COMPREHENSIVE ADVICE FOR REAL ESTATE INVESTORS IN SPAIN

At Cánovas Legal Studio, we have over 30 years of experience as lawyers and advisors to Real Estate investors in Spain. We specialize in advising on Real Estate investments and property transactions across Spain for foreign clients.

We advise you on all the legal implications of your Real Estate investment in Spain, whether you are making it on an individual or business level.

In the Real Estate law department of Cánovas Legal Studio, we provide a comprehensive service specializing in the Real Estate field, in national and international transactions, advising both domestic and foreign clients who wish to acquire and exploit Real Estate in Spain.

As lawyers specializing in advising on the buying and selling of Real Estate and property transactions, we offer our comprehensive experience in real estate transactions in Spain.

Real Estate Investors in Spain

Spain, with its rich culture and vibrant economy, is a country that provides endless opportunities for foreign Real Estate investors. The past decade has seen a boom in foreign investments, which have played a key role in strengthening and growing the Spanish economy, thus showcasing its potential as a destination for investors from around the world.

One of the most attractive areas to invest in Spain is the Real Estate sector, and there are several reasons for this:

High quality of life: Spain offers an enviable lifestyle with a stunning landscape that includes over 8,000 kilometres of majestic coastlines. The beaches are simply beautiful, and the climate, with over 300 days of sunshine per year, is one of the best in Europe. This quality of life is a significant attraction factor for investors and residents alike.

Active real estate market: The Spanish real estate sector is very dynamic and offers favourable opportunities for buying, selling, and renting operations, both for individual and corporate investors. The sustained growth of the market provides an ideal environment for achieving lucrative returns on investments.

Diversity of options: From the sophisticated metropolis of Madrid to the appealing Barcelona, through the sunny Costa del Sol, the Valencian Community, and the Balearic Islands, Spain has a variety of locations that attract investors. Especially, luxury properties in these areas are highly sought after by foreign investors, thus providing an additional boost to the Real Estate market.

How to invest in Real Estate in Spain

Investing in Real Estate in Spain can be an excellent financial decision, but foreign investors should be aware of the tax responsibilities that these transactions entail. Two main factors directly influence the taxation of the operation and the types of taxes that must be paid: the tax residency of the investor and the country of origin of both the buyer and seller of the property.

Tax Residency: The status of tax residency is one of the most determining factors in the taxation of a real estate investment in Spain. Generally speaking, an investor is considered to have tax residency in Spain if they stay in the country for more than 183 days during the calendar year. Also, it is considered if the base of their activities or economic interests is directly or indirectly located in Spain.

Tax residency in Spain carries certain tax obligations. For example, tax residents are subject to personal income tax (IRPF) on their worldwide income, while non-residents only pay taxes on income generated in Spain through non-resident income tax (IRNR). In the case of real estate investments, tax residents pay taxes on profits obtained from the sale of properties, regardless of where the property is located, while non-residents only pay taxes on the gains obtained from properties located in Spain.

Country of origin: Additionally, the country of origin of the investor and the property seller can affect tax obligations due to international treaties to avoid double taxation. These treaties establish rules on how income and capital gains obtained in one country by residents of another country should be taxed. If there is such a treaty between Spain and the investor’s country of origin, the latter may benefit from reductions in the tax rate or even exemptions in certain cases.

These treaties also determine which country has the right to tax first. Generally, the investor’s country of residence has the primary right to tax income and capital gains, while the country where the property is located has a secondary right. However, each treaty has its own specifics, so it is essential that foreign investors seek expert tax advice to fully understand their obligations and opportunities.

Residence permit for real estate investors in Spain

Investment in Real Estate in Spain does not require the buyer to hold a residence permit. Both citizens of the European Union and those from non-EU countries can acquire properties without any residence requirement. However, there are tax considerations and other benefits that might lead a foreign investor to consider obtaining tax residency in Spain.

Investing in Real Estate in Spain as a foreigner may involve double taxation, since you could be subject to taxes both in your home country and in Spain. Therefore, many foreign buyers consider acquiring tax residency in Spain to mitigate this tax burden.

To obtain tax residency in Spain, the investor must meet certain criteria. Among these are physically staying in Spanish territory for more than 183 days a year or having the main core or base of their activities or economic interests in Spain, either directly or indirectly.

This implies that if the majority of businesses, investments, or the administration and management of them are carried out in Spain, tax residency could apply, even if the individual spends less than 183 days a year in the country.

In addition, Spanish law also considers tax residency based on family ties. It is presumed that an individual is a tax resident in Spain if their spouse (not legally separated) and their minor children, who are dependent on them, habitually reside in Spain.

It’s important to note that acquiring tax residency has significant implications, including the obligation to pay taxes in Spain on worldwide income, that is, income earned both within and outside the country. Therefore, investors should seek tax advice before deciding to apply for tax residency in Spain.