What are the tax implications of buying or selling property in Spain as a foreigner?

Key facts

• All foreign buyers and sellers need a NIE, a Spanish tax identification number, before any money changes hands. Without one, nothing can complete.
• Buyers of resale properties in Andalucia pay ITP (Property Transfer Tax) at a flat 7% of the purchase price. New builds attract VAT (IVA) instead, currently 10%, plus a stamp duty charge (AJD).
• Sellers pay Spanish capital gains tax on the profit from the sale. The rate and any available exemptions depend on your residency status and how long you have held the property, your UK accountant is not the right first call for this.
• Non-resident owners who rent their property out also face Spanish income tax on that rental income, approximately 19% for EU/EEA residents, 24% for non-EU residents, declared quarterly to Hacienda.
• A qualified local Spanish solicitor, not a general property lawyer, is the correct professional for tax structuring. We can make a warm personal introduction before you commit to anyone.

What taxes does a foreign buyer pay when purchasing property in Spain?

The main purchase tax on a resale property in Andalucia is ITP, Impuesto sobre Transmisiones Patrimoniales, charged at a flat 7% of the agreed purchase price. On top of that, budget for notary fees, Land Registry registration, and your solicitor’s fee. When you add all of that together, the commonly used figure is 8,13% over and above the headline price, and that is the number Kevin advises buyers to build into their calculations from the start. New-build properties work differently: IVA (VAT) at 10% replaces ITP, and AJD (stamp duty) is charged on top. Which applies to your property depends on whether the seller is a private individual or a developer, so the distinction matters from the very first conversation.

What taxes does a foreign seller pay when selling a Spanish property?

Two taxes hit sellers. The first is capital gains tax on the profit, the difference between what you paid and what you sell for, adjusted for certain allowable costs. Residency status matters enormously here: rates differ between resident and non-resident sellers, and exemptions that apply to Spanish residents may not apply to you. The second is Plusvalia, a municipal tax on the increase in the cadastral value of the land since you acquired it, paid to the local town hall. Plusvalia calculations vary by municipality and by how long you have held the property. Neither of these is straightforward for a non-resident to calculate independently, and neither should be estimated by a UK-based accountant unfamiliar with Spanish tax law. A qualified local adviser is not optional.

What is the NIE and why does every foreign buyer and seller need one?

The NIE, Número de Identificación de Extranjero, is your Spanish tax identification number. You cannot buy property, sell property, open a Spanish bank account, or pay taxes in Spain without one. The process of obtaining it is straightforward but needs to happen early: you can apply in person at a Spanish consulate in your home country or at a designated police station in Spain. Many buyers and sellers instruct their solicitor to handle the application via power of attorney, which is slower but far more convenient if you are not based here. If you have bought in Spain before, check your existing NIE is still valid, the number does not expire, but your supporting identification may have changed, which can cause complications at the notary.

Does residency status change the tax picture for foreign property owners in Spain?

Significantly. Non-residents, people who live outside Spain for more than 183 days per year, face a different tax framework from Spanish tax residents. On rental income, for example, EU and EEA non-residents are taxed at approximately 19% of gross rental income with certain deductions available, while non-EU non-residents pay approximately 24% on gross income with no deductions. On capital gains, rates and available reliefs also differ by residency. There is also a deemed income tax that applies to non-resident property owners even when they are not renting the property out: Hacienda assumes a notional rental value and taxes it accordingly. These are exactly the rules that catch people out when they rely on general advice rather than a specialist in Spanish non-resident taxation.

Should I use a solicitor or a tax adviser, and is there a difference?

Both, usually, and they serve different purposes. A Spanish solicitor (abogado) handles the legal transaction: due diligence on the title, checking for debts registered against the property, reviewing contracts, and representing you at the notary. A qualified Spanish tax adviser (asesor fiscal) handles the tax structuring: which entity should buy, what deductions apply, how to manage capital gains on an eventual sale, and how to stay compliant with Hacienda year-round if you are a non-resident owner. The two roles overlap at points but are not interchangeable. Some solicitor firms in the Golden Triangle offer both services under one roof, and that can be practical. We can make a warm personal introduction to the right people, that is how we prefer to handle it rather than listing names on a page.

Are there any ongoing Spanish taxes once I own a property in the Golden Triangle?

Yes. IBI, Impuesto sobre Bienes Inmuebles, is the annual local property tax, roughly equivalent to UK council tax, paid to the local municipality. The amount depends on the cadastral value of your property and varies between Marbella, Benahavis and Estepona. As a non-resident, you also face an annual non-resident income tax filing, even if the property sits empty, Hacienda taxes a deemed rental value regardless of whether you let it out. If you do rent, that rental income is declared quarterly. A local tax adviser who works specifically with non-resident owners is the most efficient way to stay on top of these obligations without filing errors that attract attention. Trust and transparency is at the heart of everything we do, and that extends to pointing you squarely at the right professional rather than glossing over the detail.

Is it true that buying through a Spanish company avoids the property taxes?

This comes up often, and the honest answer is: sometimes a corporate structure has genuine advantages, but it is not a tax dodge and it is not right for most individual buyers. Buying through a Spanish SL (Sociedad Limitada) can have benefits in specific circumstances, particularly around inheritance planning or where multiple buyers are involved, but it comes with its own costs: corporate accounting obligations, annual filing requirements, and a different tax treatment on eventual sale. Spanish tax law is watched closely. Hacienda has specific provisions targeting artificial structures, and what looked like a clever arrangement ten years ago may not hold up now. The decision about whether a corporate structure makes sense for your purchase needs to come from a qualified Spanish tax adviser who knows your full financial picture, not from a sales brochure or a general internet search.

How do I know if this tax picture applies to my situation?

Three things to check. First, are you buying a resale property or a new build? The tax you pay as a buyer changes, ITP versus IVA plus AJD, and the rate difference is meaningful on a multi-million euro transaction. Second, what is your residency status? If you spend fewer than 183 days per year in Spain, you are a non-resident for tax purposes, which affects your annual obligations and the rate you pay on any capital gains when you eventually sell. Third, have you obtained your NIE? If not, or if your documentation has changed since you last used it, that needs to be resolved before anything else moves. If any of those questions feel uncertain, the right next step is a conversation with a qualified local adviser, not more research online.