If you are not a Spanish citizen, you should know that this will not be an obstacle to your quest to obtain autonomous status. However, you will need to meet a few requirements: first, you must be a Spanish tax resident (i.e., reside in Spain for more than 180 days per year, or concentrate the majority of your economic activities in Spain); second, you must have a NIE, the identification number for foreigners in Spain. This precious passport can take up to three months to obtain and can be requested at a local police station or through a lawyer. This document will be indispensable for all the administrative formalities necessary for establishing yourself in Spain: subscribing to a telephone service, paying your taxes, buying a car, etc.
The last step is to open a Spanish bank account: all you need to do is go to the bank with your ID, your NIE and a proof of Spanish residence.
If you are not a Spanish citizen, you should know that this will not be an obstacle in your quest to obtain autonomous status. However, you will need to meet a few requirements: first, you must be a Spanish tax resident (i.e., reside in Spain for more than 180 days per year, or concentrate the majority of your economic activities in Spain); second, you must have a NIE, the identification number for foreigners in Spain. This precious passport can take up to three months to obtain and can be requested at a local police station or through a lawyer. This document will be indispensable for all the administrative formalities necessary for establishing yourself in Spain: subscribing to a telephone service, paying your taxes, buying a car, etc.
The NIE must be requested at a police station, via the following link: administracionespublicas.gob.es. The problem is that there are usually very few appointment slots available, especially in large cities such as Madrid or Barcelona. This is why the time it takes to obtain the permit can vary from one week to three months!
The documents you will need to bring to the appointment are:
Original and photocopied identity document
Proof of economic, professional or social interests that justify your application. Copy of a document justifying your application for an NIE (work contract, letter of acceptance to university, real estate purchase contract, etc.)
Form EX-18, which must be completed in Spanish
Form 790 codigo 12 (This is a document that allows you to pay the €9.74 fee either by direct debit or in cash at any of our collaborating banks).
Once the procedure is completed, the NIE will be sent to the e-mail address indicated by the applicant. It is currently not possible to access information on the processing status or to speed up the process.
If the application is made through a representative, the original and a copy of the identity documents of the holder and the representative, as well as their accreditation, will also be requested.
Be careful and plan your day; the wait may be long, even with an appointment!
The application must be submitted to the Spanish Consulate closest to your home, by appointment. Please note that the procedures for making an appointment differ from one consulate to another.
If you are in a hurry, an alternative is possible to obtain a NIE quickly and consists of calling upon the services of an expert lawyer in the field. You can contact us now!
Taxation differs depending on whether the property is new or old. For a new property, two taxes apply. Firstly, VAT, at a rate of 10% for all of Spain except the Canary Islands where the rate is 6.5%. Secondly, the tax on documented legal acts (AJD or IAJD) whose rate varies according to the autonomous community and is between 0 and 1.5%.
For an old property, the buyer must pay the tax on the transfer of ownership (ITP), which varies between 4 and 11% of the value of the property, depending on the autonomous community. This must be paid within 30 days of the deed of sale.
A tax system that benefits expats
Before embarking on any real estate acquisition, it is advisable to survey the market. In Spain, real estate has lost 40% of its value since 2007 and has tended to stabilize since 2014. This depression allows you to be able to claim properties at attractive prices and to take out loans at low interest rates.
This is not the only aspect where Spain favors investment: the 2014 tax reform initiated the decrease in the tax rate of the real estate sector in 2015, a decrease that continued into 2016. In the same period, the tax rate for non-residents fell from 24.75% to 19%.
Among the differences in favor of Spain, the absence of property tax remains a very popular feature, as does the amount of property tax, which is half as high. Also noteworthy is the absence of a pre-emption period, which allows for faster transactions and acquisitions.
The acquisition process step by step:
Obtaining the NIE: Número de Identidad de Extranjero or Foreigner’s Identity Number, this is absolutely THE document to obtain. It is mandatory and essential for signing the deed of purchase. Please note that if you wish to move abroad, it will be essential for any procedure (work contract, opening a bank account, registering for Social Security, etc.). It must be requested from a police station. This number identifies you and will follow you throughout your life as an expat or non-resident.
The reserve: you’ve chosen your property and have reached an agreement on the final price with the current owner, the reserve (reserva) consists of a minimum payment of a sum intended to reserve the property. Therefore, the current owner will undertake to withdraw the property from the market and not offer it to anyone else. Generally, it is 10% of the total amount of the sale. Note that the Spanish do not use checks as a means of payment. It is therefore advisable to make a bank transfer.
Verifying the documents: this involves checking the conformity of all the documents related to the property purchased. It is advisable to ask the seller for a certain number of documents in order to certify the legality of the property sold.
Here are the different documents required in this regard:
- Building permit.
- Certificate of registration of the property.
- First occupancy permit for the property.
- Housing certificate.
- Administrative authorizations.
- Electricity, water and gas bills.
The Spanish Ministry also advises to request the following documents:
- Last real estate tax form.
- Document proving that the property is not in rental condition
The private contract: it provides the general information for the sale and indicates the date on which the deed of sale will be signed before a notary.
The deed of sale before a notary: authentic deed of purchase finalizing the sale.
Taxation differs depending on whether the property is new or old. For a new property, two taxes apply. Firstly, the VAT, at a rate of 6.5% in the Canary Islands and 10% in the rest of Spain. Secondly, the tax on documented legal acts (AJD or IAJD), the rate of which varies according to the autonomous community and is between 0 and 1.5%.
In the case of an old property, the buyer must pay the property transfer tax (ITP), which varies between 4 and 11% of the value of the property depending on the autonomous community. This must be paid within 30 days of the deed of sale.
Once a property owner, the real estate tax in Spain, called IBI, applies to both residents and non-residents. The amount is calculated by the municipality in which the property is located, which sets the tax rate to be applied on the cadastral value.
Owners of property worth more than 700,000 euros (or 1 million for a principal residence) will be required to contribute to the Spanish equivalent of the wealth tax. The amount depends on the autonomous community in which the property is located and ranges from 770 euros in Catalonia to 0 euros in Madrid!
Secondly, if you requested to rent out your property, it is good to know that in the case of a long term rental, it is possible to deduct 60% of the rental income (i.e. the difference between the rent and the expenses related to the maintenance of the property). The deductible expenses include insurance, utlities, works and maintenance costs. Regardless of the type of rental, the value to be taken into account is the difference between the total rent and the expenses related to the property.
Keep in mind that the rent from renting out your property will be considered as income and therefore subject to income tax, either the traditional income tax (IRPF), or the non-resident income tax (IRNR). Meanwhile, if the property is neither your primary residence nor rented out, you will have to pay additional taxes to compensate for the income that the property would have generated if it had been rented out, regardless of whether you are a Spanish resident or not.
If the property has not been rented out: a fictitious rent is determined, which corresponds to 2% of the cadastral value of the property. The normal income tax rate of 19% is applied to this amount.
If the property has been rented out: the tax is applied to the net rental income.
This tax is subject to a declaration, annually if you do not rent your property, or quarterly if it is rented.
The property is your primary residence: no taxes to pay.
The property is rented: the income generated is taxable
The property is neither rented nor a principal residence: a tax of 2% of the cadastral value applies. In some cases, the rates vary.
The law states that you can live in Spain without residing there for a maximum of 90 days. After these three months, you must obtain a residence permit or leave the country.
The sale of real estate is an income that as such must be declared and will be subject to IRPF. If the sale of the property resulted in a gain (the property was sold for more than its purchase price) taxes will be applied, while if the sale was made at a loss, you can offset it with capital gains. In addition to the IRPF, and only if the sale of the property has generated a profit, a municipal capital gain will have to be paid by the seller. The rate varies from one municipality to another.
To establish your company in Spain, you must first register as an employer and create your contribution account code (Código de Cuenta de Cotización). This contribution account code is assigned to you when you register and is used for checking purposes and to fulfill your obligations to the Social Security System.
It is important to note that a contribution account code is mandatory for each autonomous community where your company is located. Address your request to the General Social Security Treasury (Administración de la Tesorería General de la Seguridad Social) closest to your location.