Madrid Other Taxes Guide
Inheritance and Gift Tax
Regional
This tax applies to the beneficiaries of an inheritance or gift. The tax is on assets received with a value of over 8000 Euros. Even if the beneficiaries are not residents of Spain, they must pay this tax when the assets or rights are located in Spain. The tax rate starts at 7.65% and rises to 34% for assets with a value of over 815,000 Euros. If the beneficiary is a child (under the age of 18) of the deceased, then the tax rate on the assets is reduced to 5%.
Transfer Tax and Stamp Duty
Regional
Filing period: Within 30 days of the transaction.
This tax is for real estate and commercial transactions. It is paid by the purchaser or the beneficiary of the transaction. The rate starts at 0.5% (for commercial activities) and rises to 6% (for real estate transactions).
Property Tax (IBI)
Local
Filing period: Varies depending on the municipality, but normally between September and November of each year.
Each year, the municipality issues a property tax payment slip for all properties. The tax is usually between .5% and 1.1% of the cadastral value (valor catastral) of your property, which is roughly 20 times lower than the market value.
Garbage Collection Tax
Local
Filing period: Varies depending on the municipality.
Usually assessed by house or building. Sometimes the tax is combined with water consumption.
Motor Vehicle Tax
Local
Filing period: Varies depending on the municipality, but normally between September and November of each year.
This tax is based on the age and power of the vehicle. The larger the city, the higher the tax. For an average car, it’s about 60 Euros per year.
Capital Gains Tax
This tax is charged at 18% for both foreigners and Spanish residents.
IVA Reimbursement
Non-Europeans: The 16% VAT/IVA tax can be rebated for many items over 90 euros. Keep your receipts and upon leaving the European Union and Spain, you may receive the tax money back from the government. This mostly applies to tourists, but it may be applicable to short-term expats as well. This process can be completed at the airport and some tourist information centers.
Taxes in Spain: Buying property
When buying property in Spain you will encounter a lot of tax information, and this is the reason most expats employ a Spanish lawyer to help them wade through the paperwork. However, the following is a list of taxes you will encounter when buying property in Spain:
If you buy a property in Spain you will have to pay a transfer tax of 7%, unless you have already paid VAT.
The amount of VAT/IVA you pay depends on the type of property that you buy. It is 4% for publicly subsidized homes, 7% for newly-built properties and 16% for plots of land and commercial premises.
The rate of stamp duty tax is levied on the sale price declared on the public notarized deed; it varies by autonomous community between 0.1% and 1%.
The local property tax/council tax is set by the municipal authorities, usually between 0.5% and 1%.
The land appreciation tax is levied each time a property changes hands and increases in value. This rate is set by the municipal authorities.
When you sell property, the capital gains tax rate is 18%. However, there are tax breaks available.
