The buying and selling of goods in Spain is a common transaction, whether acquiring property, a vehicle, or any other valuable item. However, it’s essential to understand the tax implications that accompany these transactions to avoid unpleasant surprises in the future. If you want to learn more about how it works and the taxes you should consider for a purchase-sale, here’s more information.
Steps and Key Aspects to Consider:
1. Identifying the Object of the Purchase or the Sale: The first step is to clearly identify the item to be bought or sold. You need to request certain documentation specifying the property owner, any possible encumbrances on the estate, and conduct a visit to verify any aspects to consider before proceeding to the next step.
2. Agreement between Buyer and Seller: Once the item is identified, the buyer and seller must agree on the price, transaction conditions, and any other relevant clauses. This might involve negotiations on price, delivery timelines, payment methods, among other aspects.
3. Formalizing the Agreement: The agreement is formalized through a purchase-sale contract. This document details all the agreed-upon aspects between the parties and may be drafted by a lawyer or legal advisor to ensure clarity and legality.
4. Investigation and Verification of the Property: Before finalizing the transaction, conducting a thorough investigation of the property is fundamental. For real estate properties, technical inspections can be carried out to verify their condition and ensure they are free from encumbrances or debts.
5. Formalizing the Purchase or Sale: The purchase-sale is formalized through the signing of a public deed. At this point, the agreed payment is made, and the transfer of property or possession of the item to the buyer takes place.
6. Payment of Taxes and Associated Expenses: When carrying out a purchase-sale, it’s important to consider the taxes and associated expenses. This may include taxes such as the Property Transfer Tax, Value Added Tax (VAT), among others, depending on the type of item and current legislation. The taxes to consider, depending on the type of item and other aspects such as if it’s a purchase by a legal entity or if it will be reused as an investment, include:
| Property Transfer Tax and Documented Legal Acts Tax (ITP-AJD):
One of the most common taxes associated with the purchase-sale of goods is the Property Transfer Tax and Documented Legal Acts Tax, known as ITP-AJD. This tax varies by autonomous community and applies to the transfer of ownership of real estate, used vehicles, and other assets. ITP-AJD is calculated on the real value of the property or item and is usually paid by the buyer when formalizing the transaction through a notarial public document. Value Added Tax (IVA): In the case of the purchase-sale of new goods, such as acquiring property from a real estate developer, the Value Added Tax, known as VAT, applies. VAT is usually at 21% for most goods, although specific cases like property purchases may have a reduced tax rate. In Spain, it’s currently at 10% |
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Capital Gains and Income Tax Declaration:
Another aspect to consider is the capital gains obtained from the difference between the purchase and sale price of an item. If an item is sold for a price higher than the purchase price, a capital gain is generated that may be subject to taxes. In Spain, the usual tax is known as “plusvalía,” which must be settled with the City Council where the property is located. Additionally, these gains are subject to the Personal Income Tax (IRPF) in certain cases, so it’s important to consider this for property sales and its potential character.
Other Fiscal Obligations:
If you’re not a resident in Spain, the sale of real estate is also taxed as a capital gain, and a prior payment to the Tax Office must be made, which can subsequently be requested for refund in case the taxpayer has suffered a capital loss in that transaction. Also, the Corporate Tax must be considered if the sale of the property is carried out by a legal entity.
Additionally, the Property Tax and waste management fees must be up to date at the time of the purchase-sale.
7. Registration and Legal Formalization: Finally, the last step is to register the purchase-sale with the corresponding authorities.
In summary, a purchase-sale involves several steps from identifying the item to legal formalization. Conducting thorough research, drafting a clear contract, and complying with all legal and tax obligations are fundamental to ensure a successful and hassle-free transaction. It’s advisable to seek professional advice or consult experts in tax matters to better understand the specific obligations that apply to each situation, thus ensuring compliance with current tax regulations and avoiding legal issues in the future.
Are you looking to buy property and need advice? Feel free to contact us, and we’ll provide guidance!