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Spanish Taxes on the increase

By Malcolm Roach M.I.C.M - Thu 2th Feb 2012

We have received almost 1,500 enquires in the past 12 months alone from owners of Spanish property who are concerned about Spanish Inheritance and Taxes in Spain.

Over 95% of these owners have spoken with one of our Spanish Tax Consultants and have received our free illustration and proposal demonstrating the potential Spanish Inheritance Taxes they or their Beneficiaries will face upon death. Our proposal provides details of the process of moving a property in Spain into a UK Limited Company structure and the onward management which helps avoid Taxes in Spain.

Many of our clients tell us that they have been advised by other professionals that Spanish taxation is likely to decrease in coming years and that Inheritance Tax should not be an issue. However, this may not be the case, as the new Spanish Government is trying to bring financial stability to the Country.


From January the 1st 2012 CGT for non-resident property owners in Spain will stand at 21% across the board. This follows a previous rise in 2010 from 18% to 19%. In 2007 the European Union put pressure on Spain to lower the CGT rate of 35% for non- residents (15% for residents) to 18% deeming it to be an unfair penalty on non-residents. A subsequent rise of 1% in 2010 passed relatively unnoticed but it is now followed by a further 2% increase.

Spanish Residents will also feel the sting with CGT figures rising to 21% up to 6,000€, 25% between 6,001€ and 24,000€ and 27% on higher figures.

It is very important not to confuse CGT with Inheritance Tax. CGT is payable on profit made from the sale of assets. Inheritance Tax in Spain is paid by the Beneficiaries of a property on death of an owner.

It should be further noted that UK Residents are obliged to submit a tax return in respect of CGT to HMRC on the disposal of a Spanish property. The current CGT rate in the UK is 28%. Relief against this tax can be claimed in respect of taxes paid in Spain as long as a suitable certificate from the Hacienda (Spanish Tax Office) has been received. The 3% retention retained by the buyer on sale cannot be claimed as relief from UK CGT.

A further potential liability to a UK resident is the capital gain incurred in respect of the exchange rate gain made by the seller. This is calculated based on the exchange rate when the property was purchased against when the property was sold. This can create a CGT liability in the UK even if the property was sold in Spain without a profit.


Wealth Tax is usually charged as part of the annual tax declaration which is submitted by all residents and non-residents of Spain. This is based on the value of your assets held in Spain. Although it had been reduced to zero for a number of years it was reintroduced in late 2011 and will begin to affect those with assets in excess of €700,000.


From January 2012 Income Tax charged to Non-Resident property owners on the rent they collect in Spain has been increased from 24% to 24.75%.


Spanish Resident Income Tax has been increased in 2012 for Higher Rate Tax payers from 45% to 52%.

Should you need help and advice on any of the above please feel free to contact us for a no obligation proposal.

If you would like to understand your Tax implications in Spain and receive our free Spanish Inheritance Tax illustration please contact one of our experienced and trained Consultants by completing the contact form, below, or by clicking the link, above.

Our Consultants can also explain some of the other benefits of moving your property into a UK Company. With Spanish taxation on the increase there are many benefits to restructuring your assets today, saving you and your Beneficiaries money in the future.

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