Larraín Nesbitt Lawyers is a Marbella-based independent law firm specialized in property conveyancing, taxation, litigation, probate and succession. Expert native English-speaking lawyers and economists blend legal and practical advice providing tailored assistance on your matter. Our range of services cover the greater Marbella area, Sotogrande and Costa del Sol.


The firm focuses advising foreign investors on acquiring residential property in Spain both from a legal and fiscal point of view. Our no-nonsense approach to business coupled with our commitment to clients ensures easy-going transactions. We pride ourselves in putting our clients’ interests at the forefront of everything we do.


Larraín Nesbitt Lawyers, your legal partner in Spain.

Last Article:

IBI Tax Explained

Raymundo Larraín Nesbitt, October, 31. 2018

Marbella-based lawyer Raymond Nesbitt explains the importance of IBI tax and the consequences of non-payment.

Article copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of November 2018

 

Introduction

With the ongoing off-plan property boom firmly underway, I thought it would be a good idea to write a gentle reminder for new-build owners on their duty to pay this local tax on the following year from buying a house.

Unbeknownst to most non-resident property owners, on buying property in Spain, you automatically become liable to pay IBI tax on the following year. No one will give you the heads up on this tax, so it is up to you to find out how much you owe and comply with the Tax Authorities.

IBI tax is of crucial importance because it has associated a valuation for tax purposes of your home known as 'cadastral value' (valor catastral, in Spanish) which is used as the benchmark to calculate all your property-related taxes.

IBI Tax - Definition

The Impuesto sobre Bienes Inmuebles (IBI, for short) is a tax that applies to both residents and non-residents. In some parts of Spain, it is known as SUMA. All property owners must pay this tax every year.

This is a local tax levied by the town hall where your property is located. It is paid once a year (normally due in August through to November). This is Spain’s equivalent of the United Kingdom’s Council Tax. It varies from one town hall to the next. It is based on the rateable value of your property (0.4 – 1.1% of cadastral value per annum); for cheap properties (think rural land) it can be as low as a few euros whereas posh pads, in sought-after prime locations such as Marbella and Sotogrande, command several thousand euros/year.

Importance

  • IBI tax is used as the benchmark to calculate all property-related taxes.
  • On selling, a buyer’s lawyer will demand copies of the IBI invoices for the previous 4 years.

 

When is it due?

  • Town halls are empowered to rule on this, so it varies. Normally, it is payable once a year, typically from August through to September. Whoever owns the property on the 1st of January is liable to pay this tax, by Law.

 

Sample IBI tax invoice

Just follow the link supplied: sample IBI invoice

Consequences of not paying IBI tax

  • It may lead to your property being impounded and sold off in a public auction. Spanish town halls, besieged by dropping revenue, are becoming increasingly adept at pursuing aggressively this local tax post-credit-crunch; particularly for high-end property.
  • It is not possible to file and pay NRIT and NRIIT taxes, as it requires for its calculation IBI tax. This in turn attracts fines, delay interests and surcharges.
  • On selling, a buyer’s lawyer will practice a huge retention to safeguard against any unpaid IBI tax.
  • As a seller, you may forfeit the 3% sales proceeds tax rebate (plus legal interests). On selling, when a seller is non-resident in Spain, buyers must withhold 3% of the sales proceeds by law and pay it into the Spanish Tax Office. Non-resident sellers are entitled to a tax rebate on the 3% (subject to criteria).

 

Conclusion

Non-payment of IBI tax is the daftest fastest way to lose ownership of your Spanish property.

If you haven’t been paying this local tax, you should contact Larraín Nesbitt Lawyers ASAP to get it sorted out.

 

We offer the most competitive fees in the market. We file taxes all over Spain.

Setting up IBI tax: from only €200

We are specialized in taxation

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance, and litigation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

What the Arab world needs most is free expression.” – Jamal Khashoggi

Jamal Ahmad Khashoggi (1958 – 2018). Was a Saudi journalist, writer and the former general manager and editor-in-chief of Al-Arab News Channel. He was also a Washington Post Global Opinions contributing columnist and served as editor for Saudi newspaper Al Watan. An outspoken critic of his country’s iron-ruling family, he bravely did not shy away from bringing to public light serious matters and staunchly defended the civil rights of his countrymen, specifically the freedom of speech. About to marry his fiancée, he was brutally butchered inside the Saudi consulate complex in Istanbul, Turkey, by a state-sponsored death squad at the behest of the highest level. You can read his last column here.

 

Article also published at Spanish Property Insight: IBI Tax Explained.

Legal & Tax services Larraín Nesbitt Lawyers can offer you

 

Taxation-related articles

 

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Last Blog Entry:

Spain’s Supreme Court rules that in Dissolutions of Joint Property Ownership, Stamp Duty is only paid on the outgoing share

Raymundo Larraín Nesbitt, November, 14. 2018

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
14th November 2018

 

The Supreme Court makes the headlines (again), but this time for good reasons.

In a ruling from last month, the Supreme Court established that Stamp Duty is only paid on the outgoing share in a Dissolution of Joint Property Ownership (DJPO, for short), not on the full property value as until now.

I remind readers that following a DJPO is ideal on the following three cases (with up to 80% in tax savings):

  • In a divorce or separation.
  • Re-arranging inheritances.
  • Re-arranging property holdings between family and friends.

 

So, what on earth does this new change mean in layman’s terms?

It simply means you pay less taxes now – which is always a welcome respite.

It always boggled the mind on why Stamp Duty was paid on the full 100% of the property when only a share or % was actually being transferred.

With this new tax change, a joint owner will only be required to pay Stamp Duty strictly on the outgoing share only, which translates into a massive tax saving. However, the damper is that I must stress that the change still requires further like-minded rulings to consolidate it and become the new High Court doctrine. This is the new direction going forward on this tax on DJPOs.

This is more clearly seen with an example.

Example. Husband and wife divorce. They jointly own a villa in Andalusia. Wife buys 50% of the husband’s outgoing share on a property worth €500,000.

Before: ex-wife paid 1.5% Stamp Duty on the full property value= €7,500 euros

Post-ruling: ex-wife pays now = €3,750 euros (50% less tax)

Stamp Duty is a devolved tax of Spain’s 17 different autonomous regions. Each region is empowered to fix the tax rate within a sliding scale that varies between 0.5 and 1.5%. In Andalusia, for example, it is set at 1.5%.

And to close, as a gold nugget, the Supreme Court magistrates behind this new key ruling, are the same ones that ruled last 16th of October that lenders were to pay for Stamp Duty on mortgage loans, not the borrower; this landmark ruling caused a great commotion when the Supreme Court stepped in to appeal its own ruling and which prompted the Government to pass a new law on Stamp Duty to settle the matter amid the social backlash. They are a High Court section specialized in taxation.

 

We offer the most competitive fees in the market.

Dissolution of Joint Property Ownership

We are specialized in taxation

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal & Tax services available from Larraín Nesbitt Lawyers

 

DJPO related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Last Press Entry:

Licence of First Occupation

Costa del Home Magazine, November, 8. 2018

Costa del Home Magazine is the single largest property advertising publication on the Costa del Sol packed with properties for sale and rent, real estate news, features and analysis. CHM kindly published our article on Licence of First Occupation in Spain in its October 2018 issue.

Full article can be found on page 63. Link to our article: Licence of First Occupation

Original article can be found published in our website: Licence of First Occupation

Larraín Nesbitt Lawyers' conveyancing service: Conveyancing – Buying

 

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