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Reduction of Capital Gains Tax for non-residents |
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The Spanish Courts have just approved a major revision of fiscal regulations which will take effect from 1 January 2007.
The most important aspect affecting non-resident - EU national - property owners is the reduction of Capital Gains Tax from 35% to 18% and the withholding tax from 5% to 3%. For property owned by non EU individuals or entities, the higher rates still apply. For resident property owners, CGT will go up from 15% to 18%, and the higher rate of 35% for properties sold within 12 months of purchase disappears. At the same time, changes have been made with regard to money laundering regulations. The one that will most affect property buyers is the obligation to include the method of payment within the title deeds (escritura). Up to now, buyer and seller simply had to swear to the Notary that the full purchase price has been paid and received. Now they will have to state in the deeds how it has been paid and failure to do so will mean the property cannot be registered in the new owner's name. |
