Eshkeri & Grau Solicitors - FAQs

Do I need to apply to the Spanish government for permission to reside in Spain?
What is a fiscal representative? Do I need one?

A fiscal representative is a person resident in Spain who can handle all matters relating to tax on your behalf. Your fiscal representative will:

receive all relevant correspondence from the Town Hall ("ayuntamiento") and the Spanish Revenue ("hacienda")

advise you of any money required to meet the payments demanded

make the payments on your behalf, leaving you worry and hassle free.

Non-resident property owners are not legally required to have a fiscal representative (N.B: non-resident companies must have one) but for a relatively small fee this service is good value for money. ESHKERI & GRAU offer all our clients this service as a matter of course, and we make only a small charge to cover administrative costs.


How does buying a property in Spain differ from buying a property in England?

Just as in England, most property in Spain is registered at the Land Registry (Registro de la Propiedad). The first stage of the transaction may require both parties to sign and exchange contracts detailing the terms on which the property is changing hands (contrato de arras). As in England, the final stage of the transaction usually happens about one to three months later. A difference in Spain is that the final stage is conducted by a Spanish Notary who drafts the Transfer Deed. As in England, the transfer is registered at the Land Registry once all taxes and other official fees have been paid.

Do I have to pay commission to the estate agent when I buy a property in Spain?

No. As in the UK, the commission earned by the estate agent is paid by the seller. However, the rate of commission is established before the property is marketed. Accordingly, the seller can set the selling price at a level which he wants and the estate agent can earn the commission which he wants. In Spain much the same system operates. However, it is commonplace for the seller to agree a price for the property with the agent. If an estate agent achieves a price above the figure asked by the seller, the agent keeps the difference. Whereas in England a typical rate of commission is between 1.5% and 3%, Spanish estate agents rarely earn less than 5% of the purchase price, although they may have to share that commission with others who have helped to introduce the buyer to the seller or vice versa.


I've heard that I have to pay tax in Spain, even if I only own a holiday home there. Is that true?

Yes. Under Spanish law, non-resident owners have to pay two taxes. Wealth tax ("impuesto sobre el patrimonio [IP]") and non-residents income tax ("impuesto sobre la renta de no residentes"). Wealth tax is 0.2% of the total value of property owned in Spain by the non-resident. Non-residents income tax is 0.5% of the rateable value ("valor catastral") of all property owned in Spain by the non-resident.


How can I ensure that money I have paid to a builder or property developer will not disappear into thin air?

When property is purchased from plans, Spanish law enables a buyer to demand a bank guarantee from the seller for the buyer's benefit for the amount of the deposit paid. If a property developer will not comply with the law at the negotiation stage, the decision to proceed with the purchase must rest with the buyer in full knowledge of the risk involved.


I have been told by the estate agent that some of the purchase monies will have to be paid in cash. I don't mind withdrawing money in cash, but wonder what impact if any it might have on me.

It has been common practice throughout Spain for many years for the seller to understate the purchase price enabling the seller to reduce his or her tax liability. Prospective purchasers may be told that such practice will reduce their initial outgoings by a saving in stamp duty. This is true at the outset, as a purchaser will not pay stamp duty on the amount paid in cash. However, purchasers should be aware that any saving made at the outset is likely to be lost when the property is sold on, as capital gains tax will have to be paid on the additional profit. For non-residents this tax is payable at the maximum rate of 35%.


Can I purchase my property using an offshore vehicle, such as a company registered in Gibraltar or Jersey?

In the past this was a very tax efficient way of purchasing property in Spain. However, the Spanish revenue ("hacienda") have now imposed an annual tax, currently 3%, on property owned by an offshore company (subject to exemptions).


Do I need to apply to the Spanish government for permission to reside in Spain?

Until 1st January 2003 all foreign nationals residing in Spain had to register with the Spanish government as residents of the European Union. Since that date this requirement has been lifted for EU nationals, who need only produce their passports as a means of identifying themselves. However, it is highly recommended to obtain from the police station ("comisaría") a foreigner's identification number ("Numero de Identificacion de Estranjero" or "NIE"). ESHKERI & GRAU can assist you with your application for a "NIE".