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Spanish VAT (IVA)

Value Added Tax (IVA): This tax is applicable to any taxable supply of goods or services made in Spain by a taxable person as part of their business. It is not restricted to the provision of goods and services by way of sale but also applies to other forms of transaction. For VAT purposes, the Spanish territory is the Peninsula and the Balearic Islands. It does not include the Canary Islands, Ceuta, or Melilla.

Scope and Rates

The standard rate of VAT is 21% (since 1 September 2012).

Are there any reduced rates, zero rates, or exemptions?

Yes. There is a reduced rate of 10% (since 1 September 2012) for certain goods and services, including but not limited to the following:

  • Food and drinks.
  • Residential renovations and alterations.
  • Water supplies.
  • Certain buildings used for residential purposes including rentals with an option to buy.
  • Passenger transport.
  • Hotel and restaurant services.

There is a special reduced rate of 4% for certain acquisitions and importations. This is applied to all items that are considered to be of basic and primary need.

Exemptions with input tax recovery (zero-rate supplies) include but are not limited to:

  • Exports.
  • Financial transactions outside the European Union (EU) Member States.

Exemptions with no input tax recovery (exempt supplies) include but are not limited to:

  • Health and welfare related supplies.
  • Education.
  • Cultural services by bodies governed by public law.
  • Financial transactions.
  • Insurance.
  • Certain games of chance (gambling).
  • Certain supplies by public post offices.
  • Real estate transactions (certain transfers of land and second transfers of real estate).

VAT on Property Sales

As of 1 January 2013, all sales of new property are subject to a 10% VAT (IVA) charge and a stamp duty of 1.5% of the sale price. For second-hand property sales, a tax of 8-10% is levied on the sale price. In this case, it is not VAT (IVA) but a transfer tax (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados). It is not synonymous with the UK stamp duty. This transfer tax is determined by the autonomous community where the property is located.

Registration: who is required to register for Spanish VAT?

Self-Employed Individuals

Autónomo status is the Spanish equivalent of self-employed or freelance. It also covers people operating unincorporated small businesses. Anyone engaged in any type of independent economic activity in Spain, whatever their profession, is obliged to register as autónomo with the tax office, declaring their economic activity and VAT obligations.

Read our article Starting a Business in Spain – Registration of self – employment (autónomo) to find out more about being self-employed in Spain.

Spanish Entities

If a business makes taxable supplies in Spain it will be required to register and account for Spanish VAT.

Are there any simplifications that could avoid the need for an overseas company to register for VAT?

A business supplying goods or services in Spain is required to register and account for Spanish VAT provided that it is considered to be the Spanish VAT taxpayer of the transactions (that is, the reverse charge rule does not apply). However, it is possible to avoid registering and accounting for Spanish VAT when providing certain supplies. Contact us to arrange a consultation either in person or by phone/email if you require advice on this.

Services Provided by Andalucía Lawyers

  • Registration of self–employment (autónomo).
  • Obtaining a tax ID number for the business.
  • Registering the company for VAT purposes.
  • Applications for the refund of VAT.

Business

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Council Tax in Spain

What is IBI?

IBI is a local tax levied annually on the ownership of rural or urban real estate properties. The tax is based on assessed property values known as the cadastral value (valor catastral). It is payable to the local council to cover its expenses such as maintenance of local facilities and all manner of infrastructures.

When do I have to pay the IBI?

In Spain, the IBI is payable once a year and the period for voluntary payments varies from area to area. For more information contact your local council (ayuntamiento) or get in touch with us.

How can I pay the IBI?

Payment notifications are sent to the known address of the property owner in Spain, never abroad. Even if you don’t receive it you are still obliged to make the payment within the set period stated. The onus is on the property owner to be aware of when their council tax is due and to pay it on time. In order to avoid paying late or not at all you can arrange for a direct debit to your Spanish bank account.

What are the consequences if I don’t pay?

Once the voluntary period is over, unpaid bills will be subject to a surcharge in addition to interest for late payment and any corresponding expenses.

How can we help you?

We can assist you in setting up a direct debit to your Spanish bank account by contacting the local council. You could also appoint our office to receive the annual IBI payment notification if you are worried about missing it or not being able to receive it at your Spanish address.

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Buying Property from a Developer

What should I check if I am buying property in Spain from a developer?

  • Ensure that there is either a building licence, a first occupation licence or ten year inherent defects insurance (seguro decenal).
  • Check that the developer owns the property and that there are no charges or encumbrances against the property.
  • Check descriptions of the plans with the land registry office and the local council.
  • Check that the certificates from the utility companies are provided.

What are my rights in the private contract?

  • There is a legal requirement for builders to be covered by an insurance policy or bankers’ guarantee, protecting the buyer’s payments against the risk of the builder going bankrupt.
  • There must be a full contract containing all the clauses of the purchase with building specification, planning consent, plans etc.
  • It is a legal requirement, set out in specific regulations, for the buyer of a property to be given clear information about the purchase process and building specifications of dwellings bought in Andalusia.
  • The regulations specify the required information to be given to the purchasers or lessees of a property in Andalusia. The regulations are applicable to developers and any intermediaries relating to any kind of publicity made by a company or individual towards the sale or lease of dwellings.
  • The regulations demand that accredited estate agents, developers or any other intermediary, make available to the purchaser a document with clear and sufficient information about the characteristics of the house and economic condition of the offer. For infringement of the law fines range from €5000 up to €400,000, depending on the case.

It is hoped that the regulations will increase confidence in the real estate sector. The Andalusian government wishes to enforce the new law by improving purchaser information, in addition to carrying out inspections of estate agents and developers in Andalusia. It is the first time the second hand housing market has been regulated in this way.

  • Anyone interested in buying an off plan house will receive an AID (Abbreviated Information Document).
  • If you are buying a second hand house, you must receive a document called the Information File.

Both documents specify the physical and legal characteristics of the dwelling as well as its price and method of payment. The new law clearly forbids the agents, developer and intermediaries to keep silent about the AID or the Information File or to give false information to the buyer. Finally, all estate agents offices (including virtual ones) should display a sign saying “the buyer has the right to receive a copy of the corresponding Abbreviated Information Document for the property”.

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