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Reduction in Spanish Capital Gain Tax

Good news for property investors in regard to the property gains tax in Spain

In order to encourage real estate property investments, the Spanish Government has approved a Royal Decree to be effective as from 11th May.

Here is an overview of the new provisions. For details as to how it might affect you please contact your financial advisor.

The main measure is a reduction of 50% in the Capital Gains Tax on sale proceeds for properties bought between 12th May and 31st December 2012. This is regardless the future sale date.

The tax remission benefits both natural persons (residents and non-residents) and legal entities, under the following conditions:

  • The property must have been purchased between 12th May and 31st December 2012
  • It must be an urban property (residential or commercial)
  • The buyer and seller should not have any connection, either corporate or family.
  • The property should not be considered a commercial development or venture.

The tax reduction will be applied in the annual Income Tax declaration or in the company tax of the fiscal year in which the capital gain was generated.

Provided that the applicant meets all necessary requirements, the capital gain to a non-Spanish tax resident on sale of a Spanish property is taxed as follows

Sale in 2012-2013:

  • Before: 21 %
  • Now: 10,5 %

Sale in 2014 or after:

Before: 19%

Now: 9,5 %

The tax on capital gain to a Spanish tax resident is as follows:

Sale in 2012-2013:

  • Before: until 27% (depending on Gain)
  • Now: until 13,5 %

Sale from 2014 on:

  • Before: until 21%
  • Now: until 10,5

In the case of companies, the Capital Gain is taxed at approximately 15%.

We would like to remind you that the tax for newly constructed properties remains at 4 % until 31st December 2012.

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