Spanish Legislation

Rights and obligations of foreign home buyers in Spain

Under Spanish law, any foreigner can become the owner of a home in Spain. The openness and loyalty of Spanish law is part of the country’s policy. Spain ensures that the country’s budget is replenished by attracting foreign capital and investment in real estate. In turn, foreigners are attracted to Spain by reasonable real estate prices, European legislation, a favorable political climate and a good economic forecast.

Spain is in the top 5 European destinations that lead the market for real estate investment. Tenerife, in turn, is included in the list of the most popular resorts in Spain. Canaries are attractive for their prices (here you can find an apartment from 50,000 euros), preferential taxation and lack of seasonality.

By law, foreign investors in Spain can buy and resell any property without restriction. Excluding certain types of real estate. As a rule, having a strategic location for the country.

*Excluding certain types of real estate. As a rule, having a strategic location for the country.

What you need to know if you want to buy a house in Spain

Any foreigner can buy property in Spain, regardless of whether he is a resident of the country or not. To purchase, you must have an account with a Spanish bank and NIE – tax number of a foreigner. As well as citizens of the country, foreigners in Spain can apply for a loan to purchase a home and apply for a mortgage, must pay purchase taxes and income tax. The tax rate depends on the status of the owner – is he a resident of the EU or not.

How to open an account in a Spanish bank

To open an account in any of the Spanish banks you will need the following documents:

• International passport
• NIE (Número de Identificación de Extranjero)
• An official document confirming the source of origin of funds – income statement, tax return, etc.
• Some banks also ask for additional documents, depending on internal instructions.

How to get NIE

NIE (Número de Identificación de Extranjero) – foreigner identification number, aka tax number. This is an analogue of the Russian TIN. In Spain, NIE is required for any financial transaction: buying a property, a car, opening a bank account or business in the country. NIE alone does not give the right to reside in Spain and is not a visa document.

List of documents for registration NIE:

• Foreign passport and its copy
• EX-15 statement in Spanish indicating the purpose of obtaining NIE
• For minors – birth certificate
• Paid fee

There are two ways to obtain NIE. You can arrange NIE in the territory of your country of residence. To do this, apply to the Consulate General of Spain. This document can also be obtained in Spain.

Mortgage for non-residents

Obtaining a mortgage in Spain can be achieved by both citizens of the country or non-residents. However, there are defined differences between mortgage lending for foreigners and for residents. The differences concern both the list of required documents and the size of the loan. So, for residents of the EU, banks can approve up to 70 – 80% of mortgages, non-residents will be able to get about 50 – 70% of the price of real estate on credit.

Terms of financing:

• Loan rates range from 2.5% to 3.5% per annum
• Interest rates are of three types: fixed, floating and mixed
• Floating rates are calculated depending on Euribor – the current average interbank rate set by EU banks for a certain period
• Under Spanish law, mortgages and fulfillment of obligations under a mortgage agreement are certified by a notary and registered in the Property Register

*The required list of documents for obtaining a mortgage is requested at a particular bank.

Taxes in Spain for non-residents

Homeowners in Spain pay property taxes and income taxes annually. In the case of rental housing and profit from real estate investments, taxes on rental income and capital gains are paid. Non-residents pay taxes only on income received in Spain.

In Spain, tax and duty rates vary by region.

• At the time of buying, when purchasing housing in the primary market, the buyer pays IVA or value added tax. In the Canaries, its own regional counterpart to this tax, called IGIC (Canary Islands Indirect Tax), has been introduced. It is 6.5% for 2019. When buying real estate in the secondary market, a tax on the transfer of property rights is paid, in the Canaries its rate is 6.5%.
• Real estate tax. Owners pay IBI – municipal property tax. In the Canaries, its rate is 0.7% of the cadastral value.
• Income tax. Impuesto sobre la renta. Income tax rates for residents can vary from 19 to 45%. Non-residents pay this tax at a fixed rate of 24%.

Since 2000, the Canary Islands has been a zone of preferential taxation – ZEC, Zona Especial Canaria (special economic zone). The regime of benefits is valid until December 31, 2019, after which it can be extended by the European Commission. The benefits apply to ZEC residents who open a business in the Canary Islands and create new jobs. If key conditions are met – minimum investment and job creation – the income tax rate in the ZEC zone is from 1 to 5%, in contrast to the generally accepted rate of 30%.