This is an essential requisite for signing notaries´ documents, opening bank accounts, engaging in business or a profession, etc.
The legal representative of a non-resident company also needs to apply for a tax registration number, but in this case, they have to apply to the national tax administration and they have to present the company´ legal documentation. But first of all, this same legal representative has to apply for his/her own NIE.
The applicant has to go to the national police station with the pertinent form filled in and signed. The applicant has to present both the original and a copy of his/her passport and the bank slip showing that they have paid the duties into the appropriate bank account. This duty is currently nine euros.
There may be slight variations in these requisites, which we will try to keep you up to date about, because the police have sometimes asked for photographs of evidence of the investment to be made.
At the moment, you have to go to the police station very early in the morning in order to get a number so that you will be dealt with in the course of the morning.
Any return earned on a property located in Spain by a NON-resident is taxable at 24% and this is payable the year after the income is earned.
If these earnings come from a rented property, the management company usually withholds the tax and pays it to the tax authorities on behalf of the owner.
If the non-resident property is used by its owner, his/her family and friends exclusively for their own private use (as a second home), the amount due would be 24% of the minimum income, which could be 2% of the ratable value or 1.1% if the ratable value has been revised. The ratable value is to be found in the rates (IBI).
In the event that there are still no rates due on the property, and therefore, there is no ratable value, the income is considered as 1.1% of 50% of the value declared in the title deed, or the revised value for purposes of Wealth Tax.
This is a local tax on urban properties payable once a year. The date it falls due and the percentage applied for calculating the sum payable will depend on the borough in which the property is located.
This tax is based on the ratable value of the house, which is calculated on the basis of its location, the date it was built, the urban services provided, etc. This value is revised from time to time by the Rates office.
If there has been a revision of the ratable value in previous years, there is a reduction applied to the tax base for several years so that the rates do not go up too much.
The rates do not change automatically when a house changes owners, although the notary does send the information to the Rates Office for this purpose, but if the change of ownership is not made, then you have to present a form, modelo 901 to make the change.
In Spain, all purchases are made in the presence of a Public Notary, by signing a Public Deed of Purchase so full payment must be made for the property. Prior to the public deed, you can sign a private contract, especially in the event that the full sale price is not paid, which will establish the different agreements reached between the purchasing and the selling party concerning the property for sale.
In this case, it is worth seeking the advice of a lawyer who can supervise the preparation of these documents and their signing in the presence of a notary.
You can sign a Deed of Purchase and defer part of the payment, but it is more expensive for the purchaser.
Both the purchaser and the selling party must appear in person, or appoint an agent with powers of attorney, before the notary.
At the time of signing the deed of purchase, a Transfer Tax and Stamp Duty is payable, which will be 6.5% of the price that appears in the Deed.
In the event of buying a property directly from a developer, this tax will be 0.75%, because a 5% IGIC tax is payable first (or the equivalent tax � VAT – outside of the Canary Islands).
In any event, the deadline for paying the Property Transfer Tax or Stamp Duty is thirty working days from the date of the deed.
Apart from this tax, the purchaser must also pay the notary´ fees and the fees of the land registrar.
Payment of the tax on the increase in land prices � payable to the local authorities of the borough in which the property is located � is the responsibility of the selling party, although this may depend on the clauses of the purchase agreement.
The purchaser must bear in mind that if the selling party is non-resident, then the purchaser must withhold 3% of the agreed upon price and pay it in to the tax authorities on behalf of the selling party within 30 days of signing the purchase agreement and the corresponding payment slip must be given to the selling party or his/her representative.
In general, all these expenses, except for the aforementioned withholding that is part of the price, account for just under 9% of the value declared in the deed of purchase.
In the moment that a non-resident sells a property, this tax falls due, and the tax return must be filed within four months of signing the deed.
The tax rate is 18% of the profit made.
To calculate the profit, to deduce the value declared in the deed of purchase from the sale price (for purchases, inheritances, donations, etc.), together with eligible legal expenses (including estate agent´ commissions provided you can provide the pertinent receipt).
If the selling party is a company, an annual depreciation percentage has to be calculated on the purchase price since the date of purchase.
The purchasing party is obliged to withhold 3% of the purchase price from the selling party if said party is non-resident, to be paid on account for this tax at the time of signing the purchase deed. So the selling party will only receive 97% of the price of the house.
The administration will therefore hold this sum until such time as the selling party, or his/her representative, files a tax return within the aforesaid deadline, which will rarely coincide with the sum withheld.
There may have been no increase in the value of the property, in which case you can apply for the sum withheld to be returned, as this still forms part of the sale price.
If there has been an increase, the tax payable may be less than the sum withheld, in which case, you can apply for the difference to be returned.
In either case, the tax authorities will return the difference within a maximum of six months from the date on which the tax return is filed, and said tax authorities shall pay interest on this sum on any period over and above said six months.
The rebate shall be paid by bank transfer into an account within Spain and may not be paid into a foreign account.
Obviously, in some cases the real amount of the tax is greater than the sum withheld by the purchaser, in which case, the selling party must pay the difference within the deadline established for filing the tax return.
In the declaration of capital gains, you must present a copy of the deeds, expenses that can be written off and the payment of your annual taxes, amongst other things. In the event of a legal entity, the special tax on the assets of non-resident entities is also a requisite.
The tax authority will not start work on a rebate if you cannot prove you have paid your annual taxes for the years that are not covered by the statute of limitations.
A non Spanish company must accredit its articles of association and justify the appointment of the person or persons representing the company just like a Spanish company before it can engage in any legal transaction in Spain.
To do this, you have make a translated and authenticated copy (with apostille) of the articles of association of the company or its equivalent in the country of residence. If the representation of the company were not sufficiently justified in the articles of association, a notary power of attorney granting powers to the legal representative must be signed, and this must also be translated, authenticated and certified with an apostille.
Once in Spain, the legal representative of the company must apply for a tax registration number (C.I.F.) to the National Tax Authorities (A.E.A.T.)
Foreign companies do not file income and/or wealth tax returns as these are personal taxes, but they have to declare and pay 3% of the ratable value of whatever properties they own in Spain in the month of January every year for the previous year.
If the entity were physically resident in a country with which Spain has signed a double taxation agreement including a clause on the exchange of information, it can apply for an annual exemption from said tax. These countries include practically the whole of Europe.
This is not possible if the company were domiciled in a so-called tax haven, in which case, they have to pay the taxes.
To apply for an exemption from the special tax on the goods of non-resident entities, the personal details of the final beneficiaries of the company, i.e. its shareholders or partners (physical individuals), providing data like nationality, address in their country, percentage stake in the company, etc. and each of these must apply for his/her NIE.
The form for applying for a tax exemption is the modelo 213, and when it is presented, before the 30the of January each year, you have to attach a certificate of tax residency issued by the country in which taxes are paid, for each of the shareholders or partners in the company and for the company itself. Without this essential requisite, the application will not be accepted and, therefore, the exemption will not be granted.
If any of the shareholders or partners in the company is resident in a country that does not meet the required conditions for exemption, the percentage of this tax that corresponds to the holding of this shareholder, must be paid.
Heirs that have been resident in the Canary Islands for five years prior to the death of the deceased are exempt from this tax. Residency can generally be proven with a copy of the income tax returns filed. Beneficiaries of donations are also exempt if they have been resident for the same length of time and under the same conditions.
In all other cases, the heirs to any property situated in Spain must pay inheritance and/or donations tax within six months of the death of the legal owner.
A public deed of acceptance of an inheritance must be signed as soon as possible. To this end, you have to provide: Death certificate (translated and with apostille if it has not been issued in Spain) and the will also translated and authenticated with apostille.
With the death certificate, you can apply for a third and usually final document that you need: certificate of the last will and testament from the Central Registry in Madrid, which clarifies whether the deceased has signed any later will in Spain, dated after the one presented by the heirs.
Given the legal complexity involved in preparing and signing a deed of acceptance of an inheritance, it is advisable to seek the legal advice of a lawyer.
Inheritance tax is calculated, once the tax base has been established for each heir, by applying a sliding scale of tax rates that is generally up-dated in the national budget each year. As a general guideline, the tax rate is generally significantly reduced if there is a close relationship between heirs and deceased (children, wives, husbands). This reduction is less, the greater the number of heirs and when their estate is not of very great value even in their own country.
You can pay the tax on signing the deed of acceptance of an inheritance if the documentation takes a long time to process, and hence avoid surcharges for late payment, although it is preferable to do it all at the same time.
There are also other additional expenses, such as notary´ fees, land registrar´ fees, tax on the increase of local land values, etc.
Many owners of second homes in Spain, especially if they do not speak Spanish, are confused when faced with the many and varied payments that they have to make for maintaining their properties: community charges, electricity, water, rubbish, telephones, sewers, insurance, taxes, garden maintenance, cleaning, etc. Something that is even more complicated if there is any change in the account number, name, etc. or of the letters do not reach the right address.
That is why we offer customers the chance of maintaining an internal account with us, with enough money to cover these payments for a quarter. We will make these payments on their behalf through our accounts and send a quarterly statement in their language with all the original receipts, although they can also ask for any information at any time by e-mail.
To this end, at the beginning of each year, we provide an estimate based on the information provided by the customer so that we can send the funds on time.
In any event, all our customers, whether they pay through their own bank or whether they maintain an internal account with us or they send the funds to cover each payment, receive an estimate at the beginning of the year in their own language in order to give them better control over the expenses incurred by their properties in Spain.
As brokers for Spanish insurance company MAPFRE, we can offer you a quote to cover your needs with regard to house insurance, or for vehicles or any other kind of insurance you may need.
MAPFRE HOGAR house insurance policy covers damages caused by water, fire, explosion, broken windows and civil liability claims from third parties and legal services.
As brokers, in the event of a claim, we can help you to manage repairs, visits from insurance adjusters, facilitating the communication between all the parties involved.
We can provide you with a quote at any time, without it being binding on you.