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Property tax on foreign companies that own a property in Spain to be abolished

The Spanish government is proposing to abolish a tax that is currently levied on foreign companies owning property in Spain in order to attract more investment from abroad.

The tax currently stands at 3pc per annum of the company’s holdings in Spain. The change in the law, currently going though the Senate, is expected to come into force early next year but will only benefit companies that are not domiciled in tax havens.

The tax was originally introduced to stop property ownership through foreign companies when at the time, there was no tax at all, and the government gained nothing. Furthermore, when a property in Spain was sold which was the only asset to the company, there was no change in ownership of the property in the land register, as the company was sold and not the property, and therefore none of the taxes associated with the sale were made either. By removing the tax, it can be easier and cheaper to buy, sell, and inherit property in Spain through a foreign company, rather than face the cost and hassle of doing the transaction in Spain.

This of course will benefit those people wishing to purchase property at the top end of the market as the cost of maintaining a foreign company would not be beneficial to the holding of low priced property.

Nevertheless, it is another gesture by the Spanish government to move the enormous stock of unsold property currently in Spain.

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Just one month remaining to save VAT on a property purchase in Spain

With just one month remaining before the VAT on the purchase of a New property in Spain increases from the current 4% to 10% on 1st January 2013, there is still time to benefit and save money.

In order to save paying this increase you must complete the purchase of a new property by signing the title deed before a notary prior to 31st December 2012.

What is a new property?

A new property is one that has never been registered to a first time buyer, i.e. that from a developer, a builder or even a re-possession from a bank as long as it has never been registered for the first time to a purchaser.

Despite many things taking time to accomplish in Spain, buying a property can in fact be extremely quick – just 7 days! Once having decided to purchase a New property, all paperwork can be checked by a lawyer, searches made at the land register, and all necessary appointments made at the notary all within 1 week. As long as the vendor and purchaser (or their notarised legal representatives) and funds to purchase are available, the property can be signed before a Notary within this time frame.

So if you’re still pondering and want to save 6% on your purchase costs, there’s still time to do so.

Here are some examples of New property in and around Nerja where you can save the 6% VAT before the end of the year:

2 Bedroom, 2 bathroom luxury built apartments in Torrox Costa with private underground parking spaces and lock-up storage room and 2 communal swimming pool complexes from just 195.000 Euros.

RELATED TOPICS:

Guide to purchasing a property in Spain.

New rates of VAT in Spain to take effect as from 1st September 2012.

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90 days remaining to save 6% on a new property purchase in Spain

The VAT on the purchase of a new property will rise from the present 4% to 10% on the 1st January 2013.

This tax was originally reduced in 2011 from 8% to 4% by the former socialist Spanish government. This was extended on January 1st 2012 through to the end of this year by the current conservative government. However, VAT in Spain was increased across the board on September 1st and the former 8% VAT has increased to 10%. So the increase jumps from 4%, at present, to 10% next year.

In order to save paying this increase you must complete the purchase of a new property by signing the title deed before a notary prior to 31st December 2012.

What is a new property?

A new property is one that has never been registered to a first owner i.e. that from a developer, builder or even a re-possession from a bank as long as it has come from one of the above situations.

The saving can also be made in such a situation where you are paying for a property in stage payments and where the final payment falls into 2013, by paying all VAT payments (at 4%) in advance and before the end of this year.

RELATED TOPICS

New rates of VAT in Spain to take effect as from 1st September 2012.


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Transfer Tax & Stamp Duty 2012

The Andalusia regional government has introduced an increase on the Property Transfer Tax (ITP) and Stamp Duty (AJD), whish will be applied from January 1st 2012.

 

Transfer Tax for resale property purchases will now be calculated according to the following rates:

  • Any amount up to 400.000€ – 8% Transfer Tax
  • Any amount between 400.000€ and 700.000€ – 9% Transfer Tax
  • Any amount in excess of 700.000€ – 10% Transfer Tax

Here is an example: A property valued at 750.000€ will be subject to a tax of 64.000€, which is based on the following calculation:

  • 8% up to 400.000€ – 32.000€
  • 9% between 400.000€ and 700.000€ – 27.000€
  • 10% over 700.000€ – 5.000€

Transfer Tax applicable for a private parking space, when purchased as an independent property, will be based on the following rates:

  • Any amount up to 30.000€ – 8% Transfer Tax
  • Any amount between 30.000€ and 50.000€ – 9% Transfer Tax
  • Any amount in excess of 50.000€ – 10% Transfer Tax

Please note that the Property Transfer Tax is not based on the property purchase price, but on the minimum fiscal value, which is regulated by the Regional Government. Should you have any query about this value, please do not hesitate to contact us.

Stamp Duty has also been increased from 1% to 1.2% and applies to brand new property purchases and mortgages, where Transfer Tax does not apply.

These taxes apply only for properties located within the region of Andalusia.

Source: Transfer Tax & Stamp Duty 2012 in Andalucia, Spain | Costa Consulting Bureau.

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Income tax, IBI and motorway tolls go up but electricity, IVA and phone line rental frozen

Income tax, IBI and motorway tolls go up but electricity, IVA and phone line rental frozen

THE start of 2012 will see income tax increase and pensions rise by one per cent, but electricity, gas bottles and telephone standing charges will be frozen.

Young people between 22 and 30 years of age can no longer claim the 210-euro benefit for buying a first home, but those currently in receipt of it will continue to be able to claim.

The tax reduction on a first home will be reintroduced, and IVA will not go up, but income tax will rise.

Civil servants’ salaries will be frozen, and mains gas will increase in price.

Bottled gas remains at 15.09 euros and landline standing charges via Telefónica will stay at 13.97 euros.

Toll fees on motorways will increase by up to 3.2 per cent.

The percentage charged on land registry values for IBI, or asset tax, will rise, and the cost of postage stamps will increase by 2.86 per cent.

Rail travel will go up, but the exact figure has not been calculated so far.

Source: Income tax, IBI and motorway tolls go up but electricity, IVA and phone line rental frozen.

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