Sotogrande, the pearl of Cadiz

Raymundo Larraín Nesbitt, June, 6. 2022

Lawyer Raymundo Larrain sheds some light on what makes Sotogrande special and why you should buy property there.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted. 

Inset photo: The 40th anniversary of Sotogrande’s Gold Cup where team Las Monjitas defeated team Ellerston 11-9. Rider: Fran Elizalde

 

 

 

8th of June 2022

Introduction

Continuing on last month’s trend (Where to buy property on the Costa del Sol), I thought it would be appropriate to write on this ‘hidden’ gem. Sotogrande doesn’t really need an introduction - much less from me - but I need to begin my article somewhere, and the beginning is always a good place to start.

Sotogrande, to many of us this word evokes images of unspoiled sandy white beaches, unending forested areas, superb views at dusk against a dashing blue sea, free roaming horses on green fields, and luxury secluded villas. To be honest, every time I’m there, it strongly echoes the Marbella of the 70’s I once knew, unblemished and blissfully underdeveloped.

Sotogrande has a very low building density by rapport to neighbouring towns, with very few constructions actually reaching two stories high. The plots of land are huge, allowing nature to take over. It belongs to the Andalusian province of Cadiz. Meaning all the lenient tax breaks and allowances I have collated in previous taxation articles apply, making Sotogrande an area of ultra-low taxation.

Sotogrande, by Spanish standards, is a very unusual place and that is good! If you take a moment to drive through its wide avenues, you can’t help but notice it bears an uncanny resemblance to a US leafy suburb; you would be forgiven if you thought you were in the US, and you would in fact be right. Col. Joseph Ralph McMicking, a retired US serviceman, bought in the 60’s several adjacent plots of land and set about developing them devising a huge housing estate reminiscent of Boston.

As a result of his ambitious overarching vision, through sheer force of will, this forerunner developed a very exclusive estate that stretches lazily from the coast all the way up to the gentle mountain slopes, adjacent to land earmarked by the Spanish Army where building is banned. This results in a huge estate that is cleverly surrounded by green belt land. This sprawling estate is dotted with lakes, lush forested areas, 18-hole golf courses (such as the Real Club Valderrama, which hosted the Ryder Cup in 1997), and a top private school. Sotogrande is renowned for its beautiful and elegant polo matches during the elegant summer soirees.

If you are the kind of person that shies away from the bling and glitz of sister upcoast resorts, and rather place value in discretion, choice, and exclusive gated communities that keep to themselves, Sotogrande is right up your alley. Sotogrande’s game, unlike other tacky neighbouring coastal resorts, is not about distasteful antics showing ostentatiously what you have, but rather, about enjoying what you have. It is home to discreet affluent individuals from all over the world.    

Sotogrande is split broadly into three distinct areas, which I’ll gloss over.

Sotogrande Bajo

This is the part of the estate that borders the coastline. You will find lavish mansions built in huge independent plots of land. Its wide sprawling avenues, with green sidewalks that make them distinctive, are dotted with impossibly tall palm trees that look taken straight out of a postcard from Miami Beach. What they lack in views is compensated by vast plots of land.

Sotogrande Alto

This is the part of the estate that sprawls over the gently rolling green hills with commanding views over the Atlantic coastline and Gibraltar. Impressive views are guaranteed at dawn & dusk. No palm trees here, it’s a leafy suburb. A mantle of evergreen lush vegetation covers the ground whilst a mature canopy, that belongs to the Atlantic climate, provides a welcome respite of shade. You will find multiple impressive gated estates within, such as La Reserva, where discretion is cherished, mum’s the word.

La Marina de Sotogrande

Strictly speaking, it’s located within Sotogrande Bajo. But it has such a distinctive personality, that it warrants being featured as its own space. This is where the port is located, Sotogrande’s main social hub and its vibrant heart. Its unusual bright pastel colours, Moustique like, catch visitors’ eyes. Most homes boast their own private moorings, door-to-door, much like in Venice! The marina is lively and vibrant, dotted with glam cafes and trendy restaurants that cater to all tastes where one can mercifully rest his weary bones basking in the warm sunlight, sipping a coffee, whilst watching life gently passing by; with younglings amorously courting each other, against a backdrop of sailboats and luxury yachts, in a never ending cycle that only gets interrupted, from time to time, by the bickering of seagulls flying overhead.

Sotogrande International School (SIS)

To close, I need to mention a school that was our feared sports rival when I studied in Marbella a long, long time ago.

Nestled high atop the mountains, surrounded by tall pine trees, lays a school with commanding views of the coastline (you’ve got to see the view at the crack of dawn, simply gorgeous) that is one of the finest private schools in all of Spain, directed by Mr. James Kearney.

Once again, I don’t really need to introduce what in time – and by its own merits – has become a renowned academic institution. The syllabus followed is the International Baccalaureate. The school attracts students from all over the coast, not only from Sotogrande, that flock to receive a privileged education from a passionate and dedicated faculty. They have recently built dorms so students can reside on campus during the academic year.

A special shout-out to teacher Mr. Carmelo (Tino) Sanchez, Head of IT, whose indelible passion for teaching his students cutting-edge ‘engineering’ courses, designing and developing all types of ingenious aquatic devices in tandem with local companies, is so advanced that it borders a university course.

Because of its superb sports facilities and installations, which they continuously expand upon through the approval of its ever-watchful Board, it generously hosts every year sports events that gather schools from the area, and beyond. I myself attended several as a kid, representing first Swans School, and later on Aloha College. But we, the underdogs, held our own, and even managed to beat’em at some events, heh!

Did I mention the school’s beautiful views? Simply breathtaking!

Sotogrande, heaven on earth. Sans soucis.

 

My main language was music, and my teacher was nature.”  Vangelis

Evángelos Odysséas Papathanassíou (1943 – 2022). Was a Greek musician, composer, songwriter, and producer of electronic orchestral music. He was best known for his Academy Award-winning score to the spiritual Chariots of Fire (1981), sci-fi noir films such as the mythical Blade Runner (1982), Missing (1982), Antarctica (1983), 1492: Conquest of Paradise (1992), and Alexander the Great (2004). He also left a mark for his masterful use of music in the 1980 documentary series Cosmos: A Personal Voyage by Carl Sagan. Vangelis was one of the greatest modern composers of our time whose magic music will echo down the ages, standing the test of time; a hallmark reserved only for a handful of artists.

 

 

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.

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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Guide to buy property in Spain

Raymundo Larraín Nesbitt, May, 3. 2022

Larrain Nesbitt Abogados publish a brief guide on how to buy property in Spain.

You can review here our client’s testimonials.

Article copyrighted © 2022. Plagiarism will be criminally prosecuted.

8th of May 2022

Having bought and sold hundreds of properties, and with over 430 articles published over the last twenty years, it was long overdue Larrain Nesbitt Abogados published an in-depth guide on How to Buy Property in Spain. This has been a long-standing request from clients and SPI readers that we needed to fulfil.

Our practical guide will take you step-by-step through the process of finding and buying your dream home, with particular focus on the region of Andalusia. Whilst we have strived to help you to get the best result at every stage of the buying process, please understand this guide is only an approximation to the procedure and should not be construed, or taken, as a substitute for professional legal advice.

 

You can download our guide on PDF format from this link: Guide to Buy Property in Spain


Larraín Nesbitt Abogados, small on fees, BIG on service. At Larrain Nesbitt Abogados we have over 19 years’ experience buying, selling, and renting properties. We are also specialized in immigration & residency visas. 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.  

Related services:

    Conveyancing in Spain – Buying
    Conveyancing in Spain – Selling

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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Working remotely from Spain

Raymundo Larraín Nesbitt, April, 1. 2022

Lawyer Raymundo Larrain runs us through the basic pointers on relocating to work in Spain.

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 have 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 Abogados
8th of April 2022

War, Covid-19, high taxes, lousy weather, living new experiences, enjoying quality of life, etc There are simply too many reasons to collate on why people decide to pack up and move over to Spain.

It is undeniable that the virus outbreak has changed and shaped our mentality redefining our outlook on life. Millions of workers the world over have taken time to sit down and reflect upon their lives. Thousands have handed in their resignation and have made the decision to set up shop in Spain.

Spain has so much to offer that it comes as no surprise how over the last two years dozens of thousands of talented individuals, and their families, have made the move and are now living the (great) life in Spain. As a result of this large influx of foreign remote workers, the Spanish Government has seen fit to approve a bill that further improves and expands work conditions to attract talented immigrants: Spain’s new Entrepreneur Law.

In this short article, I give some basic pointers so you can plan ahead:

  1. Residency permit. Whether you belong or not to the European Union, if you spend more than 90 consecutive days in Spain within a calendar year, you need to apply for a residency permit. The main difference is that EU nationals are fast-tracked and can easily attain one at a very competitive cost. Non-EUs (i.e. British) are required to attain a visa to bypass the dreaded 90/180-day rule. We cover the topic of all the visas available in our in-depth immigration article: How to spend over 90 days in Spain – Residency visa overview.
  2. Work permit. EU nationals can automatically work in Spain without any further red tape, but what about non-EUs? Non-EUs require a work permit to work in Spain. Not all visas have associated a right to work in Spain. Visas which do are: Golden Visa, Marriage Visa, Business Visa, Work Visa. A Student Visa does not allow you to work but you can do internships in companies. A new visa will be approved further on this year which is the optimal choice for remote workers: digital nomad visa. It has associated significant tax benefits.
  3. Taxation. Spain is not a uniform country. It is comprised by a series of nations that speak their own regional languages, have their own cultural heritage and bear their own idiosyncrasy. Spanish is the official language that applies nationwide, but there are four other languages that are also used regionally. As a result of this diversity, regions have devolved competencies on several matters, including taxation. This is extremely relevant, as there are huge variations (understatement) when it comes to taxing legal or physical persons on income tax, inheritance, gift tax etc. Some regions are tax-friendly (Andalusia, Madrid), with ultra-low taxation, whereas other regions in Spain have very high taxes in place. Before you make the move to Spain, for your own sake, make sure you have researched the taxation of the region you pick.  
  4. Climate. Spain has a diverse climatology, it’s not all sun and palm trees. As a general rule, Mediterranean coastal areas have a pleasant and mild all-year-round weather. Inland and Atlantic coastal areas are cold and rainy with sharp contrasts in temperature between winter and summer.
  5. Language. You know that Spanish you learnt in secondary? Well, it may be for naught if you choose the wrong region in Spain. As written above, in Spain we have four co-official languages besides Spanish. In some regions, with strong nationalist views (read separatist) Spanish is shunned and they do not even use it on official administrative procedures or schools. Please ensure the region of Spain you pick actually does use Spanish. This is obviously a non-issue for those that don’t speak Spanish.
  6. Accommodation. The best advice I always give is that when you have chosen an area to settle down in, before you commit buying any property, you should rent out a place for 4 to 6 months. Bear in mind, tourist hotspots change dramatically from low to high season. That quiet shack on the beach next to you, that remains shut all winter, springs into life during the summer season with booming latino music for 3 months non-stop!

To close, I add my shameless plug on the beautiful region of Andalusia, which ticks all the boxes above! This could be your new life in Spain: The Passion of Andalusia.

At Larrain Nesbitt Abogados, we have made true the dreams of hundreds of non-EU investors, and their families, assisting them to attain residency permits. You can browse our clients’ visa testimonials here. 

 

Ukraine is entitled to its sovereignty, no matter who its neighbors happen to be. In the modern era, great countries accept that, and so must Mr. Putin. That is the message undergirding recent Western diplomacy. It defines the difference between a world governed by the rule of law and one answerable to no rules at all.” – Madeleine Albright

Marie Jana (Madeleine) Korbelova Albright (1937 – 2022). Was born in a family of Czechoslovakian immigrants who fled from the terrors of a war-torn Europe following the end of WWII to settle down in the U.S., which would become her new adopted home. She was a brilliant student that spoke eight languages. She became an American diplomat who served as the 64th United States Secretary of State from 1997 to 2001 under President Bill Clinton. She was the first female secretary of state in U.S. history. She was an outspoken advocate of freedom and a staunch defender of democratic values that showed a will and tenacity seldom seen our days.

Madeleine is a role model to young women and to all those that defend and uphold Western democratic values.

 

Residency services available from LNA

 

Larraín Nesbitt Abogados, 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.

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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The Spanish Golden Visa: 8 reasons to apply

Raymundo Larraín Nesbitt, March, 17. 2022

Lawyer Raymundo Larraín highlights the eight main advantages of a Spanish Golden Visa.

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 have 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 Abogados
21st of March 2022

Introduction

The Spanish Golden Visa is a success story.

Spain has become the number one Golden Visa provider in the European Union since it was introduced in 2013.

Out of all the visas available in Spain, it is hands down the one that offers the most perks, including one which is exclusive to it (explained below) and which strongly appeals to affluent investors.

Europe, cradle of democracy, is chosen every year by thousands of wealthy non-EU individuals as it provides a clear and stable legal and tax framework that allows freedom, nurtures ingenuity, and upholds property rights.

Thousands of non-EU nationals have already secured their families’ future and well-being on benefiting from this special arrangement that rolls out the red carpet cutting through all the admin red tape.

Spain’s Golden Visa is a success story, be a part of it!

 

8 Reasons on why you should apply for a Golden Visa in Spain

 

I’ll list the main benefits as bullets points for ease of comprehension, simplifying where necessary.

  • A Golden Visa does not automatically make you tax resident in Spain, unlike every other visa in Spain. This is a unique advantage exclusive only to GVs. No other visa in Spain shares this unique trait. Only for this reason, affluent investors will find it most appealing if they do not fancy paying taxes in Spain.
  • Allows you to override the 90/180-day that limits stay in Spain (and by extension in the Schengen Area/EU).
  • You can work in Spain. Unlike other visas, which ban you from working in Spain, a GV allows you, and your family, to work in Spain if you wish. Working is optional.
  • Allows you unfettered access to Spain. You can enter and leave the country as you please, even overriding Covid flight bans, as you will hold a select residency permit that few people have.
  • No minimum stay is required. Fancy staying only one night? A Golden Visa has you covered. You can spend as little as one day, or the full year round in Spain, at your choice.
  • Family is included as dependents.
  • Leads to permanent residency (optional).
  • Leads to Spanish citizenship (optional).

 

Conclusion

If you can afford one, it is hands down the best visa to have in Spain.

The good news is that you may already qualify unbeknownst to you! You see, Golden Visas apply retrospectively. If you have invested in Spain €500,000 in real estate on or after the 28th of September 2013, you may already pre-qualify for one!

Over the last year I have come across multiple people who hadn’t realized they already qualified for a Golden Visa. This is because they already owned property in Spain, which allows them the opportunity to apply for one, if they fancied.

Interested? Come and speak to Larraín Nesbitt Abogados friendly staff who will be pleased to guide you through Spain’s Golden Visa programme. On applying for a Golden Visa, we assign you one of our immigration lawyers, who will be assisted by one of our in-house visa specialists, guiding and hand holding you through the whole procedure. A Golden Visa takes under 2 months to attain.

At Larrain Nesbitt Abogados, we have made true the dreams of hundreds of non-EU investors, and their families, assisting them to attain a Golden Visa since its inception in 2013. You can browse our clients’ visa testimonials here.

At LNA, we put you in touch with the most reputable real estate agencies across Spain to make your dreams come true safely. Apply for the keys to your Golden Visa through Larraín Nesbitt AbogadosGolden Visa Service.

Your family’s success is only one call away: (+34) 952 19 22 88

Golden Visa Service *

*includes one family unit

 

“Democracy owes its existence to Christianity.” – Robert Schuman

Jean-Baptiste Nicolas Robert Schuman (1886 – 1963). Was a French statesman. Schuman was a Christian Democrat (Popular Republican Movement) political thinker and activist. Twice Prime Minister of France, a reformist Minister of Finance and a Foreign Minister, he was instrumental in building post-war European and trans-Atlantic institutions and was one of eleven Founding Fathers of the European Union, the Council of Europe, and NATO. Upon retiring, the European Parliament bestowed on him the title of Father of Europe.

 

Schuman’s generation was indelibly marked by the harrowing events of WWII and would go to great lengths to ensure such bloodshed would never take place again in European soil. To this end, the Union was conceived; a supranational political entity that safeguards peace & freedom within its borders and which does not seek dominion over others, preserving each Member state’s idiosyncrasy, united but not absorbed. It is hands down the greatest political achievement of all time and a living testament to those eleven men that made it possible.

In fact, all Founding Fathers of the Union were Christian, which explains the thoughtful choice of Rome - bedrock of Christianity - to sign in 1957 the EEC’s Foundational Treaty, a forerunner of what in time would be known to us as the European Union, or Union.

 

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

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

 

Residency services available from LNA:

 

Golden Visa related articles

 

Article originally published at Spanish Property Insight: Golden Visa: 8 Reasons to apply

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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New law for the protection and wellbeing of animals

Raymundo Larraín Nesbitt, March, 3. 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 Abogados
8th of March 2022


Animal rights, always a pet article of mine.

Spain’s social-communist government approved a new law for the protection and rights of animals. I can only show my personal appreciation and gratitude for at (long) last having such a law enacted and enforced throughout Spain.

The new draft law can be browsed here, it came into force on the 5th January 2022.

This key law, which amends several other laws, is the latest addition to a general legal framework that is gathered in an Animal Codex (Código de Protección y Bienestar Animal) devised for the protection of animal welfare. Updated as of 27-01-2022.

This was a trend that was started long ago by one man; a proto-ecologist called Mr. Félix Rodríguez de la Fuente in the 70’s who, over time, shaped Spanish modern society changing its mindset, even to our day, and has coalesced in this Animal Codex that now protects our little brothers and sisters. No accolade can honour enough what this man achieved in benefit of us all. Almost four decades on after his tragic death, he is still mourned and credited as the Father of Spanish Environmentalism.

Spain’s historical disposition towards animal’s rights has been hazy at best; to put it mildly and avoid ruffling feathers. This situation has changed dramatically post-Constitution as new open-minded generations, imbued by democratic ideals, seize power to enact laws in line with the core values that behoove a modern society.

This new law, that extends jail terms to those gits that would abuse animals, is a clear victory for animal rights in Spain which have (finally) become a core tenet of our society and which may now be legally upheld.

Kudos to our government for making such a great effort to protect our pets and wildlife.

Credit where credit is due. Gracias Félix.

Recap of the new points brought by this law

As per usual, I will collate the main 25 as bullet points, simplifying where necessary.

  • Animals cease to be ‘things’, in legal terms, and are now regarded as living, sensitive beings. As a consequence, they may no longer be repossessed or embargoed in insolvency procedures.
  • Animals can no longer be sold in pet stores. They will be sold only by licenced animal breeders.
  • Animal exchanges between private unlicenced individuals must be free of charge, no money can be exchanged.
  • Animal breeders are under a legal obligation to identify and tag animals in a national animal registry before being sold.
  • Some animals will be neutered prior to being sold to avoid their unwanted reproduction.
  • Animals may no longer be freely sacrificed unless there are valid reasons.
  • Prohibition to mistreat them physically or psychologically.
  • Animals may no longer be abandoned by owners in open or closed spaces i.e. terraces, cars, etc.
  • No mutilations are allowed i.e. for aesthetic reasons.
  • Animal fights are forbidden.
  • Banning of public shows that use animals and may cause them any kind of pain or suffering.
  • Beggars may no longer use animals to beg.
  • Certain jobs, that are deemed too stressful for their wellbeing, may no longer use animals.
  • Banning of animal accessories that cause them harm i.e. spiked collars for dangerous dogs.
  • Banning of pets to be eaten (sic)!
  • Banning of capturing wild birds to force them to sing.
  • Banning of certain foods for animals not considered apt.
  • Banning of animals as prizes in draws or lotteries.
  • Banning of animals (i.e. pets) released into the wild.
  • Banning of animal traps unless legally authorized.
  • Cats can no longer be left alone for more than 3 days, dogs no more than 24 hours unsupervised.
  • The adoption of non-tagged or identified animals is expressly banned.
  • Publicity with animals is banned except for their own purposes i.e. animal food
  • Arts 332 to 340 of Spain’s Criminal Code.
  • New amendment will increase jail terms from the current 12 months to 2 years in prison.

 

Conclusion

The majority of animal lobbies consider the new amendment of 2 years falls short of what’s required. They are lobbying hard to increase it to 3 or 5 years. Given the changes in the mindset of our society, I find it highly likely this increase in jail terms will be achieved in the future. I very much welcome them.

There is still much work to be done to extend these rights and protection to animals in the wilderness.

To close, such laws for the protection of animals are always a welcome respite, as they exemplify the best of Human exalted values and show the respect that is due - and owed - by our little brothers and sisters, who look up to us. These changes act as a ray of hope, in the dark times we now live through, when not even human life is spared by those who wield absolute power and ought to know better. History is a ruthless mistress, tyrants and despotic warmongers go down in shame, always.

 

The greatness of a nation, and its moral progress, can be judged by the way its animals are treated.” – Gandhi. AKA Mahatma (‘Great Soul’) Gandhi.

Mohandas Karamchand Gandhi (1869 – 1948). From an impoverished and humble social background, he would rise to become the Father of the modern Indian Nation. Trained lawyer, author, journalist, editor, statesman, staunch human rights activist and founder of the non-violent movement. He would be wrongfully incarcerated and would suffer unjust persecution throughout most of his adult life. Gandhi's mindset would be for ever changed after reading the book ‘The Kingdom of God is Within You’, from the universally acclaimed Russian writer Leo Tolstoy, in which Tolstoy reinterpreted the teachings of our Lord Jesus coalescing his ideas of nonviolent resistance. In what can only be described as an extraordinary feat at the time, he single-handedly managed to lead the country to a peaceful independence, on following a non-violent resistance movement, breaking the heavy chains of oppression from the British Empire; at the time, the world’s greatest superpower. He also oversaw the peaceful breakup from the Muslim population, thus avoiding the horrors of a fratricidal civil war, which would go on to form their own country (Pakistan). Through Gandhi's peaceful actions, in both South Africa and India, he would go on to influence civil right movements and freedom activists the world over, including historically relevant figures such as Reverend Martin Luther King and Nelson Mandela, both awarded with the Peace Nobel Prize. The Peace Nobel Prize for 1948 was never awarded because sadly "there was no suitable living candidate". In a dark century, full of giants and great historical figures, Gandhi towers above them all, a shining beacon of Humanity. He is arguably the greatest historical figure of the 20th century.

 

At LNA we can assist you buying, selling or renting out your property in Spain. We have 19 years’ experience in conveyance & tax. We are also specialized in Immigration & Residency permits.

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

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

Related animal rights articles:

 

Article also published at Spanish Property Insight: New law for the protection and wellbeing of animals

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 animal, or politician, was harmed on writing this article. VOV.

2022 © Raymundo Larraín Nesbitt. All Rights Reserved.

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European Court of Justice rules on tax form 720, declares aspects illegal

Raymundo Larraín Nesbitt, February, 1. 2022

Lawyer Raymundo Larrain does a brief rundown on the ECJ’s landmark ruling from 28-01-2022 on tax form Modelo 720 (Worldwide Asset Declaration for Spanish residents).

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 have 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 Abogados
21st of February 2022

Introduction

It was long time coming, the writing was on the wall.

Through the dogged perseverance of one Spanish lawyer, Mr. Alejandro del Campo, we now have this ruling. We should all be grateful to him (and our EU Overlords).

Finally, after years of anxious wait, the European Court of Justice (ECJ, for short) delivered a landmark ruling on Spain’s unfamous 720 tax form. We had published several articles on this topic leading up to this long-anticipated moment (i.e. European Court of Justice’s lead council states Spanish Tax Form 720 fines are disproportionate – 16th July 2021).

On Thursday 28th of January, the ECJ declared null and void several sections of the law related to tax form 720.

This was featured prominently all over the Spanish press and is now being misconstrued as the end of 720. But, is it really?

(Spoiler) No! Not by a long shot.

We keep receiving emails from clients telling us they no longer need to file 720 because it “has been abolished” etc.

In light of this, I’ve written this short article to shed some light on the matter and hopefully clarify the matter.

ECJ’s ruling

The ECJ’s ruling declared null and void a series of aspects that we had previously bitterly criticized in our articles and blog posts:

  1. The no imprescriptibly of the debt.
  2. The disproportionate fines of 150%.
  3. The disproportionate fines on not disclosing all the financial data or doing it wrong.

All three aspects above have been declared null and void by the ECJ in yesterday’s ruling.

I really don’t want to go into this in detail, but as an example, only crimes of genocide in our legal system have no imprescriptibility. And quite frankly, you honestly cannot compare a heinous act such as genocide (a crime against Humanity) with not disclosing your estranged rich uncle left you 60k in some fancy Swiss bank. I mean honestly.

In short, the above points are an affront to core tenets enshrined and upheld by the community of nations known to us as the European Union i.e. freedom of movement of capital. As a result, they are null and void as they are deemed incompatible with core principles of our Union (UK not included).

Does that spell the end of the dreaded Modelo 720?

Again, for the avoidance of doubt, no.

720 remains, and will very much remain, a tax form that all tax residents in Spain will need to abide.

If you meet the 720 criteria, you must file a 720 tax form on or before the 31st of March of every year. It’s only for reporting purposes, no tax is paid and in principle, you only need to do it as a one-off, not every year.

So, what’s changed then?

The three points I collate above.

The Spanish Tax Office will waste no time (understatement) in working on this and tweak the penalties associated to 720 over the next weeks so they are fully compliant with the ECJ’s ruling on the 720 and with the EU’s founding principles that pervade all our legal system.

I bet my bottom dollar that they’ll sort it out before the end of February 2022. When it comes to these matters, that is to demand taxes from us poor buggers, our tax office moves so fast it would even make a cheetah blush in shame. Eat your heart out Mr. Bolt Usain, you’re no match for our tax office.

Going forward

Going forward, as mentioned, any resident taxpayer that meets the criteria of 720 needs to submit it, so no changes there.

The only difference is that the associated penalties on non-compliance, or presumably on making any mistakes (knowingly, or not), will be far more lenient and fall in line with other tax forms.

What about fines? What happens to all those that were fined in the past?

The Spanish Tax Office racked up an estimated 230 million euros in fines since the inception of 720 in 2012.

As a result of yesterday’s landmark ruling, all those taxpayers that were (heavily) fined now have the door ajar to apply for a tax rebate on the amount fined, plus legal interests on top.

We advise taxpayers, that find themselves in such a predicament, to contact our law firm so we study their case and assist them in recovering their money.

Conclusion on the ECJ ruling on the Modelo 720 Spanish tax form (Worldwide Asset Declaration)

Once more, the ECJ, the highest court in the land, proves its mettle and draws the line on abuse. The voracity of the Spanish Tax Office knows no bounds and it is up to law courts and impartial judges and magistrates to defend us from this abuse.

Ideally, and it pains me to write it, it should really be Spain’s Supreme Court that should be doing this job and holding the line. But I guess they are far too busy still trying to rule – twelve years on – such cases like the one on abortion. I kid you not. A slooow justice indeed, no cheetah fast-pace here.

Once more, I must commend our EU Overlords for delivering impartial justice and setting the record straight. Thank you.

Rant over.

For the broader market (read real estate & foreign investments), the implication of this ruling is that resident taxpayers should no longer hold back submitting this tax form as the fines that will now be levied by the Spanish Tax Office (still to be disclosed) will be very reasonable and should no longer be feared.

Bottom line, the ECJ’s key ruling is (most) positive, and it is much appreciated by us punters, kudos!

Justice delayed is justice denied.” – legal maxim

 

Larraín Nesbitt Lawyer’s taxation service:

Tax form 720

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

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

Related tax articles

 

Article originally published at Spanish Property Inisght:  European Court of Justice rules on tax form 720 – 21st February 2022

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. No taxman or politician was harmed on writing this article. Voluntas omnia vincit.

2.022 © Raymundo Larraín Nesbitt. All Rights Reserved.

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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:

Related articles

 

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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Spain’s new Entrepreneur Law

Raymundo Larraín Nesbitt, January, 8. 2022

Lawyer Raymundo Larraín briefs us on the new Entrepreneur law which aims to assist and incentivize new businesses in Spain.

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 has 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.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of January 2022

Introduction

Spain’s social-communist government enacted in December 2021 a new Entrepreneur law (Ley de Startups) whose aim is to incentivize startups. This new law introduces a plethora of (very) positive changes that will make the life of businesspeople much easier, removing red tape and foremost creating great tax incentives, both for workers and for investors (business angels).

Slew of tax & admin novelties

 

I’m going to list them as bullet points for ease of comprehension.

  • Dramatically reduce the number of admin steps to incorporate a new company. In effect, deregulation.
  • Foster state investment in startups. Last year over three billion euros were devoted to this end.
  • Reduction of non-resident income tax from 25% down to only 15% over a 4-year tax period (providing the company turnover is positive).
  • Tax exemption retribution through stock options (capped at 50k/year).
  • The first 100,000 euros will be tax-free
  • Incorporation of companies is greatly reduced to one electronic document. In effect, deregulation.
  • Tax deferral from 6 to 12 months (without delay interests or penalties), allowing more time to settle the tax.
  • Removal of fractioned tax payment within the first two years with positive turnover.
  • Removal of NIE number requirement for foreign investors, requiring only a tax number.
  • In the event of failure (something natural in startups), winding up the company is greatly simplified
  • The government wishes to attract foreign talent. To this end, it will introduce a digital nomad 5-year residency permit for non-residents that will significantly cut through all the red tape and which also has associated (very) attractive tax perks.
  • Business angels may now apply for tax exemptions of 100,000 euros a year (up from the previous 60k threshold).
  • Business angels tax deductions are expanded upon to 50% (was 30%).
  • Business angels are exempt from paying tax on profit if they reinvest the sale proceeds in another startup.
  • Suppression of double contribution to the Social Security for a three-year period in the event a worker is employed by multiple companies.
  • Startup category increased from 3 to 5 years in general, and to 7 years for companies operating within certain key sectors the government wishes to incentivize (biotechnology, industrial energies and other strategic sectors).

 

Conclusion

This is a commendable initiative from our social-communist government; quite the capitalist move If I may (cheekily) say so.

Any law that contributes to deregulation (removal of unnecessary admin red tape) and lowering taxes is always greatly welcomed by the economy and society at large.

I will say it time and time again, if Spain only lowered its taxes – in line with fellow European countries – and also deregulated heavily, it would foster a huge boom in the economy, creating millions of jobs in its wake. This in turn would (paradoxically) greatly increase the tax office's revenue, reducing Spain's overreliance on public indebtment,  following the Laffer Curve economic theory.

Sounds fancy? Not at all. This is not science fiction, we are already witnessing this at play in both Andalusia and Madrid, two regions in Spain which have deregulated heavily and which have also dramatically lowered their taxation becoming de facto ultra-low taxation regions. As a result of pursuing liberal fiscal policies, they have attracted huge foreign investments (only Madrid attracts over 80% of foreign investments in Spain in 2021). Madrid has raked in billions in additional tax revenue and Andalusia borders over one billion euros. But most fundamentally, adopting liberal tax policies and deregulating has created thousands of new (well paid) jobs bolstering the middle class, the backbone of any strong western democracy.

In fact, the changes in Andalusia are deemed by non-residents so positive that in a 2021 survey, 12,000 expats, from 174 countries, voted Malaga as the world's second best place to work & live in. Make no mistake, high taxes only benefit politicians and their cronies.

Just give entrepreneurs the right tools in life and they will handle the rest. It will spur them on to fight & win, creating wealth and jobs benefitting society at large.


Hay personas que se convierten en leyenda y que hacen grande a un país. Manolo Santana ha sido y será siempre una de ellas.” – Casa de S.M. el Rey

Loosely translated as: “There are people who become legends and make a country great. Manolo Santana was, and will always be, one of them.” – Spanish King Felipe VI

Manuel Santana Martínez (1938 – 2021). From a humble social Madrid background, Manolo would rise to become a world-class tennis champion, contributing to make it a popular sport all over Spain, not just a sport for the social elite. He’s credited as the Father of modern Spanish tennis. He won the Grand Slam in 1961 and 1964, the US Open in 1965, and Wimbledon in 1966. He married four times, from his first wife he had three children. Santana settled down in Marbella and, as an entrepreneur, founded and co-managed the Manolo Santana Racquets Club with his loving third wife Otti, a glamorous and kind Swedish model. The Manolo Santana Club initiative has created thousands of jobs over the years. Simply put, Manolo is the best Spanish tennis player in history (well, until Rafa came along, but he’s on a league of his own). In his own words: “I am an example of humility in an elitist world.”

 

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.

ver worked a day in his life in the private sector, devoting all his professional career to the public sector, paid for with our taxes.

Legal services available from Larraín Nesbitt Abogados:

 

Related articles

 

Also published in Spanish Property Insight: Spain’s new Entrepreneur Law  – 8th January 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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Tax breaks on buying property in Andalusia extended indefinitely!

Raymundo Larraín Nesbitt, December, 4. 2021

Lawyer Raymundo Larraín briefs us on the landmark tax changes recently approved by Andalusia’s regional government, which have turned the tables, making it the region with the lowest taxation in all of Spain, along with liberal Madrid.

Marbella-based Larraín Nesbitt Abogados (LNA) has over 18 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 has a long track record of successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2021. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of December 2021

To put it simply, now is the right time to buy (or sell) property in Andalusia, period.

Feel free to skip the rest of my article below.

Introduction

 

As we’ve been hammering in previous articles, there has never been a better time to buy property in Andalusia than now. A series of factors have coalesced to the point it has created unique buying opportunities. I can only think of 1998 (which kickstarted the longest real estate bull market that Spain has known to date, lasting a full decade) as a comparable situation to the one we are now living.

2021 was poised to be one of the worst years in record in Spanish real estate sales. The virus’ financial aftermath proved devastating, nothing seemed to withstand in its relentless wake.

And that’s when – least expected of all – Andalusian politicians stepped in saving the day.

Andalusia’s regional government took the bull by its horns and approved in April of this year a taxpayer’s aggressive relief package to combat the adverse consequences brought about by Covid-19. These included, amongst many others, drastic tax cuts on buying property, both off-plan and resale. The two most notable tax changes, from a real estate perspective,  were a 20% reduction in Stamp Duty (off-plan property) and the simplification of Property Transfer Tax into a single flat rate of 7% on buying resale property (which translates into massive savings ranging from 12.5% to over 30%, contingent on the sale price as this tax followed a sliding scale). In plain English, huge tax savings for property buyers.

But there was a catch. These lenient tax breaks from April 2021, conceived to combat the pernicious effects of Covid-19, were time-gated. Buyers only had until the 31st of December 2021 to take advantage of them.

That was until the Junta de Andalucia passed its new Law 5/2021 of 20th October. In effect, what this pivotal law did was to make these tax breaks permanent, indefinite. No longer are these tax breaks subject to an end-of-year deadline. On approving this law, the Junta have in fact extended the tax breaks into 2022, and beyond.

But the significance of this new regional law doesn’t only stop at Stamp Duty and Property Transfer Tax cuts. That’s just scratching the surface. It also extends to drastic cuts in Inheritance Tax (yes, again!), IRPF (personal income tax), Wealth tax, and a long etcetera.

Frankly, I would need to publish a couple of taxation articles every month only to keep abreast with all the taxes they keep tweaking, lowering or downright suppressing in a trend which remains unabated since 2019. Kudos to them.

I normally criticize Spanish politicians a lot in my articles, for which I make no apologies, but on this occasion, I take off my hat to what they are doing in Andalusia, because they are doing what’s right for the economy, and ultimately what’s best for the people.

What do these tax changes spell out for the real estate market?

 

Basically, it’s a win-win.

On the one hand, the Junta de Andalucia, and by extension all the inhabitants in this region, benefit from lowering taxes as this, paradoxically, increases the tax revenue. Hang on, you may be wondering, how on earth can they increase the revenue flow if they are cutting down taxes drastically left, right and centre? Well, the previous administration, which had been in power for almost 40 consecutive years, had extremely high taxes in place. On drastically lowering taxes – to more reasonable levels in line with fellow European countries – it has now levied an extra 600 million euros a year because of the increase in economic activity! Madrid too lowered its regional taxes, and as a result also raked in billions of euros in additional revenue proving – once more – that lowering taxes is the right path to attract foreign investments, foster job creation, and generate wealth for society at large. In Economic Theory, we know this as the Laffer Curve, after reputed US economist Arthur Laffer. This increase in additional tax revenue translates into the Junta offering better services to all its citizens and reducing public indebtment.

On the other hand, taxpayers and property buyers, likewise reap the rewards of a low-taxation environment. Taxpayers pay significantly less taxes having more purchasing power available to spend, propping up the economy. In a post-vaccination scenario, this is really being noticed as more and more people spend their extra money in amenities, boosting the overall economy. As for property buyers, well, that’s easy, you pay significantly less taxes on buying property in Andalusia! It ain’t rocket science.

One of the winners of this liberal fiscal policy is the real estate market, no doubt, but ultimately society as a whole, as this property bonanza translates into the creation of more jobs, which in turn creates wealth, and attracts even more foreign investments creating an upward spiral.

In effect, these generous tax breaks on buying property from April 2021 have created a property boom in Andalusia, as we wrote here: Andalusia: now is the right time to buy property – 8th October 2021.

Permanent real estate tax breaks in Andalusia

 

  • Off Plan (Stamp Duty): 20% discount on Stamp Duty Tax. Tax rate is now a flat 1.2%.
  • Resale (Property Transfer Tax): tax savings range from 12.5% to 30% (or more) on Property Transfer Tax, hinging on the sales price. Tax rate is a flat 7% on any sale price.

Of particular interest are the tax cuts in resale property. The gist is that the higher the sales price, the more tax a buyer stands to save. With numbers:

  • On a €500,000 sale price, the tax savings are 15%.
  • On a €3,000,000 sale price, the tax savings are 27%, and so forth.

In short, simply spectacular for high-end property. This has prompted a tidal wave of villa sales, the press reports 573 villas are selling a day in Spain!

Yes, but what about Spain’s new Housing Act? Surely that’s a spanner in the works!

 

Actually no, it is not. Last month I published a scathing article on this new law. On the bright side, as I pointed out in the article itself, this pernicious law will not be implemented in Andalusia because regional governments have devolved competencies on housing matters.

This means that while other regional governments in Spain will gladly embrace the hardships of a planned economy (increasing property taxes, fining landlords, dictating at what price you can, or cannot, rent out your property, extending tenant evictions) in Andalusia we will continue to enjoy economic and personal freedom, which translates into attracting even more foreign investments, spurring job creation and wealth.

Spain’s new housing bill will, unfortunately, fracture and polarize Spain furthermore, into two regional tiers: investment-friendly and those regions which are not. It’s an insidious side effect I cared to point out in the article’s conclusion, but it will not impact Andalusia one iota, nada.

If anything, Spain’s new Housing Act will only contribute to consolidate Andalusia’s status as a tier 1 tax region; an investment-friendly region which boasts an ultra-low taxation that attracts foreign investments and property buyers from the world over.

8 reasons why you should invest in Andalusia

 

  1. Ultra-low taxation. As we’ve covered in previous articles (Andalusia lowers Property Transfer Tax and Stamp Duty), early on this year Andalusia drastically reduced the taxes on buying property, to the point we have never seen such low taxes in this region. Furthermore, the tax breaks on buying property have now been extended indefinitely, so they are no longer time-gated. The Junta de Andalucia has also approved a batch of measures to also cut down several other taxes (Inheritance Tax, IRPF, Wealth tax etc) turning Andalusia de facto into an ultra-low taxation area, along with Madrid. In plain English, Andalusia and Madrid are now the two areas where you pay fewer taxes in all of Spain. And last I checked, Madrid had no beach, so the choice is easy. To sum up, the continued landmark tax changes implemented by the new regional government since April 2019 (lowering, negating or suppressing them) are so eventful they have ushered in a new era of wealth-planning in Andalusia.
  2. Ultra-low interest rates. Interest rates are sitting now at an all-time low, which enables would-be buyers to secure cheap loans (fixed interest is your best bet if the ECB hikes the interest rate in the future to offset a spike in inflation). Bank loans become ‘cheaper’ as inflation rises, as you actually owe less money to your lender (in real terms).
  3. Pandemic & Brexit induced price reductions. The ongoing pandemic and Brexit have forced sellers to reduce their asking price creating once-in-a-lifetime buying opportunities for savvy investors.
  4. Property boom. Andalusia is in the midst of a property boom, since April’s huge tax cut, that has prompted a rise in property prices, specifically in coastal areas. Property is appreciating an average of 8% p.a. in coastal resorts and gathering pace. In some exclusive locations, such as Marbella, property prices have already risen by over 30% over the last two years. More on this property bull market here: Andalusia leads house price boom triggered by Covid.
  5. Spike in inflation. In a financial context of a sharp rise in inflation, having your money stuck in a bank is a losing proposition. In an inflationary environment, such as the one we are in, money depreciates fast losing its value day-to-day. Finance experts agree that a smart way to hedge your savings against rising inflation is to take on a mortgage loan and invest in real estate to avoid losing purchasing power over the long run as bank deposits devalue over time with high inflation. Although Financial Authorities, the world over, are quick to point out this surge in inflation is merely transitory, and bend over backward to downplay the situation and assuage our fears (or is it really theirs?), the fact is that new virus strains emerge all the time; such as the new South African one from last week which caused worldwide mayhem. Meaning disruptions in the supply chain are here to stay and we need to factor this in over the long run; which implies that inflation is also here to stay, at least for several years. Taking on a mortgage loan and investing in real estate was the key strategy that many savvy investors followed in the 70’s, during a time of high inflation, which in hindsight made them very rich.
  6. Buy-to-rent. Annual rental yields are over 5% net. If you also add on top the capital appreciation (point 4 above), you are looking at a safe investment that is netting you over 10% p.a. risk-free. No other safe investment offers you such yields in a context of an underperforming bond market. In addition to this, the Spanish Tax Office offers lenient tax breaks which on average reduce landlord’s tax bills by 70%, or more (if EU-resident). A landlord can offset most, if not all, of their property-related expenses, vastly reducing their income tax on buy-to-lets (i.e. holiday rentals). More on this topic in my articles: Rental prices soar for 5th consecutive year in Spain! and 8 Tips for Buy-To-Let Success in Spain.
  7. Pound rally vs. Euro. For our UK readers only, following up on point two above, expectations are high the BoE will raise the interest rate to combat the pernicious effects of inflation. In anticipation of this move, the pound rallied, since April this year, appreciating significantly against the Euro. This translates into UK buyers having greater ‘purchasing power’ on buying euro-denominated property. In plain English, any property in euros becomes much cheaper for sterling pound purchasers.
  8. Gorgeous weather. I know, it’s so cliché, but I had to tack it on, soz. Andalusia boasts 330 days of sunshine a year. After having spent years working in the UK, under dull grey skies and non-stop rain, I can only say it’s pure gold.

The point being, is that if you are thinking of buying property in Spain, and you like to pay little to no taxes, think Andalusia.

Can you really afford to miss out on a new property boom?

 

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.

Yo no voy a bajar impuestos, un socialista no baja impuestos (nunca). Esas recetas del neoliberalismo son ya historia. Está demostrado científicamente que la Curva de Laffer es una falacia.” – Luis Ángel Hierro Recio

Loosely translated as: “I’m not going to lower taxes; socialists don’t lower taxes (ever). These are neoliberalist ideas which are phased out. It is scientifically proven that the Laffer Curve is a fallacy.

Luis Ángel Hierro Recio (1963). Ph.D. in Economics at the public University of Seville. Teacher of Economic Theory at Seville’s public University. Director of LL.M. in Urban Planning. Board member of the public University Pablo Olavide. Ex-congressman for Andalusia. He bid for the leadership of his political party in Andalusia and attained 5.51% of the ballots.

Mr. Hierro has never worked a day in his life in the private sector, devoting all his professional career to the public sector, paid for with our taxes.

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Article originally published in Spanish Property Insight: Tax breaks on buying property in Andalusia extended indefinitely! – 8th December 2021

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

2021 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Spain’s new Housing Act

Raymundo Larraín Nesbitt, November, 5. 2021

Lawyer Raymundo Larraín does a quick rundown on the major highlights this new bill introduces.

Marbella-based Larraín Nesbitt Abogados (LNA) has over 18 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.

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Article copyrighted © 2021. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of November 2021

Introduction

Spain’s social-communist government is in the last legislative stages of enacting a new housing bill that will create ripples across the real estate industry. A bill that has not been exempt from controversy, ruffling the feathers of all those involved in the industry. No doubt, a new feat of our beloved communist government.

As I can only review a draft bill at this stage, albeit a final draft with few changes to be expected, please be aware alterations may be introduced.

The lofty goal of this law is to stop speculation on housing and reduce rental prices, making them more affordable for vulnerable collectives, such as despondent youngsters.

To reach a wider audience, I will shy away from esoterics, and go the good old-fashioned way of listing the major highlights in bullet points in no particular order.

Housing bill’s major highlights

  • Housing earmarked as public is banned from being sold to investment funds to avoid speculation of a good of first necessity.
  • Landlords who leave housing empty for over two years may be faced with higher municipal tax rates (of up to 150% surcharge on IBI tax). Some communist regional governments, such as the Balearics, have already made public they will levy the maximum penalty as soon as the law allows it. This is done to avoid speculation and free up the housing to those in need. The question arises with second residencies, such as those held by fellow expats.
  • Creates new mechanisms to draw out (sic) non-paying tenant evictions (particularly longer for legal persons acting as landlords). We actually need the opposite in Spain to foster a robust rental market, but whatever.
  • The new law will cap rental prices in earmarked areas where demand is stressed out with a view to curb rampant speculation.
  • The law forces property developers to reserve 30% of all developed land for social housing.
  • Tenants may apply for forced renewals on periods lasting from one to three years, forcing the hand of landlords.
  • A new concept is created, the ‘great’ landlord. Defined as someone (legal or physical person) who has more than ten properties or who has a built surface of 1.500 m2 on rental.
  • Great landlords are now forced to offer rentals at a price set by Authorities, under huge penalties.
  • Great landlords cannot update the rental price year-to-year (as currently) and must remain frozen for a period of up to 10 years
  • Physical landlords will rent at a fixed price determined by Authorities in areas under ‘rental duress’ (zonas tensionadas, in Spanish).
  • Sliding tax breaks will be introduced for landlords who lease properties to tenants within the age group of 18 to 35 y.o.
  • Reduction or suppression of 85% tax breaks for great landlords.
  • Creation of landlord tax breaks of 60% when improvements over the previous three years exceed a 6-month rental.

 

Potential negative repercussions of this new law

We already glossed over them in detail in previous articles: Government to introduce rental control in 2021 – 28th October 2020.

  • Sharp rise of off-the-books rental agreements
  • Sharp increase of rental prices (as offer will foreseeably retract following these changes)
  • End of buy-to-let boom as we know it
  • Introduction of legal insecurity on creating several undefined legal concepts 
  • Artificial creation of ‘guettos’ in large cities with long waiting lists
  • Rise of unemployment in a sector that was thriving (we are in a property boom!)
  • Restriction in offer. Sharp decrease in offer as landlords, on learning the government will fix at what price they can rent, will cease renting
  • Introduction of price market distortions. Huge price distortions with new and old rental prices, creating ‘privileged’ rentals
  • New problems: What happens to existing signed rentals?
  • New problems: What happens to signed contracts under this new law if it is found unconstitutional and is repealed (as is likely under a new government)?
  • On reserving 30% for social housing on all developments, how are you going to market (and sell) a luxury development?
  • Landlord tax break on long term tenancies reduced from 60% to 50%
  • Longer tenant-eviction procedures (effect pursued on purpose)
  • Sharp tax rise (IBI) for some landlords

 

Personal opinion

To sum up, lofty ideals at the expense of other people’s estates.

This law introduces a plethora of undefined legal concepts left for ulterior regulation to develop, listing but a few:

  • Areas under ‘rental duress’
  • Empty homes
  • Fixed sliding rental scale set by Authorities

 

A golden rule is never to create a legal text with undefined legal concepts that can be construed in any manner of ways. Needless to say, this creates legal insecurity for investors. This is not what investors want to hear. This is exactly the type of regulation they abhor and move away from.

Spain has huge potential to attract foreign investments, creating jobs and wealth on its wake.  We see this actively happening in Madrid and in Andalusia which are in a property boom. But clumsy laws such as this one, which openly favour market interventionism over a free market economy, in a move straight out of the playbook from Maduro’s Venezuela, are counterproductive. Spain is not a planned economy. Spain's economic potential is held back by laws such as this one. Investors will invest elsewhere. The Spanish government should stop demonizing foreign investors which are key to our economy.

This piece of legislation is the latest in a long string that further undermines the rights of property owners. Spain’s social-communist government is hell-bent on curtailing ownership rights as much as they can, and then some.

We don’t need a nanny state that dictates at what prices we can rent out or not. I was under the impression we lived in a free market economy in a democratic country, silly me.

Conclusion

This law (unfortunately) will likely fracture Spain further into regions which are investment-friendly and those which are not. This introduces pernicious market asymmetries which stifle competition.

Regional governments in Spain have devolved competencies in housing matters. It can be reasonably expected that regions under moderate right-wing control will implement this law lightly, or not at all, in sharp contrast to left-wing regions. This is a very important nuance and the reason why I write this law will directly contribute to fracture the country and introduce market asymmetries. 

Free-market regions, with ultra-low taxation which enshrine personal and business freedom as core civic values, such as Madrid and Andalusia, not only will ignore it, but vehemently fight it. Much to the disgust of our beloved social-communist government.

Whereas regions under left-wing control, such as the Balearics and Catalonia, can be expected to implement the new housing bill stringently, imposing immediately the 150% surcharge of IBI on empty houses.

Honest to God, the last thing Spain needs right now is to exacerbate social or regional polarization further, thank you very much.

There is also the matter of housing affordability. As I mentioned in the article's introduction, the aim of this new regulation is to make housing more affordable, particularly rentals, for vulnerable collectives such as young people on low and precarious McJobs. Whilst the government's goal is certainly commendable, no doubt, the way it is trying to achieve this may backfire, at least to my mind. As I have collated above as possible negative effects, it is foreseeable that landlords (offer) will remove from the market properties given the stringent conditions that are now government-imposed (i.e. Authorities set rental prices in areas under rental duress, no updating of rental price in 10 years, taxes on empty property, temporal expropriation of empty properties to be rented out, 30% of all new developments earmarked for social housing, etc). These effects are far-reaching and greatly affect landlords and developers who will likely pull out their units from the property market. When offer retracts but demand remains steady, following the laws of demand and supply, the price of an asset undergoes a rise. This is why I write that all these new changes enacted through this law - as commendable as they are - will likely impact on the market and translate into a general rise of all rental prices as there will be fewer properties on offer to chase after. This, in a context of a sharp rise in inflation, is very negative as it affects precisely the vulnerable collectives this law attempts to protect and assist.   

If there is a change in government in 2023 (highly likely) this new bill will be top on the list to be repealed. Key laws – ideally – should be consensuated, reconciling both political sides, and agreeing to a common text that can be upheld regardless on who wins on poll day. Otherwise, laws are short-lived and last what a 4-year legislature lasts (or even less), which is daft, unproductive and fosters widespread legal insecurity which deters foreign investments in Spain. You can expect this new Housing Bill to last a year. Smart money is risk-averse, the market rules need to be fair, clear and long-lasting.

Spain’s social-communist government unconcealed goal with this housing bill is to win the hearts and minds of a disenfranchised youth, mired by record-high levels of unemployment, the highest in any OECD country, wooing their vote in the upcoming election of early 2023. 

God willing, these changes will be for the better.

"I commend thee to Almighty God. He is the source of all good. Do the Will of God, which is the Way of Peace. Beware of bloodshed; de not trust in that, for spilled blood never sleeps. Strive to gain the hearts of thy subjects and watch over all of their interests, for thou art appointed by God and by me to look after their welfare. I have become as great as I am because I have won the hearts of men by gentleness and kindness. Never nourish ill feeling toward any man, for Death spares none. Be prudent in thyself. God will pardon the penitent, for He is gracious.– Saladin’s parting words to his son, al-Zahir.

Al-Nasir Salah al-Din Yusuf ibn Ayyub (1137 - 1193). From humble Kurdish origins, Saladin displayed from an early youth a series of unique traits which distinguished him from his peers, allowing him to quickly climb through the ranks and elevate him to commander of all Muslim armies (over 70,000 men). He became the first sultan of both Egypt and Syria, founding the Ayyubid dynasty. As a master chess player, he developed an uncanny ability, almost preternatural, to ‘read’ opposing Christian commanders’ minds to the point he could effortlessly anticipate their every move; much in line with Alexander’s prescient ability. He would regularly inflict huge losses to armies who vastly outnumbered him and – in theory – were better equipped (with superior European manufactured gear). As a master tactician, he would cleverly deploy his troops in such a manner to always take advantage of the surrounding terrain paying great care to logistics. His unmatched military prowess and gallantry would garner him great admiration, not only from within his own ranks, but from his enemies alike, most notably from Richard the Lionheart, King of England. Through his strategic campaigns, in a tour de force, he would eventually wrestle the control of Jerusalem from Crusaders, which had held onto it for over 88 years. When Saladin recaptured the city, there was no killing and no desecration of holy places, and Christian pilgrims were allowed free access to their places of worship (unlike the first Crusaders who took the city in 1099, murdering thousands, including women and children). He encouraged the establishment of institutes of higher learning in Cairo, Damascus, and Jerusalem. He also set up courts of law. Unlike other potentates, before and since, Saladin did not set himself above the law. But more importantly, he displayed a rare acumen that singled him out and made him human and relatable to all, even his foes. He showed great compassion and piety and would refrain from any unnecessary bloodshed. In Saladin’s possession at the time of his death were one piece of gold and forty pieces of silver. He had given away his huge wealth to his poor subjects, leaving nothing to pay for his funeral. Ironically, Saladin incarnated like no other man the best of chivalric qualities making him a true knight in all but name. Salah al-Din is likely the greatest Muslim commander of all time bar none.  

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:

Related articles

 

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

2021 © Raymundo Larraín Nesbitt. All Rights Reserved.

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