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


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Andalusia’s new tax changes for 2022

Raymundo Larraín Nesbitt, January, 21. 2022

Lawyer Raymundo Larraín briefs us on the new tax changes in force in Andalusia as from 2022. The landmark tax reduction is so significant that it has ushered in a new era in wealth-planning.

Marbella-based Larraín Nesbitt Abogados (LNA) has over 19 years’ taxation & conveyancing experience at your service. We offer a wide range of over 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record of successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

 Inset photo: La Alhambra, Granada

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
21st of January 2022

I’m going to cut to the chase on this one because, in all honesty, it’s growing old reporting every month on the continued changes in taxation in Andalusia (lowering them one month after another). I will be focusing mainly on the tax changes dealing with buying & selling property, inheritance, and income tax. But the scope of these changes run broader and deeper.

Any reader who follows us regulalry, will have noticed the large influx of tax articles featuring Andalusia over the last three years. This is because Andalusia’s new regional government is hell-bent on lowering taxes across the board and we are immersed in what can only be described as a ‘tax revolution’.

After almost 40 years of high taxes under the previous Administration, the newly-appointed Authorities have reduced taxes as much as is legally possible – within the constraints of devolved competencies – and we are all very grateful for it.

Changes below are a recap from law 5/2021, which came into force as from the 1st of January 2022. Please note I will not mention any previous tax changes (such as the key suppression of inheritance tax in Andalusia approved in 2019) only new tax changes.

Wealth Tax (Patrimonio)

  • Tax-free allowance increased to €1,250,000 per taxpayer with a physical disability equal to or greater than 33% (was €700,000).
  • Tax-free allowance increased to €1,500,000 per taxpayer with a physical disability equal to or greater than 65% (was €700,000).
  • Improved wealth tax sliding scale:
Tax base

 

Euros

Quote

 

Euros

Remainder

 

Euros

Tax rate

 

%

0 0 167.150,00 0,20
167.150,00 334,30 167.100,00 0,30
334.250,00 835,60 334.250,00 0,50
668.500,00 2.506,85 668.500,00 0,90
1.337.000,00 8.523,35 1.337.000,00 1,30
2.674.000,00 25.904,35 2.674.000,00 1,70
5.348.000,00 71.362,35 5.348.000,00 2,10
10.696.000,00 183.670,35 Onwards 2,50

Personal Income Tax (IRPF)

  • Tax allowance on buying main home 5% for young people (under 35 y.o.)
  • Tax allowance on long-term rental 15% (capped at €600/year).
  • Improved regional sliding scale: *
Tax base

 

Euros

Quote

 

Euros

Remainder

 

Euros

Tax rate

 

%

0,00 0,00 12.450,00 9,50
12.450,00 1.182,75 7.750,00 12,00
20.200,00 2.112,75 15.000,00 15,00
35.200,00 4.362,75 24.800,00 18,50
60.000,00 8.950,75 onwards 22,50

*works in tandem with national scale

Inheritance Tax (ISD)

  • 99% tax reduction on acquiring a main home for Groups I and II (irrespective of value).
  • 99% tax reduction on acquiring business/company for Groups I, II, and III.
  • Tax allowance for Group III increased to €10,000 (was €8,000)
  • Additional tax allowance of €250,000 for inheritors with disability greater than 33%
  • Additional tax allowance of €500,000 for inheritors with disability greater than 65%
  • Group III: top marginal rate is reduced to 45% (was 70%, top rate applies only in the most extreme cases, when millions are inherited).

As a gentle reminder:

Group I: Natural and adopted children under 21.

Group II: Natural and adopted children over 21, spouse, registered civil partnerships, parents, adoptive parents, grandparents, and great-grandparents.

Group III: Relatives in second and third degree: in-laws, brothers/sisters (siblings), nephews/nieces, aunts, and uncles.

Gift Tax (ISD)

  • 99% tax reduction on parents gifting money to children to buy a main home.
  • 99% tax reduction on parents gifting the main home to children.
  • 99% tax reduction on parents, or family members, gifting capital to set up a business (capped at €1,000,000).
  • 99% tax reduction on parents gifting money to children.

Property Transfer Tax (ITP)

  • 7% flat rate (irrespective of property value)
  • 5% for young families (under 35 y.o.) on buying a main home (capped at €150,000)
  • 6% on buying a main home (capped at €150,000)
  • 5% on buying a main home and with disability (capped at €250,000)
  • (long list of case-per-case reduced rates goes on and on) etc

Stamp Duty (AJD)

  • 1.2% flat rate on buying property (off-the-plan)
  • 1% on buying a main home (capped at €150,000)
  • 0.3% in rentals

Conclusion

These tax changes are as good as it gets, period.

Andalusia’s regional government continues with its unabated trend of lowering taxes across the board.

The tax improvements are so prominent, they have turned Andalusia into an ultra-low taxation area.  Andalusia and Madrid now have the lowest taxation in all of Spain.

The improvements foster foreign investments in Spain, and in particular in Andalusia.

These pivotal tax changes have not gone unnoticed by non-residents. In a 2021 survey, 12,000 expats from 174 countries, voted Malaga as the world’s second best place to work & live in.

If regional politicians continue doing such a stellar job, I won’t have anyone left to throw darts at, sigh.

 

At Larrain Nesbitt Abogados we can assist you buying & selling property in Spain and deal with its taxation. Ask us.

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyance, taxation, inheritance, residency 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.

Legal services available from Larraín Nesbitt Abogados:

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Originally published in Spanish Property Insight: Andalusia’s new tax changes for 2022

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No politician was harmed on writing this article. VOV.

2022 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Spanish residency permits and tax residency

Raymundo Larraín Nesbitt, January, 21. 2022

Marbella-based Larraín Nesbitt Abogados (LNA) has over 19 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists has a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21st of January 2022

A common misunderstanding on applying for Spanish residency is the matter of tax residency.

I have witnessed how several companies and so-called ‘advisors’ are misselling residency permits in Spain without property explaining and disclosing to applicants the tax implications of their decision.

I’ve written this short article to cast some light on this and clarify once for all this topic.

Spanish residency and tax residency

Although – technically – it is true that admin residency and tax residency are two separate legal concepts, the fact of the matter is that eventually they go hand in hand in most cases.

As a general rule the following applies:

Spanish residency permit = Spanish tax residency

Without going into detail on the whys and whynot’s, the reason is because as a staple requirement all visas in Spain require on renewals you categorically prove you have lived in Spain long term; defined as spending over 183 days within a calendar year in Spanish territory. The tax implication of this is that it automatically triggers tax residency in Spain.

Example: Mr Smith applies and attains a Non-Lucrative Visa in 2021. On the following year (2022), he must file personal income tax in Spain because he has now become a Spanish tax resident.

If Mr Smith challenges the tax residency status on grounds that he did not spend over 183 days in Spain during 2021, on his visa renewal, he will be stripped of his residency permit.

In other words, they go hand in hand. You cannot have one without the other or you visa renewal will be turned down.

Are there any exceptions to this general rule?

Yes, it’s a special type of residency permit called Golden Visa (investor visa).

A GV allows its permit holder to bypass the 90/180-day rule. It also allows its holders unfettered access to Spain. They may enter and leave as they please (even circumventing Covid restrictions).

Attaining a Golden visa, unlike every other visa in Spain, does not automatically make you tax resident in Spain and the reason being is because renewals are not tied to proving you live in Spain (which triggers tax residency), but rather that you have maintained the investment over time in Spain.

This nuance is extremely important and goes on to explain why Golden Visas are so special and why they are so sought after by affluent applicants.

As a recap, Golden Visas allow you:

  • To bypass the 90/180-day rule
  • Unfettered access to Spain
  • Do not automatically make you tax resident in Spain (unlike every other visa)

 

LNA has a 100% track record attaining Spanish residency

 

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

At Larrain Nesbitt Abogados, we have assisted hundreds of EU and non-EU nationals to successfully attain a Spanish residency permit.

Interested? Come and speak to Larraín Nesbitt Abogados’ friendly staff who will be pleased to guide you through the different residency options, choosing the one that appeals to you most. Your family’s success is only one call away: (+34) 952 19 22 88.

Residency services available from LNA:

 

Related visa 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.

2.022 © Raymundo Larraín Nesbitt. All Rights Reserved.

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8 reasons why you should invest in Andalusia

Idealista, January, 21. 2022

Idealista is Spain's leading online property portal, ranking number one. It was recently sold for over 1.3bn euros to EQT group.

It was founded in 2000 by three partners, brothers Mr. Jesús and Fernando Encinar, and by Mr. César Oteiza. It offers millions of properties for rental and sale in Portugal, Italy and Spain.

Following Nielsen audited ratings, it has over 144 million pages visited every month, 5 million unique users, 300 employees, and an annual turnover of over €40mn.

Idealista kindly published our article in exclusivity on their website in five languages, no less!: 8 reasons why you should invest in Andalusia

English    French     German    Italian 

Polish     Portuguese   Romanian   Russian

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