NIE Number Explained

Raymundo Larraín Nesbitt, May, 8. 2017

Lawyer Raymond Nesbitt explains what a Spanish NIE number is, who needs it and how to get one.

Get a NIE Number through us.

 

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of May 2017

 

Introduction

What is a NIE number? This will be one of the first questions you will be asking yourself when you move on over to Spain. Succinctly, a NIE number is a tax identification number for foreigners which identifies you before the Spanish Tax Office and allows you to file and pay taxes in Spain. NIE stands for Número de Identificación de Extranjero. It is the counterpart of the NIF number which only applies to Spanish nationals.

I have written up this brief Frequently Asked Questions to give a quick rundown on what it entails. You can request a NIE number service from our law firm.

 

Photo credit: Benidormseriously.com

 

Why is a NIE number needed?

Basically, any activity in Spain that requires you, as a foreigner, to pay taxes will need you to apply for a NIE number. A NIE number does not preclude your tax residency. The list supplied below is ad exemplum; it is by no means a closed list.

  • Buying property.
  • Selling property.
  • Connecting your property to utilities.
  • Inheriting assets in Spain.
  • Opening a bank account.*
  • Taking out insurance.
  • Importing/buying/selling a car (required to register foreign plated car onto Spanish plates)
  • Importing/buying/selling a boat.
  • Working in Spain.
  • Studying in Spain.
  • Claiming benefits.
  • Obtaining a mortgage or any other type of loan.
  • Can be used to enrol in a town hall census.
  • Paying import tariffs on importing goods to Spain at customs (aduanas) in airports.
  • Some elite private foreign schools require a NIE number from parents and/or new (foreign) pupils to enrol them!

 

*Whilst it used to be a mandatory requirement in the past to attain a NIE number as a foreign resident to open a bank account in Spain, this is no longer the case. However, although initially you can now open a bank account without a NIE number it will be required further down the line by the tax office.

Who needs a NIE number?

  • Any foreigner who becomes resident in Spain for tax purposes.
  • Any non-resident who plans to own assets in Spain i.e. real estate, car, boat etc.
  • Any foreigner who plans to work, study or start a business in Spain.

 

What does a NIE number look like?

A NIE number is issued by the National police on a standard A4 size of paper which also has your name, surname, date of birth and nationality (see article’s photo above for more details). Example: X-12345678-R.

How to get a NIE number

  1. Apply abroad in person, through a Spanish consulate.
  2. Apply in person in Spain before a Spanish National Police Station.
  3. Apply by representative. You can appoint a law firm, such as ours, to act on your behalf as proxy using a Power of Attorney specific to NIE numbers.

What is required to attain a NIE?

  • Passport.
  • Fill in the relevant application form in Spanish.
  • Pay the government fee.
  • Justification on why it is needed.

 

Advantages of hiring a law firm to apply for a NIE number on your behalf (apply by representative)

 

  • It’s fast. We can apply for a NIE number. We can then scan and email you your assigned tax number. For an extra fee, we can post you the original certificate.
  • It’s cheap. Hiring us will be significantly cheaper than flying over to Spain and doing all the legwork yourself!
  • It’s safe. We are registered lawyers with Professional Indemnity Insurance.
  • You save yourself setting aside holidays to come over to Spain for two or three days.
  • You save yourself booking flights to Spain plus hotel lodging.
  • You save yourself having to hire a Spanish translator to translate all the legal jargon and documents in Spanish (Police Stations only deal with you in Spanish).
  • You save yourself having to wake up early in the morning and endure endless queues at a Police Station under a scorching sun only to be attended in Spanish after several hours.

 

10 FAQs on NIE Numbers

 

  1. I´ve read that NIE numbers have a three-month validity, is this true? After 3 months do I need to apply for a new one?

Not true. The NIE number comes with an unfortunate wording that makes it seem as if it was only valid for three months. In practice, it does not expire. Once you have a number assigned by the National Police it will be yours for lifetime. You also do not need to renew it; so, it is basically a one-time thing.

Now that I have clarified this common misunderstanding, comes the tricky part. What actually does expire is the certificate itself which you are issued by the Police Station (the A4 size sheet of paper). Should you require a new certificate, for whatever reason, you may need to request them to re-issue you one (but as I write, it will have exactly the same NIE number as the one before). The only thing that will change is the expiry date which will be again for a further three months.

  1. I offer my property as a holiday rental (short-term) advertising on popular property portals such as Airbnb. Do my lodgers need to apply for a NIE number when I submit my quarterly tax model 210? Even if they are just staying overnight?

Short answer is no. Only the property owner (or joint owners) need to apply for a NIE number.

  1. In my country we have several Spanish diplomatic missions. Why would I need to hire a law firm instead of applying for a NIE number in person through any one of them?

Although on paper this may seem like a good idea, in practice it´s botched. The main problem on applying for a NIE number through a Spanish consulate is that your paperwork is sent from your home country over to Spain (usually Madrid) and then back again. This winded process can take up to several months to fruition with little to no feedback. You will endure first-hand the wonders of Spanish red tape setting you back by several months. Besides, not all consulates allow you to apply for one. So basically, it’s a no-no unless you enjoy watching grass grow.

  1. Does attaining a NIE number make me a Spanish tax resident?

No, it doesn´t. All it is really is just an admin number to identify you before the Spanish Tax Office. It does not preclude your tax status.

  1. I’m planning to buy a property in Spain jointly with my wife. Do we both need a NIE number or only myself? If I buy a property with my children (to mitigate IHT) do they also need a NIE?

Both of you need one. Any owner or joint owner of a property needs to apply for a NIE number.  This will also include your children should they also become joint owners with yourself and your wife.

I take the opportunity to introduce a shameless commercial plug and advise that our law firm offers significant discounts when you apply through us for NIE numbers in bulk orders (three or more).

  1. I was planning to buy a property in Spain but at completion the Notary refused to sign because I didn´t have a NIE number. Is this correct?

Yes. One of the roles of a Spanish Notary is to ensure all taxes are paid to the Tax Office. It stands to reason that if you don’t have a NIE number you cannot pay the associated taxes of a purchase. In other words, to buy or sell property in Spain it is mandatory by law to have a NIE number (if you are a foreigner) at completion so you can pay the appropriate taxes. A Notary will check if a buyer has a NIE number and will refuse to witness the signing if he lacks one.

  1. I have read online that one can no longer apply for a NIE number using a representative through a Power of Attorney; you need to apply for it in person. Is this advice wrong?

Rather than wrong, I would say this advice you have read on internet is out-of-date. Please excuse me digressing for a bit.

For a few months in 2012 National Police Stations turned down representatives using PoA to apply for a NIE. Lo and behold, it panned out that many non-residents simply did not have the sweet time to waste two or three days to leave their work and fly over to Spain in person just for the privilege of queueing up at a Spanish Police Station for hours on end under a baking sun. On top of it (booking flights, hotel lodging) these foreigners also needed to hire a translator to deal with Spanish police as they only communicate in ta-da: Spanish!

So, the dire combination of costs ballooning coupled with all the red tape translated into a sharp dip in property sales at a time when Spain’s ailing economy sorely needed its property market to pick up. The ensuing public outcry was such that the Government came back into its senses and backpaddled on its new policy only months after introducing it. As a result of such a short-sighted policy, the economy had virtually grinded to a halt. You really couldn’t make it up.

What can be gleaned from this amusing little story is that the whole property market in Spain pivots on this first step, a NIE number; if you mess with it the property market tumbles like a house of cards which is exactly what happened. Long story short, business is back to usual and National Police Stations now accept representatives applying for NIE numbers using PoA.

  1. What happens if I lose my NIE number certificate?

Nothing much. You can always request a duplicate. As previously mentioned, the number you have been assigned does not change.

  1. What happens if I move and change my address in Spain, do I need a new NIE number?

No. You get to keep the one you were assigned.

  1. What happens if I change my surname?

You must apply for a another NIE number that matches your new surname.

 

Conclusion

If you are interested in buying, working, studying or simply living in Spain, you will need a NIE number.

My advice is that you keep it simple and hire a competent law firm such as ours to sort it out on your behalf for a (very) competitive fee. We will save you time, money, hassle and considerable aggravation under the sun.

This article in other languages:

French

German

Italian

Polish

Portuguese

Romanian

Russian

Article originally published at Spanish Property Insight: Spanish NIE Number Explained.

 

Legal fee: €200 *

* Our fees do not include admin fees, or mailing a NIE certificate. In the rare event your application is turned down, refunds do not apply. VAT not inclusive

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We do NOT answer questions over the phone on NIE Numbers. You can contact us by e-mail at info@larrainnesbitt.com, or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

 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.

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Buying Property in Spain from a Developer (Off-Plan Property)

Raymundo Larraín Nesbitt, March, 8. 2017

Solicitor Raymundo Larraín Nesbitt takes us step-by-step through the legal procedure to buy new-build property in Spain from a developer.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of March 2017

 

 

 

Introduction

Continuing last month’s topic on Buying Property in Spain from a Private Seller (Resale Property), this month  I provide a general overview on the full legal procedure on buying off-plan property from a developer (also known as new-build). The procedure to buy off-plan differs significantly from buying resale; to the point it warrants its own article as the pitfalls vary meaningfully from one another.

The following article provides a sweeping outline on the buying procedure. If you are looking for concrete advice on a given matter, I highly advise you read my listed articles below which focus on specifics. Just scroll down the page to the bottom section which headline is “Related articles.”

I have simplified the procedure on purpose for ease of comprehension. If you are looking for more detail, I advise reading my article How to Buy Property in Spain Safely which gives an in-depth account of the full buying procedure.

It is strongly advised you read this article in tandem with my article Buying Off-Plan Property in Spain.

 

First Stage: The Reservation Contract

 

Bear in mind that you are paying a deposit on a property which under normal circumstances does not even exist yet and is unlikely to exist until a couple of years’ time. New-builds, unlike their key-ready resale counterparts, have an inherent element of risk associated to them. This risk is mitigated in the knowledge that new-builds are, in general, significantly cheaper than a resale property (on average by 30%). Moreover, as they are new, they are normally built catering to the highest quality standards and employing the most modern materials and know-how. This has a significant impact in insulation, for example, which may in turn impact your Town Hall tax bill by reducing it significantly (read pro-tips below).

After making enquiries and looking around for a property you may have taken a liking to one. Off-plan properties are normally listed by developers or real estate agencies. They will nudge you to sign what is known as a reservation contract (or holding deposit) which strikes the new-build property off the market for a pre-agreed period of time; normally spanning 30 days.

The deposit normally amounts from €3,000 to €6,000 depending on the property. The deposit contract is a succinct document that is normally only one page long. It has very few details, amongst them the developer´s name and company details, the development’s facilities, a general property description and the asking price.

The reservation deposit will be deducted from the final sales price at completion (third stage, see below).

Pro-Tips:

  • It is strongly recommended that you hire an independent conveyance lawyer from the outset (prior to signing a deposit contract). Do NOT hire lawyers recommended by the developer; much less use his own lawyers no matter how reputable (even if free of charge). They are biased and will act only in the developer’s best interests, not your own - you will pay dearly on making this mistake. On following this simple, yet essential, advice buyers stand to sidestep most blunders on buying off-plan property in Spain.
  • You should not pay any deposit unless the developer or estate agency have supplied you first with a copy of an approved Building Licence. The reason is because it could void the bank guarantees securing your stage payments; in plain English, you would lose all your money without any legal recourse. More details in my article Law 20/2015: Important new bank-guarantee legislation explained for offplan buyers.
  • Reservation deposits are normally non-refundable unless expressly stated otherwise.
  • You need to apply for a NIE number (Tax Identification Number for Foreigners). More details in my article: NIE Number Explained.
  • You should open a non-resident bank account.

 

Second Stage: Signing a Private Purchase Contract

 

Before the 30 days are up you will be expected to sign what is known as a Private Purchase Contract (or PPC for short). In Spanish, this is known as Contrato Privado de Compraventa. In English law we know it as Exchange of Contracts. The PPC will be a long legal contract which will list the buyer and seller´s personal details, a full property description, the agreed sales price, the schedule of stage payments, the buying terms and the time frame to complete before a Notary Public.

Your lawyer will have normally already supplied you with a report on title so you are perfectly aware of the legal situation of the property you want to buy before signing the private agreement. This report on title should cover at the very least the following check list:

  • Is the developer creditworthy? Construction track record?
  • Does the developer own the land where the property will be built?
  • Is there a valid Building Licence issued by a town hall?
  • Are there any challenging planning issues overshadowing the development?
  • Is the construction site compliant with Spain’s Coastal Law?

 

Normally on signing a PPC you are expected to make a down payment equivalent to 10% of the purchase price which will be deducted upon completion (stage three). This amount of money is non-refundable.

You will be expected to pay approximately 35% of the final sales price in stage payments. These are deducted at completion (stage three) from what you owe.

 

Pro-Tips:

  • All stage payments (including the initial reservation deposit mentioned in stage one) should be secured by what are known as bank guarantees. I simply cannot stress enough its importance. This document will be handed to you each time you make a stage payment and acts as a safety net on all the interim payments you make until the property is built. This safeguards your money in the event the development is not finished or should the developer file for bankruptcy. Attaining copies of bank guarantees is a top priority for your appointed conveyance lawyer.
  • Remember to store safely a copy of all the stage payments you make into a Spanish bank as they will be required upon completion. You may also need them further on should you instigate legal proceedings.
  • A developer cannot amend the agreed delivery date of a property worded in the PPC without your written authorisation.

 

Una obra maestra entre viñedos | Hotel Marqués de Riscal, Elciego

 Photo credit: Otherworldly Hotel Marqués de Riscal amid vineyards, Valladolid, Spain. By Frank Gehry.

 

Third Stage: Completion

 

One of the particularities of buying offplan property, is that completion normally takes place some two years after signing the PPC (stage two). The reason being is that the property is under construction and you only complete when it is finished.

Completion is the term used to sign the Title Deed which is witnessed by a Notary Public. Additionally, if mortgage finance is required a second deed is signed called a Mortgage Deed. Completion is the time when you pay the balance that you owe, normally 50% of the sales price.

You should read carefully through the deeds before you sign anything. This is particularly true of a Mortgage Deed. Your lawyer should ensure you do not sign abusive mortgage clauses.

If you need a mortgage loan to complete on the property, it is highly advisable you negotiate a reasonable time frame to secure it i.e. 45 to 60 days. This is particularly true if a borrower is non-resident. A borrower requires an Offer in Principle (or Agreement in Principle) from his lender known as Oferta Vinculante in Spanish.

At completion, you take legal possession of the property which is symbolized by being handed over the house keys.

At completion, you may be surprised to find a great number of people:

  1. The developer’s legal representative and his lawyer.
  2. The bank´s representatives (if a mortgage loan is required).
  3. The estate agent (this is the time when they earn their commission)
  4. A translator.
  5. And finally, the Notary himself.

Your lawyer will file and pay the buyer´s taxes and lodge under your name at the Land Registry your new Spanish property.

Congratulations, you are now the official owner of a Spanish property. Enjoy!

Pro-Tips:

  • It is strongly advised you do NOT complete before you are handed with a copy of the Licence of First Occupation (LFO, for short). This document ensures the property is above board (normally). Completing without a LFO has associated a number of key problems:

 

  1. Primarily, you will not be able to take out a mortgage on the property or re-mortgage it – if needed be – by any lender other than the developer’s bank.
  2. You will not be able to benefit from the official utility supplies; only from the developer’s supplies (water and electricity) with all the associated problems this has, namely that you may be cut off at any time as it is the developer who is paying for it and if they go into receivership you will be shut off. Besides, the site supply electricity doesn’t have the same strength and power surges are fairly common on simultaneously turning on various electrical appliances such as air conditioning. Until the LFO is attained, the developer has to pay, by law, for the utility supplies.
  3. Any future prospective purchaser, or their lawyer, will haggle with you and require a steep discount if you lack a LFO. In a resale, the purchasers in turn will undergo the same problems to secure finance by means of a mortgage loan. A lack of a LFO tacitly implies that you are actually reducing the pool of potential purchasers for your resale.
  4. If there are Planning issues, the town hall can set a charge against the property and you, as the new owner of an off-plan and not the developer, may be held liable to pay the fine for the planning illegality.
  5. Needless to say, you cannot (legally) rent a dwelling without a LFO.

 

  • It is strongly recommended you hire a chartered surveyor to carry out a snagging list of the property; this is particularly true of new-build properties. The time to detect and mend all outstanding construction flaws is before you complete at the Notary. Once you complete, you lose your leverage unless your lawyer has practiced a retention. Commissioning a comprehensive snagging report avoids countless problems and is worth every penny in my experience.
  • Failure to secure a mortgage loan in time may result in the loss of the 10% deposit. The developer will always offer a buyer to subrogate himself in his position taking on the developer´s mortgage loan. This may not be always beneficial for a buyer.
  • It goes against a buyer´s best interests to under-declare part of the sales price at completion (besides being illegal). More on why in my article Taxes on Selling Spanish Property.
  • You should immediately replace all the locks of your new property (including storage rooms) as countless people have had access to copies of your home keys during the construction phase. This avoids thefts and break ins during the first months.
  • Request an Energy Performance Certificate from the developer prior to completion. Properties with high energy efficiency ratings qualify for tax rebates of up to 20% on their local Town Hall tax (i.e. IBI tax).

 

https://upload.wikimedia.org/wikipedia/commons/thumb/0/08/Fallingwater_-_DSC05639.JPG/375px-Fallingwater_-_DSC05639.JPG

 

Photo credit: Fallingwater (Kaufmann Residence) by Frank Lloyd Wright.

 

 

Fourth Stage: Post-Completion

 

You should open a Spanish bank account if you haven’t done so already. Utility companies do not accept overseas payments so you should set at least all the following as a direct debit against your Spanish account:

  • Utility bills (invoiced quarterly in the case of water and monthly with electricity).
  • Rubbish collection tax. Paid twice or once a year depending on the town hall.
  • IBI tax. Paid annually (akin to the UK’s Council tax). I strongly urge this tax is set up as a direct debit; failure to pay it may lead the authorities to auction off your property in a procedure which is surprisingly expedient – as in months. Whoever is the owner of a property on the 1st of January of the current year is liable to pay for this tax.

 

Pro-Tips:

  • On owning property in Spain, it is strongly recommended you make a Spanish will. This avoids your heirs a number of problems down the line.
  • You should set as a direct debit utilities and local taxes.
  • On owning property, you should appoint fiscal representation to comply with your annual Non-Resident taxes.
  • If you plan to rent out your property as a private holiday rental some regions have stringent laws on the matter – seek legal advice. Some regions require you to apply for a rental licence or that you register your holiday rental home. Non-compliance may attract humongous fines.
  • IBI tax is not normally available to pay until one or two years after completion. However, you will be expected to pay all the backdated taxes since you completed.

 

Associated Buying Expenses

 

As a rule of thumb purchase costs add 10 – 15% over and above the purchase price. In some regions of Spain, particularly in Valencia, this figure may be higher. Please take thorough legal advice to budget your purchase before you commit. You can read my article Taxes on Buying Spanish Property for more details.

Besides paying taxes (explained below), a buyer is bound to pay the following fees:

  1. Taxes
  • Value Added Tax (IVA, in Spanish): 10%.
  • Stamp Duty (AJD, in Spanish): 0.5% – 1.5%

 

  1. Fees & Charges
  • Notary fees (for the formalization of the deeds): approx. 0.1 – 2 %
  • Land Registry fees (for the inscription of the deeds): approx. 0.1 – 2 %
  • Mortgage & Gestoría fees (if finance is required): 1 – 2 %
  • Lawyer’s fees: 1 – 2 %
  • Estate Agent’s fees: 5 % (these are paid for by the vendor unless agreed otherwise)

 

Pro-Tip:

  • Storage rooms (trastero) and car parks (plaza de garaje) sold individually and legally separate from the main dwelling have a VAT of 21%.

 

Conclusion

Hiring a seasoned lawyer, in my experience, pays for itself on all the money you stand to save on avoiding the most common pitfalls on buying a property in Spain.

Make sure you are assisted on your house-hunting by reputable experts (such as a long-established real estate agency, a reliable mortgage broker or a seasoned lawyer) to benefit most from the wide range of available bargains – you will be spoilt for choice.

It is important you avoid being pressurized into completing; take your time to fully assess the information you are being given and do not hesitate to ask any questions.

And to close, I stress draconianly not to complete without a Licence of First Occupation.

Because impartial legal advice is priceless.

 

“Your best work is your expression of yourself.” – Frank Gehry.

Frank Owen Gehry is a Canadian-American architect who won the Pritzker Prize in 1989. He is known for his buildings such as 8 Spruce Street, Dancing House, Port Olímpic, Jay Pritzker Pavilion, the Hotel Marqués de Riscal and the Guggenheim Museum in Bilbao, Spain. He built buildings across the United States and across South America.

 

 

Also published at Spanish Property Insight: Buying Property in Spain from a Developer (Off-Plan Property).

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. Please contact us for a free initial consultation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

 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.

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Buying Property in Spain from a Private Seller (Resale Property)

Raymundo Larraín Nesbitt, February, 21. 2017

Solicitor Raymundo Larraín Nesbitt takes us step-by-step through the legal procedure to buy property in Spain from a private vendor, also known as For Sale By Owner (FSBO).

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21st of February 2017

 

 

 

 

Photo credit: Spanish Property Insight

 

Introduction

The purpose of this article is to provide a general overview on the full legal procedure when you buy resale property from a private individual. I leave for another article the procedure to buy property from developers (known as off-plan or new-build property).

The following article provides a sweeping outline on the procedure. If you are looking for concrete advice on a given matter, I highly advise you read my listed articles below which focus on specifics. Just scroll down the page to the bottom section which headline is “Related articles.”

I have simplified the procedure on purpose for ease of comprehension. If you are looking for more detail, I advise reading my article How to Buy Property in Spain Safely which gives an in-depth account of the full buying procedure.

If you are buying rural property, make sure you hire a lawyer before you sign any document! Be advised rural property is a minefield in Spain.

It is strongly advised you read this article in tandem with my article Buying Resale Property in Spain.

 

First Stage: The Reservation Contract

 

After making enquiries and looking around for a resale property you may have taken a liking to one. Properties are normally listed by real estate agencies. The real estate agency that has the property listed in its books will prod you to sign what is known as a reservation contract (or holding deposit) which strikes the property off the market for a pre-agreed period of time; normally spanning 30 days.

The deposit normally amounts from €3,000 to €6,000 depending on the property. The deposit contract is a succinct document that is normally only one page long. It has very few details, amongst them the property and seller´s details and the asking price.

Pro-Tips:

  • It is strongly advised you hire an independent conveyance lawyer from the outset (prior to signing a deposit contract). On following this simple yet essential advice buyers stand to sidestep most blunders on buying property in Spain.
  • Reservation deposits are normally non-refundable unless expressly stated otherwise.
  • You need to apply for a NIE number (Tax Identification Number for Foreigners). More details in my article: NIE Number Explained.
  • You should open a non-resident bank account.
  • An agency´s reservation deposit should at no time list who pays what taxes and set out other conditions. This is agreed by the parties in stage two (Private Purchase Contract).
  • Request an Energy Performance Certificate from the estate agency. Properties with high energy efficiency ratings qualify for tax rebates of up to 20% on their local tax (IBI tax).
  • It is strongly recommended you hire a chartered surveyor to carry out a snagging list of the property; this is particularly true of older properties. If you are buying rural property commissioning a surveyor's report beforehand is simply essential. This will avoid countless problems.
  • Your lawyer will run a Due Diligence on the title to verify all is in order before moving onto the second stage.

 

Second Stage: Signing a Private Purchase Contract

 

Before the 30 days are up you will be expected to sign what is known as a Private Purchase Contract (or PPC for short). In Spanish, this is known as Contrato Privado de Compraventa. In the United Kingdom this second stage is known as exchanges. The PPC will be a long legal contract which will list the buyer and seller´s personal details, a full property description, the agreed sales price, the buying terms and the time frame to complete before a Notary Public.

Your lawyer will have normally already supplied you with a report on title so you are perfectly aware of the legal situation of the property you want to buy before signing the private agreement.

Normally on signing a PPC you are expected to make a down payment equivalent to 10% of the purchase price which will be deducted upon completion (stage three). This amount of money is non-refundable. If you need a mortgage loan to complete on the property, it is highly advisable you negotiate a reasonable time frame to secure it i.e. 45 to 60 days. This is particularly true if the borrower is non-resident. A borrower requires an Offer in Principle (or Agreement in Principle) from his lender known as Oferta Vinculante in Spanish.

If movables are being sold along the property it is highly advisable an inventory is added to the PPC. This inventory should be drawn up in great detail to avoid misunderstandings. This inventory will likewise be added to the Title Deed at the Notary Public on completion. It is regarded as a contractual element which binds both parties. If the seller does not include something from within, it will be regarded as a breach of contract. The inventory is normally drafted by the estate agency.

 

Pro-Tips:

  • Failure to secure a mortgage loan in time may result in the loss of the 10% deposit.
  • It movables are being sold along the property, it is crucial the inventory is detailed and accurate. You may even consider adding photographs of the items listed.

 

Third Stage: Completion

 

Completion is the term used to sign the Title Deed which is witnessed by a Notary Public. Additionally, if mortgage finance is required a second deed is signed called a Mortgage Deed.

You should read carefully through the deeds before you sign anything. This is particularly true of a Mortgage Deed. Your lawyer should ensure you do not sign abusive mortgage clauses.

At completion, you take legal possession of the property which is symbolized by being handed over the house keys.

At completion, you may be surprised to find a great number of people:

  1. The seller and/or his lawyer.
  2. The bank representatives (if a mortgage loan is required).
  3. The estate agent (this is the time when he earns his commission)
  4. A translator.
  5. And finally, the Notary himself.

Your lawyer will file and pay the buyer´s taxes and lodge under your name at the Land Registry your new Spanish property.

Congratulations, you are now the official owner of a Spanish property. Enjoy!

Pro-Tips:

  • It goes against a buyer´s best interests to under-declare part of the sales price at completion (besides being illegal). More on why in my article Taxes on Selling Spanish Property.
  • Never agree to a seller staying in the property post-completion even if it’s just for a “short time”. This can create massive legal problems for a buyer which will require a full eviction procedure.

 

 Inline image

 

Fourth Stage: Post-Completion

 

You should open a Spanish bank account if you haven’t done so already. Utility companies do not accept overseas payments so you should set at least all the following as a direct debit against your Spanish account:

  • Utility bills (invoiced quarterly in the case of water and monthly with electricity).
  • Rubbish collection tax. Paid twice or once a year depending on the town hall.
  • IBI tax. Paid annually (akin to the UK’s Council tax). I strongly urge this tax is set up as a direct debit; failure to pay it may lead the authorities to auction off your property in a procedure which is surprisingly expedient – as in months. Whoever is the owner of a property on the 1st of January of the current year is liable to pay for this tax.

 

Pro-Tips:

 

Associated Buying Expenses

 

As a rule of thumb purchase costs add 10 – 15% over and above the purchase price. In some regions of Spain, particularly in Valencia, this figure may be higher. Please take thorough legal advice to budget your purchase before you commit. You can read my article Taxes on Buying Spanish Property for more details.

Besides paying taxes (explained below), a buyer is bound to pay the following fees:

  1. Taxes
  • Property Transfer Tax (or ITP in Spanish) which varies, depending on the Autonomous Community where the property is located, between 7 to 10%.

 

  1. Fees & Charges
  • Notary fees (for the formalization of the deeds): approx. 0.1 – 2 %
  • Land Registry fees (for the inscription of the deeds): approx. 0.1 – 2 %
  • Mortgage & Gestoría fees (if finance is required): 1 – 2 %
  • Lawyer’s fees: 1 – 2 %
  • Estate Agent’s fees: 5 % (these are paid for by the vendor unless agreed otherwise)

 

Conclusion

Hiring a seasoned lawyer, in my experience, pays for itself on all the money you stand to save on avoiding the most common pitfalls on buying a property in Spain.

Make sure you are assisted on your house-hunting by reputable experts (such as a long-established real estate agency, a reliable mortgage broker or a seasoned lawyer) to benefit most from the wide range of available bargains – you will be spoilt for choice.

It is important you avoid being pressurized into completing; take your time to fully assess the information you are being given and do not hesitate to ask any questions.

Because impartial legal advice is priceless.

 

“Buy land, they’re not making it anymore.”  – Mark Twain.

 

American writer, entrepreneur, publisher and lecturer. Among his novels are The Adventures of Tom Sawyer and its sequel, Adventures of Huckleberry Finn.

 

Also published at Spanish Property Insight: Buying Property in Spain from a Private Seller (Resale Property).

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, 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 services Larraín Nesbitt Lawyers can offer you

 

Property-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. Voluntas omnia vincit.

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Renting in Spain – Landlord's Taxation Guide

Raymundo Larraín Nesbitt, January, 8. 2017

The following article summarises the tax obligations of non-resident landlords in Spain, including the rental reliefs, tax allowances and deductions they can benefit from.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of January 2017

 

 

 

Introduction 

In my experience non-resident landlords seem, at best, blissfully unaware of their taxation duties on renting out their properties in Spain; at worst, they are totally baffled by them. So I thought it would be a good idea to start off the year by adding to the mayhem writing up this little article!

For an abridged version of this article, please read my straight-to-the-point blog post without the esoterics.

I frequently get asked to cast some light on the matter, so this guide attempts to lay out all the different scenarios non-resident landlords may be faced with and what exactly are their tax duties as a result.

I take the liberty of introducing the article with the lenient tax allowances EU and EEA residents can now benefit from following recent jurisprudence from the European Court of Justice. British nationals, for the time being, may still benefit from these allowances on filing their Spanish tax returns until Prime Minister Theresa May triggers article 50 sometime in spring 2017.

This article is split into two sections:

  1. Allowances (state and regional) as well as deductions non-resident landlords can benefit from (as physical persons) to mitigate their rental tax bill in Spain.
  2. Tax returns to be filed (in Spain) depending on which case a landlord is classified in (short or long-term rental).

 

 I. Landlord Rental Reliefs

 

Following up on my article from February 2015, regarding the ECJ’s landmark ruling of last 3rd of September 2014, which put an end to discrimination between residents and non-residents on taxation matters, these changes also affect rental laws.

Law 26/2014 of the 27th of November amends both the Personal Income Tax Act (I.R.P.F.) and the Non-Resident Income Tax Act (I.R.N.R.). These changes came into force on the 1st of January 2015. I had already referred to these changes in December’s and February’s articles: Taxes on Selling Spanish Property and Changes To Spain’s Inheritance And Gift Tax Law.

Law 26/2014 adapts and transposes the decision taken by the ECJ amending internal Spanish national laws. It brings to an end (fiscal) discrimination between residents and non-residents in a wide array of matters; for this article’s sake, specifically on rental matters. EU-residents are now treated on par with Spanish residents on taxation matters relating to allowances and deductions. This translates into paying fewer taxes (as non-residents now qualify for deductions and tax allowances which were previously barred to them as these were earmarked for Spanish residents alone).

For the purpose of this article, when I make reference to ‘non-tax residents’ I will always be referring to citizens which are either tax resident in another Member State of the European Union or else in the European Economic Area (E.E.A., which is compromised by Iceland, Liechtenstein and Norway). Just to clarify, the below-listed changes do not benefit tax residents outside of the EU or EEA.

I.e. a US national cannot benefit from the tax allowances listed below.

Additionally, it should be noted that non-EU and EEA nationals have a different tax scale levied on them on renting their properties.

As a brief recap:

I) Landlords resident in E.U. or E.E.A.

  • Tax relief: Yes, physical persons may deduct, for example, home insurance, mortgage loan interest payments, property maintenance expenses etc. Legal persons may also deduct rental related expenses.
  • Dates: collected annually or quarterly.
  • Tax form: 210.
  • Tax rate: 19% on rental income for 2016.

 

 II) Landlords resident outside the E.U. or E.E.A.

  • Tax relief: no.
  • Dates: collected annually or quarterly.
  • Tax form: 210.
  • Tax rate: 24% on rental income for 2016.

 

Rental Allowances – Situation Prior to the ECJs’ Ruling

Non-resident rental allowances were virtually non-existent prior to this ruling for private individuals. There were few instances in which you could offset rental taxes as they required you employed someone full time and had a permanent establishment in Spain. Obviously of little practicality which was not an option for the vast majority of non-resident landlords.

Post-ECJs’ Ruling – Changes to Spain’s Rental Laws

The ECJ’s key ruling of 3rd of September 2014 marks the inflection point which puts an end to (fiscal) discrimination between residents and non-residents. It forces Spain to amend its internal laws and accommodate the European principles on which the EU is grounded on. The significance of the ECJ’s ruling is that it has opened up the opportunity for non-residents to apply as from the 1st of January 2015 to the below-listed state tax allowances and deductions which were previously reserved only to Spanish residents. In addition, non-residents may also benefit from those set by the Autonomous Communities where the property is located which have a penchant of being more generous than state law.

When taxpayers are resident in another European Union Member State, or in the E.E.A., the expenses described in the Law on Personal Income Tax (IRPF) can be deducted when calculating the taxable base, provided that proof is supplied that these expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain. When expenses are deducted, a certificate of tax residency in the corresponding State issued by the tax authorities of that State which must be filed along with your tax return.

So, for example, a British national must request from the HMRC a certificate of tax residency in the UK and submit this to the Spanish Tax Office. This allows to successfully offset the maintenance and running expenses of their Spanish property against their rental income yielding a higher net income. Needless to say, you need a lawyer to organize this on your behalf.

Landlord’s State Reliefs and Deductions for Private Home Rentals

Non-resident landlords can either rent out their properties on a short or long-term basis:

  • Short-term lets are understood to be subject to private holiday rental laws which are covered in detail by my articles Holiday Rental Laws in Spain and Holiday Home Taxation in Spain. Moreover, this can be further compounded by whether a rented property is classified as either urban or rural which gives way to a different set of regulations and legal requirements.
  • Long term lets are subject to Spain´s Urban Rental Law better known by its acronym LAU. These long-term lets are covered by my article Urban Rental Laws in Spain.

 

The main difference between both is that the former is ruled by each of Spain´s 17 Autonomous Regions whereas long-term lets are ruled by a national legal framework which acts nationwide. The significance of this from a practical point of view, is that landlords who rent on a short-term basis using, for example, Airbnb or other similar rental portals should check the minutiae of the regional laws where their properties are located. Some of these laws are fairly restrictive and in fact may even require a landlord to attain a rental licence of sorts or else to register themselves prior to renting out their accommodations. Non-compliance may attract humongous fines in the thousands of pounds.

The following state deductions and allowances can be offset or deducted mitigating a landlord´s tax bill without prejudice of additional compatible allowances set out by the Autonomous Community contingent on where the property is located. Please take legal advice on the latter for your case as for economy of space I will not be listing them below.

The above translates into significantly higher returns for landlords on taking smart advantage of these lenient allowances. Meaning non-resident landlords stand to profit from higher net yields on letting in Spain as from 2015 onwards.

Article 24.6 of the Non-Resident Income Tax Act (I.R.N.R.) makes a direct renvoi on these to art. 23 of the Personal Income Tax Act (I.R.P.F.).

Please take note I will only list in this article allowances which properties are owned by physical persons, not by legal persons. More on ownership of Spanish properties through corporate structures in my article Buying and Owning Spanish Property through Companies: Pros and Cons.

 

Landlord Rental Tax Relief: Allowances & Deductions (as Physical Person)

 

  1. Rental Tax Relief / Deductible Expenses (Art. 23 I.R.P.F.)

Proof must be supplied that the following expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain.

 

• Interests arising from a loan to buy the property (i.e. mortgage).

• Local taxes and administrative charges and surcharges that impact on the rental income or else on the property itself (i.e. IBI tax, SUMA tax, rubbish collection tax).

• Expenses arising from formalising rental contracts such as lets or sublets (i.e. Notary and/or Land Registry fees); legal defence (i.e. hiring a lawyer for tenant eviction purposes).

• Maintenance costs may be offset; refurbishment expenses are excluded.

Examples of maintenance costs (deductible): repainting over flaky paint, plumbing, debugging, tennis court green mold cleaning, swimming pool pump replacement, annual lift maintenance, leaking faucet.

Examples of refurbishment expenses (non-deductible): glass curtains, double-glazed windows, parquet, marble floor, extension to property (outbuilding), tennis court, swimming pool, private lift.

Notwithstanding the above, refurbishment expenses may be claimed on selling the property by offsetting them against your Capital Gains Tax liability. Please read my article: Taxes on Selling Spanish Property.

• Home insurance premiums (theft, fire, civil liability etc.). Please read my articles Home Insurance in Spain, Community of Owners’ Insurance Policies and How to Cancel your Home Insurance Policy in Spain. However claims arising from events that diminish the value of a dwelling are non-deductible i.e. fire.

• Utility invoices (electricity, water, gas and landline).

• Concierge, gardening & security services (i.e. gated communities).

• Rental publicity expenses.

• Home depreciation and amortization. The calculation is 3% on the highest value of the following two: home buying costs or cadastral value; the value of the land is excluded.

2. Allowances

  • The 100% tax allowance on letting to under thirty-year-olds is supressed as from the 1st of January 2015. The allowance is now 60% on the net income regardless of a tenant’s age. EDIT: This tax relief only applies to resident landlords. If you are not resident in Spain, you cannot benefit from it.
  • Other.

 

II. Tax Returns to be Filed

 

Depending on which classification a landlord falls in, different tax models need to be filed. This section is already covered in detail by my article Non-Resident Taxation in Spain. Notwithstanding, I will do a brief summary for completion´s sake.

  1. Not renting out property.

Regardless you must file and pay an annual tax return called Non-resident Imputed Income Tax. This is tax model 210. It must be filed and paid before the 31st of December of the following year. The details are already covered by my above-mentioned article. Please see Fiscal Representation (Non-Resident Income Tax).

  1. Renting out property in Spain

 

  1. Short-term (Private Holiday Lets or holiday homes)

Besides complying with the above annual requirement, you must file a quarterly tax return for model 210. This has associated higher professional fees from lawyers or economists as it is admin intensive. A tax model must be filed for each tenant. Additionally, a tax model must be filed for each joint owner of the property (think joint property ownership as in couples).

Landlords should note that this option is borderline to running an accommodation business that is advertised in specialized rental property portals over the net. Please see Holiday Rental Accounting Service (HRAS).

  1. Long-term Rentals

You also need to file quarterly tax models. Please see Holiday Rental Accounting Service (HRAS).

  1. Professional Rental Business

Professional rental businesses require VAT is filed on a quarterly and annual basis (tax models 303 and 390). The business is equated to running a hotel accommodation. Please see Holiday Rental Accounting Service (HRAS).

Conclusion

As can be clearly surmised from the above, the taxation on private rentals may be somewhat labyrinthian given the fact that 17 different Autonomous Regions in Spain hold competence over it and rule accordingly. This requires the input of seasoned professionals to wade through the pitfalls and come out successfully.

Which is where we lawyers step in; hand-holding landlords and guiding them through the taxation ordeal to come up on top, working the system.

 

“The minute you read something that you can't understand, you can almost be sure that it was drawn up by a lawyer.” – Will Rogers.

William Penn Adair “Will” Rogers was a Cherokee-American cowboy, comedian, humourist, social commentator, vaudeville performer and actor. He was also the father of a well-known U.S. politician; nobody´s perfect.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, 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 services Larraín Nesbitt Lawyers can offer you

 

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.

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Selling Property in Spain – Ten Reasons to Hire a Lawyer

Raymundo Larraín Nesbitt, December, 8. 2016

Although it is not mandatory to sell property in Spain assisted by a lawyer, it is highly advisable that you do; particularly if you are a non-resident. Lawyer Raymundo Larraín Nesbitt takes us through the advantages of having legal representation when you sell a property in Spain.

Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Article copyrighted © 2016. Plagiarism will be criminally prosecute

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of December 2016

Introduction

While it is possible to buy or sell a property in some overseas jurisdictions, including Spain, without having to appoint a solicitor, it would be very unwise to do so. If anything, it is even more important to obtain good legal advice when selling overseas as it is highly likely that you will be unfamiliar with many of the key processes.

Broadly speaking, the two key reasons which justify hiring legal representation on selling, besides avoiding payment scams and commission abuses, are tax mitigation and a refund of the 3% of the sales price withheld by a buyer's lawyer (if applicable). These two points are explained further below.

It is often that I hear that those with vested interests in there being no lawyers involved – I wonder why – are arguably the most outspoken advocates that retaining a lawyer on selling is a superfluous expense and always put as an example that Spaniards themselves don’t hire them on selling. “In fact,” they add “your estate agent could handle everything in a jiffy at no extra cost.”

I cannot even begin to explain why this flawed advice is wrong on so many levels. So why take the risk by not obtaining proper legal advice? You can read a blog post on this: 7 reasons on why you need legal representation on selling in Spain.

Only a qualified and registered solicitor (abogado) can give you legal advice in Spain. Beware of intruders posing as lawyers who meddle in conveyancing. The golden rule is to always ask a lawyer in Spain for his registration number (número de colegiado).

Selling Property – Avoid Horror Stories

  • Seller sells a property to a cash buyer and is handed over counterfeited banknotes at the Notary Public. No legal recourse is possible.
  • Seller is duped by fellow barroom ‘illuminati’ into thinking ‘under declaring’ is the norm in Spain and accepts a huge wad of cash at the Notary on completion. Immediately after signing over the property vendor gets mugged and he’s left with no house and with no cash.
  • Seller decides best not to appoint a lawyer, agrees to sell, and accepts a holding deposit from buyer. On the day of completion at the Notary she realizes just how much tax she needs to pay and decides to bail out as the numbers do not stack up. Unbeknownst to her, the seller is now liable to pay double the holding deposit. If she still refuses to pay, she can be sued and will most likely lose the court case. A charge for over 20,000 euros will be placed against her property and this may even lead to her property being auctioned off.
  • Seller appoints ‘reputable’ estate agency. Unbeknownst to him an unscrupulous agent, on realising there are no lawyers involved, words into the agency contract a sales ‘commission’ of up to 50% (plus VAT) on signing a private purchase contract (exchange of contracts). The buyer pulls out because he is unable to secure finance from a lender to carry on with the purchase and demands a full refund of his deposit. Meanwhile, despite the sale falling through, the agent demands his 50% ‘commission’ as the private purchase contract was indeed signed threatening the vendor with litigation on non-compliance.
  • Seller, after receiving an initial reservation deposit, is cajoled into skipping signing a private purchase contract and jump straight to completion before a Notary Public. This entails a vendor waiving numerous rights and legal safeguards which would have otherwise assured a problem-free transaction.
  • Seller signs away a Power of Attorney to sell his Spanish villa in favour of his expat ‘best pal’ who berates the use of Spanish lawyers (“They sleep siestas, you know?”) and who is a self-proclaimed conveyancing expert (because he bought two rural properties back when General Franco was still alive). His best friend is never seen again – nor the money.
  • Seller grants a Power of Attorney to a ‘golf buddy’ to sign completion on his behalf as his proxy. Years later, the vendor reads some internet article where it is explained that non-resident sellers are lawfully entitled to a full refund of the 5% retention of the sales price withheld by a buyer´s lawyer. Upon further inquiry before the Tax Office it transpires ‘someone’ pocketed the 5% refund.
  • Seller arranges on his own the mandatory Energy Performance Certificate on selling, and is overcharged by several hundred euros.
  • Seller agrees with cutthroat estate agent a trivial sales price because the sales market “is tough”. Conniving agent agrees with buyer a significantly higher price. Unbeknown to both vendor and buyer, the artful dodger pockets the price difference (besides his 5% agent’s commission and the 3% sales refund of the vendor). Not bad for a day’s work, eh?

 

Selling – Ten Reasons to Hire a Lawyer in Spain

 

1. Legal independence. Larraín Nesbitt Lawyers is totally independent.

2. Registered professionals. Larraín Nesbitt Lawyers only employ qualified and registered Abogados. Registered abogados are subject to disciplinary action by the Bar Association so must conduct themselves honourably to continue practising else risk being disbarred. We are members of the British Chamber of Commerce, Spain.

3. Professional Indemnity Insurance. Registered lawyers have Professional Indemnity Insurance in place in the event of malpractice or negligence. Currently this cover stands at €1,000,000 with Larraín Nesbitt Lawyers.

4. Lawyer's fees are 100% tax-deductible! The fees you pay us to sell your property are fully deductible from the sales tax (CGT), meaning you pay less tax on hiring us.

5. No language barrier, no hidden extras. All our staff speak and write English fluently, besides other languages. Nothing will be lost in translation! We will provide you with a written quote so you are sure that there are no unpleasant surprises. We will provide you with a clear breakdown of costs in English, or your chosen language, beforehand.

6. Accountability. We will give you an invoice, statement of all expenses and written advice. Larraín Nesbitt Lawyers will put everything in writing.

7. Transparency. You will receive a written report in English, clearly setting out the terms of the sales contract.

8. Tax mitigation. Our lawyers will endeavour to offset both the associated purchase costs and refurbishment expenses on your property to reduce your tax burden on selling as much as is legally admissible (contingent on the vendor supplying us with the original invoices). More details in our article Taxes on Selling Spanish Property. Additionally, a lawyer will safeguard a seller’s right to negotiate with a buyer the pro rata payment of IBI tax (equivalent to the UKs Council tax). A seller not legally represented will likely be expected to pay this tax in full.

9. Non-residents 3% sales refund (Tax Model 211). As a post-service, our lawyers will apply for a full refund from the Spanish Tax Office (if applicable) which will be credited into your account.

10. Conveyancing can be arranged in your absence. If granting a Power of Attorney, our law firm will ensure you understand what powers you are giving and for how long those powers last. Normally the powers you give your lawyer are on-going unless you expressly revoke them. You should avoid signing off Powers of Attorney to people who dabble in conveyancing and are unqualified to provide legal advice.

 

Conclusion

Hiring a seasoned lawyer, in my experience, pays for itself on all the money you stand to save on avoiding the most common pitfalls on selling a property in Spain.

Because impartial legal advice is priceless.

We offer the most competitive fees in the market.

Conveyancing – Selling from €795

We are specialized in conveyancing.

 

“Politicians were mostly people who'd had too little morals and ethics to stay lawyers.” – George R.R. Martin.

George Raymond Richard Martin is an American novelist and short-story writer in the fantasy, horror, and science fiction genres. He is best known for his international bestselling series of epic fantasy novels, A Song of Ice and Fire, which was later adapted into the HBO dramatic series Game of Thrones.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, 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 to book an appointment.

 

Tax & legal services available from Larraín Nesbitt Lawyers

 

 Conveyancing-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.

2.016 © Raymundo Larraín Nesbitt. All rights reserved.

 

 

... Read more

Buying Property in Spain – Ten Reasons to Hire a Lawyer

Raymundo Larraín Nesbitt, November, 8. 2016

Although it is not mandatory to buy property in Spain assisted by a lawyer, it is highly advisable that you do; particularly if you are a non-resident. Lawyer Raymundo Larraín Nesbitt takes us through the advantages of having legal representation when you buy a property in Spain.

Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Article copyrighted © 2016. Plagiarism will be criminally prosecute

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of November 2016

Introduction

You would never buy a property in the UK without instructing a solicitor or conveyancer and yet a surprising number of people choose not to instruct a lawyer or legal representative when buying abroad. If anything, it is even more important to obtain good legal advice when buying overseas as it is highly likely that you will be unfamiliar with many of the key processes.

While it is possible to buy a property in some overseas jurisdictions, including Spain, without having to appoint a lawyer, it would be very unwise to do so. Buying a house is one of the biggest investments most people make in their lifetime. So why take the risk by not obtaining proper legal advice?

Only a qualified and registered abogado (solicitor) can give you legal advice in Spain. Beware of intruders posing as lawyers who meddle in conveyancing. The golden rule is to always ask a lawyer in Spain for his registration number (número de colegiado).

Buying Property – Avoid Horror Stories

  • Buyer buys a rural villa which is unregistered, does not have planning permission and is set to be demolished by the Authorities.
  • Buyer buys off-plan property from a developer who is tethering on the verge of bankruptcy. The buyer is mistakenly confident because he has been issued a bank guarantee by the developer’s lawyer purportedly ensuring his stage payments when in fact this guarantee is only legally enforceable as from the moment a developer attains planning permission from a town hall; not a moment before (you can read my article on this). In the event of filing for receivership a buyer would lose all his money despite having a bank guarantee in his possession.
  • Buyer buys from someone pretending to be the owner.
  • Buyer buys a property that is different to the one shown by the vendor.
  • Smug buyer ‘under declares’ part of the sales price because “that is how things are done in Spain”. A year later he is landed with a huge tax bill as a result of the complementaria or bargain-hunter tax.
  • Buyer buys an offplan property without a lawyer thinking the bank will check his title is clean and above board. What the buyer doesn't know is that the property has not attained a Building Licence and all his stage payments are unsecured despite the bank's reassurances to the contrary. This is a consequence of Spain's new Bank Guarantee law. Buyer loses all his money without any legal recourse.
  • Buyer buys an offplan property without appointing a lawyer as he (mistakenly) thought his lender would do all the legal checks. Ends up losing all his money.
  • Buyer buys property with tenants already inside. They can legally stay until the expiration of their tenancy agreement in accordance with Spain’s Tenancy Act (which can be up to 8 or 10 years).
  • Buyer buys a property with debts, charges or encumbrances. Whoever is the owner of the property will be held liable for these debts.
  • Buyer buys a luxury frontline beach penthouse and pays full price. Years later, on selling, he is informed by the buyer´s lawyer that following Spain´s Coastal Law the property is not classified as freehold and what he bought is known legally as an 'Administrative concession' or Government leasehold. He will only be offered a fraction of the price he paid for it making a huge loss. More details in my article Proposed Amendments to Spain´s Coastal Law – Amnesty.

 

Buying – Ten Reasons to Hire a Lawyer in Spain

 

1. Legal independence. Larraín Nesbitt Lawyers is totally independent. You should avoid using a lawyer recommended by an estate agent and most certainly never use the developer´s own lawyer. If it is gratis, it is for a good reason!

2. Registered professionals. Larraín Nesbitt Lawyers only employ qualified and registered Abogados. Registered abogados are subject to disciplinary action by the Bar Association so must conduct themselves honourably to continue practising else risk being disbarred. We are members of the British Chamber of Commerce, Spain.

3. Professional Indemnity Insurance. Registered lawyers have Professional Indemnity Insurance in place in the event of malpractice or negligence. Currently this cover stands at €1,000,000 with Larraín Nesbitt Lawyers.

4. No language barrier. All our staff speak and write English fluently, besides other languages. Nothing will be lost in translation!

5. No hidden extras. We will provide you with a written quote so you are sure that there are no unpleasant surprises. We will provide you with a clear breakdown of costs in English, or your chosen language, beforehand.

6. Free escrow service. Larraín Nesbitt Lawyers keeps a separate client account.

7. Accountability. We will give you an invoice, statement of all expenses and written advice. Larraín Nesbitt Lawyers will put everything in writing.

8. Transparency. You will receive a written report in English, clearly setting out the terms of your contract, with a description of the property you are buying including any community facilities, such as pools, golf course etc.

9. Ongoing communication and post-service. For resale properties, your lawyer will inform you about the description as described in the Nota Simple and Title deeds. Remember; it is your responsibility to check the description of the property carefully with what you have seen and inform us if there are any differences. Some building reforms are undertaken without proper approval (unregistered property extensions) and there is no way for your lawyer to know about this. Which is why we recommend arranging a snagging list beforehand.

10. Conveyancing can be arranged in your absence. If granting a Power of Attorney, our law firm will ensure you understand what powers you are giving and for how long those powers last. Normally the powers you give your lawyer are on-going unless you expressly revoke them.

Conclusion

Hiring a seasoned lawyer, in my experience, pays for itself on all the money you stand to save on avoiding the most common pitfalls.

Because impartial legal advice is priceless.

Conveyancing – Buying 

 

 

“Managers keep the rules, leaders break them.” – Sir Richard Branson.

English business magnate, investor and philanthropist. Founder of the Virgin Group which controls more than 400 companies.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, litigation and inheritance. 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 to book an appointment.

 

Tax & legal services available from Larraín Nesbitt Lawyers

 

Conveyancing-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.

2.016 © Raymundo Larraín Nesbitt. All rights reserved.

 

... Read more

Plagiarism: Flattery or Just Plain Theft?

Raymundo Larraín Nesbitt, October, 8. 2016

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of October 2016

 

 

This month’s article is somewhat personal. Due to the attention some of my articles garner, I get copied a lot. It has reached the point where I am catching over ten people/companies every month. A recent example is the article I wrote earlier this year on Andalusia’s Holiday Rental Laws. This article alone was massively plagiarized. Because of this I thought it would be a good idea to write up a reminder of the legal repercussions in Spain on copying other peoples’ intellectual property.

In Spain, much like in the United Kingdom, all original written material is protected by Intellectual Property Laws (Royal Decree 1/1996). Moreover, Spain’s Criminal Code in its Chapter XI protects author’s Intellectual Property Rights against plagiarism in three articles no less (articles 270-272), all of which have jail terms associated to them, ranging from 6 months to 4 years. All an offended needs doing is file a denuncia against the offender at a Police Station. Plagio is a pursuable criminal offence. As an example, two people were arrested in Torremolinos (Malaga), and were remanded into custody for plagiarizing just one article from a website.

I first started writing articles in 2004 and, with any luck, would like to continue doing so for the remainder of my career. The aim is to provide insight to legal topics which continuously crop up with my law firm’s clients. Since many of these legal queries were on the same topic I decided at the time to make it easy on myself and write up fact sheets on a given matter collating the most frequent queries on a topic and replying to them. In time, some of these fact sheets evolved and became the elaborate articles I now publish.

As an example, I wrote back in 2005 a fact sheet on Licence of First Occupation. At the time of publishing, LFO were unheard of and my article was the first to be written in English on the matter. In hindsight it would have been more grammatically correct on my part to call them First Occupancy Licence but the term LFO catched on and I just let it go. You can still find an original version of my fact sheet from 2005 on following this link. Over time this article evolved and grew more complex resulting in this other one: Licence of First Occupation.

Where I am getting at is that some of my articles and blog posts are liked so much that people and companies happen to borrow them from our article’s archive and reproduce them in their own blogs or corporate websites crediting me as the author as well as placing a working link back to the original article, which is just fine by me. In fact, this prompted me to add a disclaimer in every article I write saying just that:

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.

Unfortunately, a minority at times takes a step further crossing the red line, removing my name and cheekily crediting themselves as authors! Despite the famous quote by cleric Charles Caleb Colton, “Imitation is the sincerest form of flattery”, I would argue that imitation is simply profiting from other’s hard work, whilst taking undue credit for it, which I personally find repulsive and is too much to put up with. I for one do not feel flattered; to my mind plagio is simply cold-hearted thieving and I take it very seriously adopting a hardline stance. I also warn in my disclaimer that I may take legal action against offenders when appropriate. I have instigated criminal proceedings against two individuals and one company for this very reason so far.

Besides, before publishing an article I always lodge it first in an Intellectual Property Registry. The purpose of this is to be used as evidence in a criminal case and prove who wrote a text first as the date and time are electronically registered on submitting the text. I was forced to act like this as some people lost the plot stealing content from me left, right and centre. Some articles, like the one I wrote on Bank Repossessions in Spain back in 2007, elicited a huge response and generated over 200 plagios!! This article at the time was the first one to be written in English on how Spanish repossessions work and garnered much attention. You can find an updated version from 2014 here.

Bottom line, sooner or later I am bound to catch all those using my articles and blog posts without authorisation; that is without crediting me as the author. Over the last decade I have caught several hundred websites using them unlawfully, as well as over a hundred lawyers/law firms, both Spanish and British, all of which apologized. Only in 2016 I have been forced to contact several dozen law firms on grounds of plagiarism. I do not relish having to waste my time hounding people and companies when they could make a perfectly licit use of my articles by simply crediting me as the author. It is not as if I charged for my articles, they are free.

Native English speakers may be harder to hound, because, on mastering English, they are able to sneakily change the wording, producing what they think is an ‘original’ work that make my plagiarised articles more difficult to track down on using search engines. This aggravates me even further when I finally get on to them. It should be noted that, from a legal point of view, amending or tweaking written content to fool search engines with a view to conceal a plagio is still regarded legally as plagiarism and only buys them some time; regardless, they will be held criminally liable when found.

As written above, and in line with Spanish Property Insight’s copyright policy, I have no qualms in anyone using my legal articles on their own websites so long as they comply with two simple requirements:

  1. Credit me as the author.
  2. Place a working link back to the original published article (not the website's homepage).

I.e.

Raymundo Larraín Nesbitt

Lawyer, Abogado.

Original article: http://www.en.larrainnesbittabogados.com/articles.php

On complying with the above, there is absolutely no need to previously contact me to request my permission to publish any of my articles. Hundreds of websites, spanning from mortgage brokers to real estate agencies, use my legal articles unmolested and I welcome their use. You can find my articles collated here should anyone wish to use them:

Raymundo Larraín Nesbitt

I will only contact those whom I feel are abusively taking unfair advantage of my hard work by not crediting me as the author and profiting from it or else even going as far as removing me and crediting themselves as the authors of my articles!

 

Examples of correct usage of my articles

 

 

Andalusia´s Holiday Rental Decree

Rental Laws in Spain

New Rental Legislation in Andalusia

Dación en Pago – Handing Spanish Property back to the Bank

How European Regulation affects Foreign Resident’s Spanish Wills

How to Buy Property in Spain Safely

Taxes on Buying Spanish Property

The pros and cons of buying and owning Spanish property through a company structure

Taxes on Selling a Spanish Property

Non-Resident Taxes in Spain

 

Examples of non-sanctioned use of my articles that may lead to prosecution: Spot the Differences!

 

 

  • Multiple plagios by lawyer Juana Mª Giménez Ballesta who removed my name and plagiarized no less than eight copyrighted articles crediting them all to herself and published them on local ex-pat newspapers in Costa Blanca & Almeria. The only word in English she added to my eight articles was 'laywer' after her own name, which she happened to misspell.
  • Plagio by lawyer David Ivars who published several of my copyrighted articles (as well as from other lawyers) under his own name in local ex-pat newspapers in Costa Blanca.

 

  • Escritura – Title Deed Explained

 

Plagio by Freedom Media, S.L. (Paul Sully and Lynne Robinson, Canary Islands). These individuals are hands down the plagio kings of this list with over 8 articles plagiarized across seven issues of their magazine. Not content with plagiarising just one article, this Canary Islands magazine ups the ante and cheekily plagiarises two of my articles on the same issue in 2.013, word-for-word (pages 8 and 16)!!: http://www.freedom4sale.com/downloads/freedom-issue-80.pdf

Plagio: http://lascasitas.eu/escitura.html

Plagio by Sunshine Tropical Properties (Granada): https://www.sunshinetropicalproperties.com/contact/faqs/

My original article (ranking number one in Google): Escritura – Titled Deed Explained – 8th of April 2.013

 

  • Renting in Spain: Top 10 Mistakes

 

Plagio by Freedom Media, S.L. (Paul Sully and Lynne Robinson, Canary Islands). Page 16: http://www.freedom4sale.com/downloads/freedom-issue-80.pdf

Plagio by Living in Spain Org: http://livinginspain.org/renting.php

Plagio by Mr Druvis Dubrovskis from Tenerife All Sales: http://www.tenerifeallsales.com/decide-to-evict-landlords-must-know/

Plagio by yourmove.es : http://yourmove.es/more-information/landlords-guide/

My original article (ranking number one in Google):  Renting in Spain: Top 10 Mistakes – 8th of June 2.011

  • Off-Plan Construction Guarantees – Know Your Rights

 

Plagio by

Original article from 8th of November 2.011 (ranking number one in Google): Off-Plan Construction Guarantees – Know Your Rights

 

  • How to Buy Resale Property in Spain

 

Plagio by Spanish lawyer Miquel Àngel Mas i Colom from DMS Consulting 11th March 2015: http://www.consultingdms.com/en/buy-house-spain-legal-tax-problems/

Original article from the 31st January 2010: Buying Property In Spain. Buying Resale: Avoiding the Pitfalls

Revamped version from the 21st February 2.013 (ranking number one in Google): Buying Resale in Spain

 

  • How to Buy Off-Plan Property in Spain

 

Plagio by

Original article from the 18th April 2.010: Tips on Buying Property in Spain Off-Plan

Revamped version from 8th June 2.013 (ranking number one in Google): Buying Off-Plan in Spain

 

  • Dissolution of Joint Property Ownership

 

Plagio from 2.013 (page 16): http://www.freedom4sale.com/downloads/freedom-issue-79.pdf

Plagio by Amanda Thomas from Spanish law firm Spanish Solutions Legal & Tax (La Zenia, Orihuela Costa):

http://www.spanishsolutions.net/legal-issues-in-spain/dissolution-of-joint-ownership/

Plagio by Spanish lawyer Celso Rodriguez Corral (Corral & Alcaraz Abogados) : http://www.corralalcaraz.com/nie-number-residency/dissolution-of-joint-property-ownership/

My original article from November 2.007: Dissolution of Joint Property Ownership

And a revamped version from 8th May 2.011 (ranking number one in Google): Dissolution of Joint Property Ownership

 

  • Bank Repossessions in Spain

 

Plagio from 2.014 (pages 16 – 18): http://www.freedom4sale.com/downloads/freedom-issue-85.pdf

Original article from 2.007: Home Repossessions in Spain

Beefed up article from 21st February 2.014 (ranking number one in Google): Bank Repossessions in Spain

 

  • Andalusia’s Holiday Rental Laws

 

Plagio Serviturismo Carboneras (2.016, unsigned): http://www.serviturismo-carboneras.com/en/InfoDecanglais.pdf

Plagio by Lets in the Sun: http://www.letsinthesun.com/2016/03/01/holidayrentalslicence/

Plagio by Spanish law firm Lex Legale, Luis Alberto Sánchez (Fuengirola): http://shorttermrentaladvisers.com/decreegeneral/

http://shorttermrentaladvisers.com/short-term-rental-law-andalucia/

Plagio by Spanish law firm Oscar Eguren Fernandez (Marbella): http://mimarbella.es/new-holiday-property-rental-law/

https://www.facebook.com/Oegurenasesores/

Original article from the 8th February 2.016 (ranking number one in Google): Andalusia’s Holiday Rental Laws

 

  • Dacion en Pago Procedure

Plagio by Salud Andreo, Reuters Solicitors: https://www.reuterssolicitors.com/what-is-dacion-en-pago/

Original article from the 21st November 2.008 (ranking number one in Google):

 

  • Licence of First Occupation

 

Plagio (undated, unsigned): http://www.discovercostacalida.info/en/Information-On-Living-In-Spain/Your-House-In-Spain/articles/First-Occupancy-Licence/

Plagio: http://www.spanishsolutions.net/2010/10/cedulacertificate-of-habitation/

Plagio from a Spanish law firm: http://www.cdsolicitors.com/2012/01/19/obtainning-the-first-occupation-license/

My original fact sheet from 2.005: Licence of First Occupation

Article from 29th January 2:009: The Licence of First Occupation Explained

A revamped version from 8th April 2.013 (ranking number one in Google): Licence of First Occupation

 

  • Golden Visa Law Spain

 

Plagio by Drumelia estates Marbella: http://www.drumelia.com/2766-golden-visa-real-estate-investor-visa.html

Plagio Panascho Media (page 53): https://issuu.com/panashcomedia/docs/plm_issue_11_light

Plagio by Spanish law firm: http://www.dfdiaz.com/practice/immigration-law

Plagio by Spanish law firm: http://privatiaconsulting.com/index.php/component/k2/item/21

Plagio by San Sebatian Houses: http://sansebastianhouses.com/english/ENnoticias.html

Plagio by Mr Nuttall, Steve Charles (undated, unsigned): http://www.hondonvalleyproperties.com/pages/EN/listProperties.asp?ACT=New&Custom=166&QN=167

http://www.goldvisasspain.com/our-services

http://www.goldvisasspain.com/faq

Plagio by Investor-Visa UK: http://investor-visa.co.uk/spanish-golden-visa-program-in-2016-news-666/

Plagio by Spanish law firm VCCR Consultores: http://vccrconsultores.com/es/news/18-cambios-en-el-modelo-de-declaracion-de-iva

My original article published on the 8th November 2.013 (ranking number one in Google): Investor´s Guide to Golden Visa Law

 

  • Non-Residents: Six Advantages of Making a Will in Spain

 

Plagio by Amanda Thomas from Spanish Solutions (Orihuela, Alicante): http://www.spanishsolutions.net/blog/legal-issues-in-spain/why-should-you-make-a-spanish-will/

Plagio by Spanish law firm Carbray from 2.016 (unsigned): http://www.carbray.es/making-will-spain/

Plagio June 2.014: http://www.balearic-properties.com/blog/2014/06/make-spanish-will/

Plagio from Spanish law firm Fernando González-Martín & Partners (Marbella): https://www.legalservices.es/english/inheritance-probate-in-spain/will-in-spain/

http://www.spainlegal.es/en/servicios/117-inheritance--probate-in-spain

Plagio by Spanish law firm Aniorte – Laakso (Torrevieja, Alicante) :http://www.aniorte-laakso.com/nuevaweb/sin-categoria/inheritance-law/espanjalainen-testamentti/

Plagio by Spanish law firm Lourdes Fernandez Abogados: http://www.fernandezabogado.es/en/2017/05/20/do-i-need-spanish-will/

Plagio by Spanish lawyer Maria Elena Lino Garcia (Galicia Property Lawyers): https://www.facebook.com/Galiciapropertylawyers/

My original article from September 2.009: Non-Residents: Six Advantages of Making a Will in Spain

A revamped version from 8th August 2.012 (ranking number one in Google): Non-Residents: Six Advantages of Making a Will in Spain

 

  • Nota Simple Explained

 

Plagio by Drumelia estates Marbella: http://www.drumelia.com/2832-nota-simple-property-registry-filing.html

Plagios (undated, unsigned):

http://www.discovercostacalida.info/nota-simpla/

http://www.answers.uk.com/services/spainproperty.html

Plagio by Naranja Properties real estet agency (Costa Blanca): http://naranjaspain.es/homes-for-sale-in-arenales-del-sol-costa-blanca.html

Original article from 8th of April 2.013 (ranking number one in Google): Nota Simple Explained

 

  • Reclaiming back your off-plan Bank Guarantee deposits: Supreme Court Rulings

 

Plagio by Brenda McAllister from Spanish law firm Legal Logic Abogados (Deposit Reclaim Spain): https://depositreclaimspain.com/2016/06/17/high-court-rulings/

Original article from 8th April 2.015 (ranking number one in Google): Supreme Court Rulings on Bank Guarantees

Spain's New Mortgage Law

Plagio by Elena Lino (Galicia Property Lawyers) posted on the 24th April 2019: https://www.facebook.com/pg/Galiciapropertylawyers/posts/

Original article copyrighted 11th May 2019: Spain’s New Mortgage Act

5 clauses to be mindful of

Plagio by Elena Lino (Galicia Property Lawyers) posted on the 11th May 2019: https://www.facebook.com/pg/Galiciapropertylawyers/posts/

Original article copyrighted 24th April 2019: 5 clauses to be mindful of

Conclusion

Plagiarising content in today’s world of internet is downright stupid (as in flat electroencephalogram stupid). Catching people is as easy as copying and pasting chunks of my own articles into Google’s search engine and the plagiarized text will surely pop up.

Why risk getting tangled in criminal prosecution when you can simply credit the author and move on? Beats me every time. 

 

“Well, me morals is low. But me ethics is high.” – Cynthia Payne.

Cynthia Payne was an English Madame and party hostess who made the headlines in the 1970s and 1980s, when she was acquitted of running a cathouse in a southwestern suburb of London.

 

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.

2.010 and 2.016 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Inheritance Tax Novelties in Andalusia & FAQ on IHT in Spain

Raymundo Larraín Nesbitt, September, 8. 2016

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of September 2016

 

 

 

 

 

Introduction

I have split my article in two sections.

The first one deals with the recent legal changes to IHT in Andalusia brought about by the Junta. I had written an inheritance tax article earlier on this year where I classified the IHT ‘tax friendliness’ of regions in Spain. Andalusia was a tier 2 region (IHT-unfriendly). In my article I explained in detail the ongoing trend in Spain to reduce the IHT burden championed by some political parties. Following the newly introduced batch of positive changes in IHT in Andalusia I may now have to go back and review my classification, moving Andalusia to a tier 1 region (IHT tax-friendly).

The second part of my article is a straightforward FAQ on what to do when someone passes away in Spain. Lots of questions arise when a loved one dies; the purpose of this short FAQ is to – hopefully – address the most common ones.

 

IHT Changes in Andalusia

 

There are two batch of laws. The first one came into force last August and the second one will be effective as from the first of January 2017. I will only focus on IHT changes that affect the majority of residents and non-residents.

  1. August's changes:

  • Main (family) home: Inheritance tax threshold increased. Before this change there was a blanket maximum (national) reduction in value per inheritor of €122,606. Any amount above was taxed. Applies only to beneficiaries which were already living in the family home at the time of death (all year round). This has now been replaced by a sliding scale:

 

Main home value up to €123,000 (always per inheritor) are now 100% IHT exempt.

Main home values > €123,000 < €242,000 follow a sliding scale with an exemption that varies between 99 and 96%.

Main home values > €242,000 will have a flat 95% IHT exemption.

As can be gleaned from above, this translates into a 95% IHT exemption for main homes over €242,000 (per inheritor) which is a much welcome respite for inheritors.

  • The above only applies if beneficiaries do not sell the property within the next three years from the death. The timeframe has been reduced as it was five years before.

 

To benefit from the above you must be one of the following:

  • Surviving spouse.
  • Descendants (natural or adoptive children, grandchildren).
  • Ascendants (parents, grandparents).
  • Exemption also applies where the beneficiary is a more distant relative over the age of 65 and lived the previous two years with the deceased.

 

2. Legal changes as from the 1st of January 2017:

  • Nil rate band increased. Before this change the inheritance tax-free allowance (per inheritor) in Andalusia was < €175,000. No IHT was charged below this threshold. As from next year, this allowance is increased to €250,000 per inheritor.
  • Another positive change, related to the one above, has been introduced on inheriting estates up to €350,000. There is now a blanket allowance on the first €200,000. The significance of this is better understood with an example. On inheriting say €300,000, the first €200,000 are exempt. You would only pay IHT on the remaining 100k.

 

This is a welcome respite as before you had to pay the full IHT on any excess over the threshold. This created serious tax anomalies i.e. if the excess over the tax-free allowance was as little as by only one euro, the Tax Office made you pay the IHT liability on the full amount (on the whole €175,000) as you did not qualify for the tax exemption – which was bonkers.

This new change strives to correct this much criticized injustice allowing for a greater degree of flexibility. It will greatly reduce the inheritance tax bill for all those inheriting above the tax-free allowance of €250,000 (new ‘soft’ threshold) but below the €350,000 cap (new ‘hard’ threshold).    

 

Spanish Inheritance Tax FAQ

 

  1. Is it feasible to do any of the admin ourselves or will we have to hand it all over to a solicitor?

Inheritance in Spain is a convoluted process that requires the input of tax experts. This is further compounded by the fact that besides a national law each of Spain’s 17 regions have devolved competencies on the matter and have passed their own laws creating a legal labyrinth.

What you can do on your own is to collate all the required legal paperwork that will be asked by your appointed expert e.g. notarised copy of last will, original death certificate etc.

  1. My father passed away. Can I simply change the (Spanish) deeds over to my name? How long does this take?

No, you cannot.

You first need to appoint a legal expert who will handle the Spanish side of the inheritance. Once Spanish inheritance tax has been filed and paid can you then change the ownership in the deeds over to your own name.

On average you are looking at six to twelve months overall until the deeds are in your name; providing a Spanish will was made. If no Spanish will was made then in all likelihood the whole procedure will be in excess of a year.

  1. How do we arrive at a probate value, is there a state website with guide prices based on the square footage or yearly tax paid, or is it done by an estate agent?

There is no national website and no, estate agents do not assess the value for IHT purposes. It is actually the Tax Office that does this.

If the beneficiary is resident in Spain, it will be the regional tax office where the majority of the estate is located that does this. If the beneficiary is non-resident, then this assessment is carried out in Madrid.

  1. Can you tell me how the value of a property is assessed for inheritance tax purposes? Is it what you paid for it or is it the market value at the time of death?

 

The value of the estate for the purpose of calculating the IHT liability, is the net value acquired by each inheritor. All charges and liabilities must be deducted first.

The Tax Office values inherited real estate according to the highest amount of the following three:

  • Cadastral value of the property (revised).
  • Acquisition value of the property (what you paid for it).
  • Tax Office’s assessed fiscal property value.

 

In practice it will be close to the market value but usually (well) below it.

  1. I am skint. Can Spain’s IHT be paid in instalments? Can it be paid off the estate itself?

Yes, Spanish inheritance tax can be paid in instalments. You must request it within the first six months as from the time of the death.

No, Spanish inheritance tax cannot be paid off the estate itself. You must first pay IHT and only then can you change the ownership to your name and dispose of it as you see fit.

Conclusion

Succession in Spain is a complex matter. I strongly recommend appointing a Spanish expert to help you wade through the admin minefield.

To get you started, I advise you read some (or all!) of my related articles below. This will give you a leg up when you start your dealings with a tax expert as the legal jargon will already be familiar.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in inheritance, taxation, litigation and conveyancing. 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 services Larraín Nesbitt Lawyers can offer you

 

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.

2016 © Raymundo Larraín Nesbitt. All rights reserved.

 

 

... Read more

Decree 218/2005. The one about rentals and properties for sale in Andalusia

Raymundo Larraín Nesbitt, August, 8. 2016

Regular legal-contributor Raymundo Larraín Nesbitt explains Andalusia’s Decree 218/2005 law that regulates the information real estate agencies and developers need to provide to consumers on renting or selling properties, before any deposit is paid, in the region of Andalusia.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of August 2016

Original article: 29th August 2.008

 
 
Photo credit: Idealpropertyspain.com

 

Introduction

This month’s article features a law that was passed in 2005. It acts as a gentle reminder of an article I published well over a decade ago. The reason I republish it this month is because sales are picking up again and we are at the peak of the rentals season.

The concept of Documento Informativo Abreviado (DIA, for short) pervades this law and is the cornerstone of this decree. It is the Spanish equivalent of the UK’s HPI, Home Purchase Information, or Seller’s pack.

DIAs will contain different information contingent on whether we are dealing with property for sale (off-plan or resale) or else a rental.

The idea behind Decree 218 is that when a consumer (tenant or buyer) walks into a developer’s sales office, or else a real estate agency (whoever is marketing the property), they are handed key legal information in the shape of a detailed booklet (DIA) before any deposit is paid, which proves most useful.

I have structured my article as a FAQ and use bullet points for ease of comprehension rather than list and comment its sections one by one which would be rather tedious and off-putting.

Where is it enforced?

Only in the region of Andalusia. All properties located in that region are subject to it.

What properties does it apply to?

Properties being rented or sold (whether off-plan or resales).

What does it rule on?

It rules on the documents and information that is mandatory to be supplied to prospective tenants and property purchasers (consumers) on the sale and let of properties located in the autonomous region of Andalusia.

Basically this law is part of the Consumer’s legislation which has been enacted to further protect and ensure the rights of all consumers in Andalusia. It complements the national Consumer Law embodiment.

Who does it apply to?

It applies to all professional intermediaries such as Real Estate Agencies, sole Estate Agents and developers on selling and letting properties located in Andalusia.

Exclusions

It does not apply in administrative, public or judicial property auctions.

It only applies to main homes. So plots of land and commercial properties are excluded.

Who is the beneficiary of this law?

Consumers at large and the broader real estate market ultimately. Would-be buyers and long-term tenants of properties in Andalusia will do so in a safer legal framework.

Where can I find a copy of this law in Spanish?

Here, just follow this link.

Sorry, no English version.

 

Brief Legal Overview of Decree 218/2005

 

 

It is a fairly short law of only 15 articles.

The information supplied must cover the following points

The following is shared amongst all three DIA classes.

  • Specify if the dwelling is under construction (off-plan) or else is a resale.
  • Dwelling’s exact location.
  • Developer’s identification details.
  • Number of dwellings built.
  • Number of bedrooms, detailing the usable surface each have.
  • If the sales price is mentioned then it is mandatory that all taxes and other expenses are included in a detailed breakdown alongside the sales price.
  • If the rental is mentioned then it is mandatory to supply as well the community fees for which the property is liable for. You can read further on Community of Owners in my article.
  • When buying off-plan property, and stage payments are involved, it is mandatory to include in the contract that said amounts will be secured under law, the name of the bank, number of the insurance policy or bank guarantee, the existence of a special bank account where the funds will be allocated and the client code. It must be specified if the funds are handed over as a stage payment or else as part of the price and as a deposit to strike the property off the market.

 

The Documento Informativo Abreviado (DIA, for short)

Developer’s or intermediaries, such as estate agents, are obliged to deliver free-of-charge in Andalusia a copy of a DIA for every property on their books.

DIA’s will include the following information:

  • Full name and social address of the developer as well as the company registrar details or that of any physical or company that is acting as an agent.
  • Details of the architect, and construction company.
  • Detailed and scaled plan of the development with a minimum scale of 1:100
  • Usable surface of the dwelling and its annexes (such as garage and store rooms).
  • Physical description of the dwelling and its annexes as well as that of the utility connections (water, electricity, gas, sewage grid etc.) and fire protection.
  • General description of the building and or development, the communal areas, and the available services.
  • Memorandum of Quality (memoria de calidades) which gives a detailed breakdown of the materials used in the construction.
  • Dwelling price as well as the associated expenses and applicable taxes, means of payment and deadlines to comply with them.
  • Breakdown of expenses and taxes available at the consumer´s sole request.
  • When stage payments are involved (applies only to off-plan or new-build property) it is mandatory to mention the existence of a bank guarantee.
  • Mention of the plot of land’s Title deed, of any leans and encumbrances on it and the Building Licence under which they are entitled to build on site.
  • Mention of the availability of a copy of the Building Licence at the sole request of a consumer.
  • Mention of the stage of construction of the development.
  • Mention of the expected delivery date of the property, it’s annexes (garages, store rooms) as well as those of the development’s communal areas. Said deadline must be referred to quarterly within a calendar year.
  • Mention of liens and charges on the dwelling or annexes or it’s access points (i.e. a Right of Way or Right of Views).
  • Mention that the consumer does not have to pay for not taking on the developer’s mortgage if he decides to take another. More on this in my article Abusive Mortgage Clauses.
  • Consumer’s right to elect a Notary on whom one cannot be imposed by the vendor. More on this in my article Abusive Mortgage Clauses.
  • The capacity for both parties to compel each other to complete the contract before a Notary Public.
  • The right of a consumer to be handed free-of-charge a draft of the Private Purchase Contract to be signed for their perusal (applies only on buying).
  • Place where all the documents included in this list are available for inspection at the Consumer’s sole request.
  • Place, date and signature.

 

  1. DIA for Off-Plan properties

Besides including all the above, a full mention of all the administrative licences available must be included, chiefly:

  • Building Licence (BL).
  • Licence of First Occupation (LFO). More on this in my detailed article Licence of First Occupation (I cannot understate the importance a LFO has to the point of advising buyers not to complete on an off-plan property without it).

Other ancillary documents that must be supplied alongside the key ones above are:

  • Property’s delivery date (contractually binding).
  • Land Registry details of the properties if available as well as mention of any liens and encumbrances.
  • Community By-laws (which further develop Spain’s Commonhold Act AKA as Horizontal Property Division Law). You can read further in my detailed article  Community of Owners in Spain.
  • Internal community rules (not to be confused with community by-laws).
  • Libro del Edificio (concrete specifications on the building itself).
  • Ten-Year Building Insurance (Seguro Decenal). You can read further on the matter in my detailed article Off-Plan Construction Guarantees.
  • Energy Performance Certificate.

 

  1. DIA for resale properties
  • Property address.
  • General property description.
  • Sales price.
  • Construction year.
  • Community of Owner’s quota (if applicable as not all properties are included within a Community of Owners).
  • Mention of community of owner´s insurance policies (if applicable).
  • Mention of utilities which are connected at the time.
  • Certificate proving vendor’s IBI tax compliance.
  • Energy Performance Certificate.

 

  1. DIA for Rentals
  • Name, social address and Company Registrar details of the landlord or estate agency acting as intermediary.
  • Total built surface of the dwelling and that of its annexes (i.e. garage and store rooms).
  • General description of the property to be let including available utilities as well as fire protection devices.
  • Furniture inventory, kitchen appliances etc. found within the dwelling.
  • General description of the building or development where the property is located.
  • Specific mention of the agreed rental as well as that of the annexes, payments terms etc.
  • Spain’s Rental Law (LAU) obliges the tenant to a one-month deposit as well as the inclusion of any other guarantees the landlord may deem fit. More on this in my detailed article Urban Rental Act in Spain.
  • Full disclosure of the Estate Agency’s commission for their professional service as intermediaries.
  • Mention the property complies fully with all administrative licences mandatory under law (i.e. BL, LFO).
  • Availability of the Community of Owner’s By-laws at the tenant’s sole request.
  • Mention on how the contract will be formalised.
  • Community of Owner’s administrator contact details
  • Internal community rules (not to be confused with Community by-laws)
  • Energy Performance Certificate.
  • Place, date and signature.

 

The Rental DIA can be supplied prior to formalising the rental contract at the consumer’s sole request free-of-charge and in any case it is compulsory to supply it simultaneous to the signing of a tenancy agreement.

Miscellaneous

Art 12.- All premises in which a professional activity of intermediation, on selling or renting property (i.e. Estate Agents or developers), must have a very visible sign with the following message in Spanish: Consumers have a right to be handed over a copy of their dwelling’s DIA. This sign will be placed alongside the one that informs consumers that a Claims & Complaints book is available on request.

Art 13.- All Private Purchase, Sale & Let Contracts must comply fully with Royal Decree 171/1989 of Consumer Protection regarding information that must be made available in conveyance & property lets.

Art 14.- Consumer bodies will enforce this law. The Junta de Andalusia’s Inspectors can, without prior warning and without any need of identifying themselves previously, verify that an establishment open to the public is complying fully with all the obligations set forth in this Decree 218/05.

Art 15.- Fines may be imposed on non-compliance.

The Decree’s Annexes

I won’t go into detail on these as it only affects intermediaries, not consumers. Basically the decree sets out six different annexes which must be used by developers and real estate agencies as templates on marketing a property. So for example annex 3 is the template dealing with new homes (nine pages long!) and annex 6 is the template on rentals (five pages long).

Professional intermediaries must populate these templates to produce a fact sheet which is then handed over to a consumer in his DIA or Home Information Pack.

Conclusion

A well-meaning law which unfortunately falls flat on its face as in practice it is snubbed by many because it adds considerable red tape.

I am not only referring to intermediaries but to owners themselves who must supply the former with a long list of documents so these can elaborate a ficha informativa or fact sheet on a property following the templates in the decree´s annexes. This ungrateful task can prove to be quite laborious and time-consuming (as it must be done for every property on their books).

Suffice is to say that this decree is widely held as unpopular.

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, 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 services Larraín Nesbitt Lawyers can offer you

 

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.

2.008 and 2.016 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Spain’s Non-Dom Tax Scheme

Raymundo Larraín Nesbitt, July, 8. 2016

Regular legal-contributor Raymundo Larraín Nesbitt tells us about a relatively new tax scheme the Spanish Treasury quietly introduced last year that works similarly to the UK’s popular non-dom tax arrangement, and which could make Spain a more attractive destination for wealthy expats when word of this pilot scheme gets around.

Credit photo: Flickr, by Phillip Ingham

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of July 2016

 

 

Introduction

The Spanish Tax Office quietly, albeit boldly, introduced in 2015 a tax scheme inspired by the popular UKs non-domiciled tax regime which has proven most successful at attracting foreign investments (particularly in the Greater London area). It is a lukewarm attempt to attract high-achievers and create wealth fostering job creation. It is popularly known as Beckham's Law.

Surprisingly, this pilot initiative has flown under the radar as I do not recall having read a single article published on the matter. I believe it merits exposure and should be made known to our large expat community as the savings on taxes are quite significant for the privileged few who are lucky enough to qualify.

Right off the bat I should make it clear that the criteria to benefit from it is fairly restrictive and it is geared at high-earning individuals who plan to relocate to Spain for professional reasons. Which means that most expats will not qualify. It is popularly dubbed as Beckham's law.

Without further ado I analyse succinctly what it consists on and how to benefit from it. I will structure it as a FAQ for ease of comprehension.

Who is it aimed at?

This law is tailored to cater for senior corporate individuals (think of a multinational relocating a top executive in Spain). These over-qualified individuals are the ones that will reap the tax benefits of the generous provisions set out by this law. But other cases, such as high-profile artists, are also included.

Exclusions

Professional athletes, such as football players, are barred from making use of it.

The Tax Benefits

In a nutshell, this tax scheme allows expat taxpayers to make spectacular savings on paying Income Tax in Spain. If you opt into this scheme you stand to benefit from both income derived in Spain as well as any other worldwide income.

  • Spanish Income. Unlike in the UK, where you negotiate with the HMRC to pay a fixed annual sum, in Spain the first €600,000 earned from a source within Spanish territory will be taxed at a flat rate of 24%. The remainder will be taxed at 45%. Under normal circumstances resident taxpayers in Spain pay 45% on earnings of €60,000 or above. As can be surmised, even for earnings whose source is in Spanish territory, the tax savings are huge.
  • Worldwide Income. But it is here where this tax scheme truly shines. Spanish Tax Authorities will only tax you on your income derived within Spanish territory. Any other source of worldwide income is tax-exempt (just like with the popular UKs non-dom tax scheme). Under normal circumstances, resident taxpayers in Spain should pay for their worldwide income. Moreover, other countries cannot tax you on your worldwide income as for all intents and purposes you have opted to become a Spanish tax resident. You can claim double-taxation relief which negates other countries’ claims. This advantage offers a hugely attractive prospect for those that hold substantial overseas earnings and interests.
  • Best of both worlds. On opting for the scheme, expats will be treated as if they were resident taxpayers but in reality it will be a legal fiction whereby they will benefit as if they were still non-resident taxpayers. So you in fact get the best from both worlds.
  • Five years plus one. It applies on the fiscal year of relocation as well as on the following five years (total up to six years).

 

Who can apply?

  • Expats relocating to Spain as a result of a professional contract. The contract is a sine qua non requirement to opt into this scheme.
  • High-earners.
  • Not to have resided in Spain within the previous 10 years.
  • No earnings derived from a Permanent Establishment in Spain.

 

When does it apply?

It is time-limited and applies on the fiscal year of relocation as well as on the following five years (up to six years).

Timeline to apply?

Six months as from the start of the economic activity or as from enrolling in Spain´s Social Security (equivalent to the UKs NHS).

Fall from Grace

Unfortunately, this initiative falls short from its UK counterpart for a number of reasons What keeps it from being great in my mind is the fact that the Tax Office requires that the relocation comes as a result of a job offer. This leaves out entrepreneurs which are hands down the greatest source of wealth and job creation through their drive and ingenuity. This, coupled with the fact that it is time-limited, and that the tax is not capped for income derived in Spain holds it back in my opinion from being stellar.

Conclusion

The Spanish Tax Office should be heartily congratulated on offering such tax incentives to high-achievers. This type of tax scheme attracts talented individuals, fostering wealth and jobs at a time where it is much needed in Spain.

It is most certainly a step in the right direction and I for one hope the AEAT continues to venture down this road. Kudos to them.

If you plan to relocate to Spain as a result of a work commitment and happen to earn a substantial amount you may want to look into this tax scheme. Unless you enjoy overpaying taxes that is; bless your heart.

“If you fail to plan, you plan to fail.” – Benjamin Franklin.

Founding Father of the United States. Exceptionally gifted scientist, inventor, diplomat, writer, printer, postmaster and political theorist. Even politician in his spare time; nobody’s perfect.

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation, 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 services Larraín Nesbitt Lawyers can offer you

 

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.

2.016 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more
13
Colegio abogados

RAYMUNDO LARRAIN NESBITT ABOGADOS
COPYRIGHT 2016

Brithish Chamber