets of their taxpayers. Red indicates the minimum tax rates in each region, blue indicates the maximum.
The following personal income tax rates apply in Catalonia:
| Taxable base (up to €) | Fixed quota, € | Remaining taxable base (up to €) | Catalonia rate, % |
| 0,00 | 0,00 | 17.707,20 | 12,00 |
| 17.707,20 | 2.124,86 | 15.300,00 | 14,00 |
| 33.007,20 | 4.266,86 | 20.400,00 | 18,50 |
| 53.407,20 | 8.040,86 | 66.593,00 | 21,50 |
| 20.000,20 | 22.358,36 | 55.000,00 | 23,50 |
| 175.000,20 | 35.283,36 | And more | 25,50 |
Personal income tax in Spain is calculated taking into account personal and family non-taxable minimums, deductions and benefits established both at the national level and at the regional level.
Taxes on dividends in Spain
The owner or co-owner of any Spanish company who receives a certain amount of dividends at the end of the year is required to pay income tax to the Spanish budget. As in the case described above, dividend tax in Spain is calculated on a progressive scale, and the entire tax amount is divided between the state and the autonomy.
The general tax rate on dividends in Spain, including the state quota and the autonomy quota, is calculated based on the tax base:
·Up to 6,000 € – 19%
From 6,000 to 50,000 € – 21%
From 50,000 € and above – 23%
The calculation and payment of tax on dividends in Spain is carried out at the source of payment, i.e. the company itself paying dividends to its co-founders or co-owners.
The IRPF tax campaign takes place annually from April to June. The final amount of the declaration can be either “payable” or “refundable”. The final payment is made through the individual’s bank account.
Tax on income of non-residents in Spain – Impuesto sobre la Renta de No Residentes, further / IRNR
Individuals do not have the right to engage in leasing, because this type of transaction involves VAT accounting. Accordingly, in order to conduct such activities, an individual must either register with the Spanish tax authorities as an individual entrepreneur or establish a company.
Only the second method is available to non-residents, because the first requires presence in Spain with the right to work. (Let us immediately make a reservation that this requirement does not apply to residential real estate.)
A non-resident who founded a company has the right to receive dividends. The INRR rate on income received from participation in the share capital of one or more Spanish companies is 19%.
Real estate tax in Spain – Impuesto sobre Bienes Inmuebles / IBI
This tax is required to be paid by absolutely all owners of real estate in Spain, regardless of their form of ownership. Those. Payers of the annual tax on commercial real estate can be both legal entities and individuals - residents and non-residents.
When calculating the tax, only the cadastral value of the property is taken into account. The tax rate is set by each municipality independently within the framework of the minimum and maximum approved at the state level. The tax is calculated and paid once a year, from August to October. A taxpayer is a natural or legal person registered as owner in the Property Register (Registro de Propiedad) on 1 January of the reporting year.
Tax on the increase in the value of urban land - Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana / IIVTNU
The most commonly used short name for this tax in Spain is Plusvalía. If there is an increase in the value of land, according to the cadastre data belonging to the “urbana” category, during the period between purchase and sale, then this tax is charged.
The cadastral value of a real estate property (including commercial real estate) is calculated as the sum of the cost of the land and the cost of the structure. All data is reflected in the real estate tax receipt described above. To calculate Plusvalía, only the cadastral value of the land is taken, to which coefficients approved at the municipal level are applied.
Those. in the case of the sale of commercial real estate, the seller must pay tax if he makes a profit as a result of the transaction. If the property is sold at a loss to the former owner, no tax is paid.
Spanish Capital Transaction Tax – Impuesto sobre Operaciones Societarias / OS
Any change in the authorized capital of a company, including companies involved in commercial real estate, implies the payment of this tax. Change refers to the initial contribution of capital, its subsequent increase or decrease, as well as merger, division and dissolution.
Property transfer tax in Spain – Impuesto sobre Transmisiones Patrimoniales Onerosas (TPO)
Property transfer tax in Spain is levied on real estate transactions made on the secondary market when the seller is a private person, i.e. when VAT accounting is not possible. Also, a certain number of transactions in which both parties are legal entities are subject to this tax.
If the buyer of commercial real estate is an entrepreneur or legal entity that keeps VAT records, you must be very careful when concluding transactions with TPO, because tax offset (as opposed to VAT) is not possible. You can read more about property taxes in Spain.
Tax on documented legal acts in Spain – Impuesto sobre Actos Jurídicos Documentados (AJD)
Documented legal acts mean documents executed by a notary: deeds of sale, bank mortgage agreements, notarial certificates and acts (for example, on completed construction), etc.
VAT in Spain – Impuesto sobre el Valor Añadido / IVA
VAT in Spain is the main indirect tax, valid throughout the country, with the exception of the Canary Islands, Ceuta and Melilla. VAT in Spain is subject to transactions for the purchase of new real estate, some transactions for the purchase and sale of real estate on the secondary market, when the seller and buyer are entrepreneurs and/or legal entities, as well as the rental of commercial real estate. The current basic VAT rate in Spain is 21%.
If the main activity of an entrepreneur or company is leasing commercial real estate, VAT is allocated as a separate line in each invoice issued in the name of the tenant.
VAT returns are submitted to the tax authorities quarterly on an accrual basis; the annual return is submitted simultaneously with the return for the fourth quarter. The final offset of the amounts of VAT payable and refundable is made when submitting the annual declaration in January of the year following the reporting one. If the amount to be refunded is accrued in the annual declaration, then the money will be credited to the company’s current account in the period from March to June.
For new, newly created companies, the possibility of monthly VAT declaration and offset is provided. This is done in order to support a new business, which usually incurs high costs at the initial stage of development.
Read about how to open a business for a foreigner in Spain.
Information about the services of Estate Barcelona can be found on the page.
In some respects, the Spanish tax system is similar to the Russian one.
For example, just like in Russia, all tax fees are divided into three main groups:
- Federal - at the state level, taxes are levied on income of individuals and legal entities (IRPF), value added tax (IVA) and enterprise tax (IS)
- Regional - At the regional level, economic transactions tax (OS), property transfer tax (ITP) and legal document tax (AJD) are levied
- Local - Local authorities are responsible for personal taxes on immovable property (IBI), motor vehicles (IVTM), economic activity tax (IAE), construction and engineering works (ICIO), and tax on urban land value gains (IIVTNU). ).
But in Spain, the size of payments may vary depending on the material well-being of individual regions. This right is given to some autonomies of the Kingdom of Spain.
Such a flexible approach to setting tax rates is very pleasing.
IRPF - Income Federal and Autonomous Tax.
Progressive tax, levied annually on residents.
This tax is:
- direct - charged directly to the person
- personal - it is levied directly on the person, not on the property
- subjective - since it takes into account the financial condition of the taxpayer
- progressive - the higher a person’s income, the higher the tax rate
- periodic - charged at a set period of time, specifically once a year.
IRPF is calculated at a progressive rate in 6 steps from 21% to 52%.
Most of it goes to the federal budget, a smaller part goes to the autonomous budget, so depending on the province, the rate may fluctuate slightly.
Since 1999, individuals may not have to submit a declaration. persons with one source of income and income below 22,000 euros per year.
For everyone else, it is mandatory to submit an income tax return by June 20 of the following reporting year.
Also, the tax amount varies significantly depending on additional circumstances: family composition, mortgage payments, number of dependents, etc.
IVA - VAT
VAT (IVA) is classified as an indirect tax on consumption.
This tax is levied on sales, and its object is consumption as an indirect manifestation of the economic potential of citizens to the extent that the availability of income reveals the purchasing power of these individuals.
The rates of this tax in Spain are: 21% (basic rate), 10% (reduced rate), 4% (reduced rate) and 0% (reduced rate).
10% is levied on basic food products, most hotel services, passenger transport services, medicines and the construction of new houses.
4% is levied on essential products such as vegetables, bread, milk, fruit, books and newspapers.
At a rate of 21%, those products that are not subject to other tax rates are taxed on an exclusive basis.
VAT is paid when making purchases and receiving services in Spain.
Since non-residents (for example, Russian tourists) are not subject to taxation, when leaving the country they can receive paid VAT at the airport in cash or on a card.
Impuesto de Sociedades - business tax
This tax is imposed on the income of corporations and other legal entities:
limited liability companies, joint stock companies, labor collectives, etc., state-owned companies, cooperatives and agricultural companies, individual entrepreneurs, European economic communities, associations, foundations and institutions of all kinds, both public and private.
Impuesto de Sociedades at a fixed rate is paid quarterly and depends on the place of business and the types (and their number) of economic or economic activities.
In Spain it is 25% (with the possibility of preferential taxation at rates of 20% and 15%), in the Basque Country - 28% and in Navarre - 30%.
Enterprises that do not declare the type of activity (the so-called “enterprises without activity”) are exempt from paying tax, but are required to submit zero declarations and reports for this tax.
OS - Economic Transaction Tax
This tax is paid when carrying out such actions as: establishment of a commercial company, its division, merger, liquidation, reduction or increase of the authorized capital, change of legal address.
Property Transfer Tax (ITP)
ITP is a property transfer tax that is levied on the purchase of secondary real estate, vehicles, and land. In short, this tax applies to all those transactions that are not subject to VAT.
For transactions with real estate on the secondary market, ITP in Spain is paid at rates from 6 to 11% of the price indicated in the official notarial deed of sale.
When registering transactions for the purchase and sale of vehicles, the tax is calculated at a rate of 4% of the market value of a car or motorcycle (tax services use annually updated market price directories when calculating the amount of tax to be paid).
Actos Juridicos Documentados (AJD) - tax on legal documented acts
Notarized documents are subject to this tax.
Actos Juridicos Documentados (AJD) includes a fixed and variable rate:
- A fixed rate applies to documents that must be drawn up on stamped paper.
- The variable rate applies to acts in which the object is a sum of money or a valuable thing, which must be registered in the Real Estate, Trade or Industrial Registers.
This tax on documenting legal acts is 0.5% of the value indicated in the escritura, paid through the bank.
Or the established quota: 0.15 and 0.30 cents.
IBI - Personal real estate tax
All real estate located in each municipality separately is included in the register and is assigned an assessed value (cadastral value). Based on the cadastral value of real estate and the application of the tax rate established by the city administration, the amount of tax that must be paid to the city budget is obtained.
Every year, a receipt for tax payment is issued for each real estate registered in the register.
It is paid once a year at a rate of 0.50 to 2% of the cadastral value of housing, depending on the municipality in which the property is located.
Impuestos obre Vehículos de Tracción Mecánica (IVTM) – Personal tax on vehicles
The IVTM tax is imposed on vehicles suitable for driving on public roads (registered in the relevant state registers). The payer of this tax is the owner of the vehicle. On average 90-150 euros per year per car. Buses, tractors, trucks, trailers, bicycles and motorcycles are not subject to this tax.
IAE - Economic Activity Tax
This tax is imposed on economic activities of both individuals and legal entities. The economic activity tax is levied on the result of professional, economic and creative activities. The exceptions to these activities are agricultural activities, livestock raising, fishing and forestry.
The following are exempt from this tax: Entrepreneurs whose net turnover does not exceed 1 million euros, Entrepreneurs during the first 2 years of their activity, Administrative bodies of autonomous regions, Public entities engaged in scientific research and financed from the state budget, Spanish ports, Associations and institutions for the disabled, Spanish Red Cross.
There is also a “discount” of 50% in Ceuta and Melilla, 50% for professional activities for five years starting from the second year.
ICIO - Tax on construction, reconstruction and organization of work
Payers of this tax are individuals and legal entities who own buildings, structures or carry out reconstruction and repair work, as well as individuals and legal entities who are not owners, but bear the costs of construction and reconstruction. This tax must be paid within 30 working days after the start of work.
The tax amount is calculated based on the actual cost of the work. The tax rate is 4% of this value.
The cost of work does not include Value Added Tax, other similar taxes and fees, other fees from local administrations, and employee salaries. Only certain bodies and institutions are exempt from this tax.
IIVTNU - Urban Land Value Tax
This tax is levied if there is an increase in the value of real estate. This is a direct tax levied on individuals.
This tax is levied if: An apartment, house or urban land is sold.
An apartment, room or land is purchased by gift or inheritance.
If the right of ownership and disposal of an apartment, house or land is established.
The subjects of this tax are:
A person who alienates property or the right to own and dispose of this property.
Grantees or people who received property for free.