Lawyer Raymundo Larraín outlines the procedure to cancel your mortgage loan in Spain attracting little to no tax.
How to discharge a mortgage loan in Spain
Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 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 © 2023. Plagiarism will be criminally prosecuted
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of Septermber 2023
Introduction
The sharp rise of interest rates over the last 12 months, has prompted scores of borrowers to look into cancelling their Spanish mortgage loans. This is done to avoid servicing large monthly repayments.
Mortgages, besides their obvious purpose of financing a house purchase, have long been used by lawyers and accountants as a useful tool to reduce clients’ tax burden. With careful forward tax planning they prove extremely helpful to mitigate client’s overall taxes. It is for this very reason that even wealthy individuals (that do not really need them) actually apply for them to benefit from the lenient tax breaks available.
However, when an inflection point is reached of high interest rates – such as the one we are now in – clients are inclined to re-assess their tax planning strategy and lean to discharge them.
Additionally, on selling a property, a buyer, or his lawyer, will demand from the seller they cancel the existing mortgage loan. Properties need to be sold with a clean title.
With this in mind, in today’s article we give a brief overview on the procedure to fully discharge a mortgage loan in Spain. Unlike other countries, the conveyance procedure involved is not automatic and requires the input of a seasoned lawyer. You will need to instruct a lawyer to carry it out on your behalf (with a specific power of attorney, or POA). This is not a legal procedure that can be followed by laymen.
Preliminaries
Your lawyer, in use of a specific POA will contact your lender and start the procedure.
The bank needs to agree to it. The borrower is free to choose a notary of his choice to formalize the procedure. The legal representative will sign several documents with the lender. Almost every mortgage loan applies a small penalty for early redemption.
The borrower will finish paying off the balance presented by his lender, with penalty interests rolled on top.
Signing the deed
A bank’s representative will then attend the notary of choice and sign a deed fully discharging the mortgage loan.
In plain English, the property is now legally ‘freed’ from the encumbrance. But it doesn’t stop here.
Land registry
The notary deed then needs to be lodged. Once done, the property will appear as free of charges and encumbrances.
How long does it take?
Overall, you are looking at 2 to 3 months on average, always dependant on how fast a lender accommodates you.
Conclusion
Mortgage loans in Spain are not cancelled automatically when you finish paying them off.
Moreover, banks are perfectly content leaving a mortgage charge against a property indefinitely (as it improves their ratios in investor’s eyes), even when the mortgage was paid off long ago. Lenders are in no rush whatsoever to discharge them, and it takes the proactivity of a lawyer to gently nudge them time and again to cancel them over the course of several months. Without a shadow of a doubt, one of the most aggravating tasks that falls on lawyers, is precisely this; assisting borrowers to cancel them as there is a huge amount of red tape involved.
On paying off a mortgage loan, you ought to cancel your mortgage loan. Banks do not do this automatically.
On selling property in Spain, you need to cancel a mortgage loan. No buyer will acquire a property with an existing mortgage against it. A buyer cannot get a new mortgage on the property if there is already one showing up in the title, that is why it must be cancelled.
In a context of high interest rates, most financial advisors will recommend you to cancel them, avoiding hefty monthly repayments which in fact negate the tax benefit sought on the mid to long run.
Bottom line, whatever the reason for cancelling a mortgage loan, you need to hire a lawyer.
Larrain Nesbitt Abogados offers a competitively-priced conveyance service: Discharging a mortgage loan.
At Larrain Nesbitt Abogados (LNA) we have over 20 years’ experience assisting clients buying, selling, or renting properties. We can also offer you a competitively priced accounting service to file your landlord taxes every tax quarter nationwide. We are also specialized in taxation, 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.
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. Ní neart go cur le chéile. VOV.
Larraín Nesbitt Abogados, small on fees, BIG on service.
2023 © Raymundo Larraín Nesbitt. All Rights Reserved.
... Read moreLawyer Raymundo Larraín outlines the procedure to gift property (and money) in Spain attracting little to no tax.
Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 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 © 2023. Plagiarism will be criminally prosecuted
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of July 2023
Introduction
The continued (vertical) hike in interest rates pursued relentlessly by the ECB (basically to mend its own errors on printing money to no end during the Covid pandemic, which generated a huge inflation bubble) has continued to erode people’s income. In plain English, we are all poorer thanks to the errors of central banks. The good news is that no one in these central banks will be held accountable for their gross incompetence (not even a slap on their wrist), yay! The bad news is that all of us punters get to pay for central banker’s mistakes – as in literally. Nay!
The bottom line is that we are all now collectively poorer as a result of their gross negligence, and as a result many families are struggling to make ends meet as they are out-of-pocket with the rising cost of loans and life in general (inflation). This translates to loving parents lending a helping hand to their offspring, so they can get their paws on the first rung of the property ladder.
Gifting property
In today’s article, we outline a method so that parents – or other family members – support their children (or loved ones) financially so they can, for example, buy their first property. But it is also extensive to gifting properties between spouses, other family members, etc.
My professional experience is that most foreigners are blissfully unaware of the legal procedure involved on gifting property (or money) in Spain to their loved ones saving huge amounts in tax in the process.
Gifting property arises when:
Gifting property (or money) has indeed become very popular in Spain, as several regions have approved new tax laws that suppress inheritance and gift tax (Andalucia, Madrid, Galicia, etc). People are jumping at the chance of paying little to no tax in case these tax laws are changed again in the future when a new government takes power …
Taxes paid by the giftor:
Taxes paid by the giftee:
Additional expenses:
Gift procedure
A lawyer needs to be retained from the outset to organize & supervise the gift deed which will be witnessed by a Spanish notary. This requires planning ahead carefully to mitigate your tax bill. If you fail to plan, you plan to fail.
If the legal procedure is not followed correctly (i.e. you do not bother to instruct a lawyer and attempt do it on your own), you will likely not qualify for the lenient tax breaks available and be slammed with a huge tax bill.
Please note we are only giving in this article a (very) basic outline on how the procedure works, the devil is in the details.
Dissolution of joint property ownership (DJPO)
If existing joint owners wish to re-arrange their property holdings, they can opt instead for a DJPO, which reduces taxes by as much as 86%, or more! More on this in our in-depth article: Dissolution of a joint property ownership.
A DJPO applies when:
1.- In divorce or separation proceedings. Couples owning property jointly may decide to split up. Taking for granted they own a property in equal shares, one of them decides to sell their 50% to his ex-partner. The ex-partner will pay him/her his quota.
2.- Re-arranging inheritances. Beneficiaries of an inheritance transfer their quota on a property to a fellow heir. E.g. Sisters who inherit property transfer a share between them.
3.- Re-arranging property holdings between family and friends. Stakeholders such as family, friends, or investors co-owning a property may decide to re-arrange their holdings.
Conclusion
If you care for your loved one’s well-being, and want to help them out in life, all the while paying little to no tax, you may wish to consider this option I explain above.
At LNA we will gladly assist you to re-arrange your property ownership by way of gifting it. Just give us a call, and one of our friendly staff will speak to you.
“If you fail to plan, you plan to fail.” – Benjamin Franklin
Benjamin Franklin (1706 – 1790). Founding Father of the United States. Exceptionally gifted statesman, scientist, inventor, diplomat, writer, printer, postmaster, and political theorist. He campaigned from early on for colonial unity, initially as an author and spokesman in London for several colonies. He was tasked to raise funds in Europe for the War of Independence. Malaga’s cathedral only has one tower (known as ‘La Manquita’), as the funds were gifted to 13 struggling colonies in their War for Independence against a mighty overseas empire. He was one of the drafters and signers of the Declaration of Independence of the 4th July 1776. Appointed as the first United States ambassador to France, he exemplified the ingenuity and prowess of a young emerging American nation.
Benjamin was a politician in his spare time; nobody’s perfect.
At Larrain Nesbitt Abogados (LNA) we have over 20 years’ experience assisting clients buying, selling, or renting properties. We can also offer you a competitively priced accounting service to file your landlord taxes every tax quarter nationwide. We are also specialized in taxation, 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.
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. Ní neart go cur le chéile. VOV.
Larraín Nesbitt Abogados, small on fees, BIG on service.
2023 © Raymundo Larraín Nesbitt. All Rights Reserved.
... Read moreLawyer Raymundo Larraín highlights the main advantages of attaining a Spanish Golden Visa.
Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 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 © 2023. Plagiarism will be criminally prosecuted
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of June 2023
*(subject to criteria)
Conclusion
The European Commission does not like golden visas.
The Spanish government doesn’t like golden visas either (although it greatly benefits from them).
Several countries in Europe don’t like them either and have already scrapped them in a trend that is growing and gathering pace throughout all the Union (Ireland, Portugal, etc).
On the back of this burgeoning trend, several political parties have piled pressure on the government to suppress them altogether registering proposals at congress (Mas Pais, Podemos, etc). The Spanish government jumped on the bandwagon last month, and made public it will either scrap golden visas, or raise the cap to €1,000,000. It seems they are leaning towards the latter (raising the cap, meaning doubling the required minimum investment).
So, what does all this mean for applicants? It means the window of opportunity to attain a golden visa in Spain, by way of investing €500,000 in real estate, is waning by the day. Over the next months, the Spanish government will approve to raise the cap, as reported by El Pais, in effect doubling the minimum investment to €1mn. Anyone who cannot afford to spend a minimum of one million euros in real estate, will be left out in the cold.
We strongly advise all non-EUs – who are considering filing for a golden visa in Spain – to do so immediately, before the window of opportunity closes. Obviously, if you are a multi-millionaire, this change does not concern you. But there is also the distinct possibility of the government caving into the political pressure and shutting down golden visas for good, in line with other fellow EU countries.
In any event, all would-be golden visa applicants, affluent or not, are strongly advised to act sooner rather than regret it later.
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.
Your family’s success is only one call away: (+34) 952 19 22 88
Larrain Nesbitt Abogados has a 100% track record of attaining Spanish residency.
“I’m self-made. I always wanted to make myself a better person, because I was not educated. But that was my dream – to have class.” – Tina Turner
Anna Mae Bullock (1939 – 2023). Was an-all American singer (later on in life she acquired Swiss residency & citizenship through investment). Born in a humble family, in the deep South, she picked cotton as a kid with her father in a farm. Family members soon noticed her natural talent for singing and she went on to join the local church’s choir. Without receiving a formal education, she would go on to work in several jobs, such as joining a household’s domestic service, etc until finally pursuing her dream, a singing career on meeting the man who would eventually become her husband, Ike Turner. He taught her all the basics. She became the featured vocalist of his band, and rose to prominence as the lead singer of the Ike & Tina Turner duo. Because of her husband’s constant abuse (fuelled by the unrestrained consumption of cocaine & alcohol), she bravely decided to split up and launch a successful career as a solo performer, at age 37, garnering worldwide recognition. And the rest, as they say, is history. Tina Turner will be fondly remembered as the Queen of Rock ‘n’ Roll.
She is one of the few singers who dedicated a song to us lawyers: “Typical male.” No doubt, the lady had class.
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 also published at Larrain Nesbitt Abogados: Spanish Golden Visa: 10 reasons to apply
Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speakinglawyers and economists have a long track record successfully assisting expats all over Spain.
You can review here our client’s testimonials.
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. Ní neart go cur le chéile. VOV.
Article copyrighted © 2023. Plagiarism will be criminally prosecuted.
... Read moreLawyer Raymundo Larrain gives ten reasons to invest in Spanish real estate.
Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 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 © 2023. Plagiarism will be criminally prosecuted
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of May 2023
When you combine soaring rental yields and capital growth, you reach the conclusion that Spanish real estate is delivering a safe two-digit return year on year.
Be smart, don’t work for your money, make your money work for you.
If you take care of your money, it will take care of you.
Invest in real estate.
“One generation plants the trees in whose shade the next generation rests.” – Ancient Chinese proverb.
LNA offers the following tax & legal services:
“Los políticos no son necesarios, pero ellos nos convencen de que los necesitamos para resolver los problemas que, sin ellos, no existirían.”– Sanchez Dragó
Loosely translated as: “We don’t need politicians, but they go to great lengths to convince us we need them to solve all the problems that, without them, wouldn’t exist.”
Fernando Sánchez Dragó (1936 –2023). Was a Spanish writer and journalist. In his idealistic youth, he was an active member of Spain's Communist party; he was imprisoned a few times for his fierce opposition against Franco’s dictatorship. Later on in life, he would gradually gravitate towards a conservative line of thinking. He was a prolific writer who published over 40 books, and wrote thousands of articles. During his lifetime he received numerous literary accolades. A polemic figure, whose private life would fill multiple libraries, that never left anyone indifferent. It is challenging to label such a unique man, greater-than-life.
Sanchez Dragó died last April aged 87. He leaves behind a vast fortune, mainly in real estate.
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. Ní neart go cur le chéile. VOV.
... Read moreLawyer Raymundo Larrain delivers useful pointers on buying property in Spain.
Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 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 © 2023. Plagiarism will be criminally prosecuted
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1st of April 2023
Introduction
You would never buy a property in your home country without instructing a solicitor or conveyancer, and yet a surprising number of people choose not to instruct a lawyer or legal representative when buying abroad. If anything, it is even more important to obtain good legal advice when buying overseas as it is highly likely that you will be unfamiliar with many of the key processes.
While it is possible to buy a property in some overseas jurisdictions, including Spain, without having to appoint a lawyer, it would be very unwise to do so. Buying a house is one of the biggest investments most people make in their lifetime. So why take the risk by not obtaining proper legal advice?
In conclusion
I have only listed the basic eight, but you should be aware there are far more points to look out for (in the dozens). A seasoned conveyance lawyer will quickly pick on all the flaws listed above and advice his client on running a due diligence on the title. For reference, we offer a free in-depth buyer’s guide to buy property in Spain: Lawyer guide to buying property in Spain.
On buying property in Spain, you should be mindful the title is clean. It is fairly common the previous owner has fallen in arrears (maybe that’s exactly why they are selling!). In Spain, the golden rule is that debts follow the property, not the debtor. Meaning, when a buyer takes over a property, they also take on all existing debts from the previous owner! And this is not limited only to owed money, if a buyer, for example, acquires an illegally built rustic property on green belt land, the may be held criminally liable for the previous owner’s planning infractions. Planning infractions follow the property; whoever becomes the new owner, ‘inherits’ any outstanding planning problems and will be held liable for them.
Whilst it is true there is no legal obligation to hire a lawyer on buying property in Spain, it would be very foolish (and costly) not to do so. This is why we advise you to hire a reputed and independent conveyance law firm to carry out a thorough due diligence on the property ensuring everything is above board.
We assist clients all over Spain. Our friendly staff will be more than happy to have a chat with you.
LNA offers the following related tax & legal services:
“Eyes up Guardian.” – Lance Reddick
Lance Solomon Reddick (1962 – 2023). Was an American actor and musician. He was best known for playing Cedric Daniels in The Wire (2002–2008), Phillip Broyles in Fringe (2008–2013), and Chief Irvin Irving in Bosch (2014–2020). In film, he was best known for starring as Charon in the John Wick franchise (2014–2023) and David Gentry in Angel Has Fallen (2019). He was also known for portraying Detective Johnny Basil on Oz (1997–2003), Matthew Abaddon in Lost (2004–2010), and Albert Wesker in the Netflix series Resident Evil (2022). He provided the voice and likeness for video game characters Martin Hatch in Quantum Break, Sylens in Horizon Zero Dawn and Horizon Forbidden West, and Commander Zavala in the much-acclaimed Destiny franchise. He will be sorely missed.
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.
... Read more
Lawyer Raymundo Larrain briefly explains the steps that need to be taken to prepare an inheritance procedure in Spain.
Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 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 © 2023. Plagiarism will be criminally prosecuted
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of March 2023
It is strongly recommended that you make a Spanish will when you own property in Spain. The reason is because it will greatly assist your appointed beneficiaries saving them time, money, and aggravation at a time of bereavement. The full advantages are explained in our article: 7 Advantages of Making a Spanish will – 8th May 2018. Spanish wills are usually done in under one hour at a Spanish notary.
It’s important to note you only have 6 months to file inheritance tax in Spain, as from the time of death, without attracting any penalties. After the tax deadline, penalties and delay interests are rolled on top and can be up to 20% of the estate. Your lawyer can request a one-time extension to avoid this.
When a person dies in Spain, you must appoint a Spanish qualified lawyer to instigate and oversee the probate procedure. Depending on whether there is a Spanish will already made, the procedure can take anywhere between two months to over a year. That is why we stress again that making a Spanish will is highly advantageous as it cuts through all the red tape saving considerable time and money (in the thousands).
Property in Spain cannot be sold to anyone until the probate procedure has concluded and the taxes have been filed. Only then can the property be re-registered under the beneficiary’s name who becomes the new legal owner and is now free to sell the property on.
Please note that in several regions of Spain, such as Andalusia, inheritance tax has been suppressed, so 99.99% of people don’t pay any tax on inheriting (but the tax still needs to be filed regardless).
If a loved one passes away in Spain, please contact our law firm so we can assist you. We have over 20 years’ experience assisting in probate matters all over Spain. We are here to help.
LNA offers the following related tax & legal services:
Further reading:
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.
... Read more
Lawyer Raymond Nesbitt explains the unique tax advantages of Spain’s Digital Nomad Visa
Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 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 © 2023. Plagiarism will be criminally prosecuted
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21st of February 2023
Introduction
The new Digital Nomad Visa (DNV) offers unique tax advantages that no other Spanish visa can match. Its main outlier - and what distinguishes it from other available visas - is precisely the wide array of tax benefits it offers. The DNV has been purposely devised so successful applicants pay few taxes; the purpose is to incentivize these overachievers to move and work (remotely) in Spain.
The DNV is modelled after Beckham’s Law, enacted in 2015, and which applies to EU residents which in turn was inspired by the UK’s wildly popular Non-Domiciled taxpayer scheme.
It’s a legal fiction whereby a non-EU taxpayer is treated as a non-fiscal resident in Spain, but for administrative purposes, they are regarded as fully resident in Spain. The tax significance of this nuance simply cannot be understated enough and opens the door to the slew of tax benefits I collate below.
Precisely because of its huge tax advantages, the law time-gates it to a maximum of only five years.
Needless to say, a DNV makes you tax resident in Spain (that’s precisely the whole point!).
Because of its nature (to attract talented individuals), and similar to Golden Visas, all applications are fast-tracked. Meaning that in under one month you know if you’ve been accepted.
In a nutshell, the DNV is all about paying little to no tax.
Larraín Nesbitt Lawyers, small on fees, BIG on service.
At Larrain Nesbitt Abogados, we have assisted hundreds of non-EU nationals, and their families, to successfully attain a Spanish residency permit since 2013.
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
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. Voluntas omnia vincit.
2.023 © Raymundo Larraín Nesbitt. All Rights Reserved.
... Read moreSolicitor Raymond Nesbitt supplies us with a general overview on the different types of visa permits available and how to spend more than 90 consecutive days in Spain.
Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 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 © 2023. Plagiarism will be criminally prosecuted
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1st of January 2023
Introduction
With the advent of the new and upcoming popular Digital Nomad Visa (which has now been approved), it was time to update our visa article. The goal of this article is to explain how you can (legally) spend over 90 consecutive days in Spain.
If you are a non-EU national, you can legally spend up to a maximum of 90 consecutive days in Spain, or within the Schengen Area, within every rolling six-month period. This is popularly known as the 90/180-day rule.
Non-EUs who wish to spend longer periods of time in Spain, or even work, must apply for a visa. Please note that not all visas allow you the right to work in Spain, it should not be taken for granted.
In this article, we supply a general overview of all five visas available through our company. We won’t cover other options, such as student visas, which are applied for directly by academic institutions.
The five listed visas below allow its successful applicants, and dependants, to remain in Spain for more than 90 consecutive days within a calendar year; moreover, you may stay all year round if it pleases you. As an additional advantage, visa holders will have unfettered access to the Schengen Area (all 26 countries). Basically, you will be treated on equal footing to a Spanish national on entering & exiting the country without all the border & customs hassle that cause so much aggravation.
Regarding taxation, none of them automatically make you tax resident in Spain on attainment. However, if you spend over 183 days/year in Spain you will be deemed tax resident. On applying for a visa renewal, you will have to provide proof you are living in Spain long term, which triggers tax residency.
All visas collated below extend their benefits to the main applicant’s family i.e. spouse and underaged children.
All five listed-below visas have in common the following staple requirements:
The DNV belongs to a new generation of visas that specifically target certain collectives that are of interest to the government. To that end, it rolls out the red rug to attract talented teleworkers offering them in exchange unique and enticing advantages. Hands down the outlying advantage is the privileged taxation it confers upon its holders (basically Beckham's law applies). No other visa in Spain offers the benefits of paying such low-income tax: a flat tax rate of only 24% on the first €600,000 of gross annual earnings over a five-year period. Your worldwide income & assets are tax-exempt. If you fancy living and teleworking from Spain, and paying few taxes, look no further.
Suitable for:
Further reading: Spain’s Digital Nomad Visa approved! – 29th December 2022
We offer this competitively priced visa service: Digital Nomad Visa
The investor visa is devised for affluent applicants. It is popularly known as a ‘Golden Visa’. It’s a blue-ribbon visa that basically rolls out the red rug for its privileged holders that neatly cuts through all the red tape. Its purpose is to foster foreign investments in Spain. Whilst there are many different ways to attain a GV, the most popular (and least expensive) is by investing in Spanish real estate. This requires investing €500,000 in property. We should point out that it applies retrospectively; meaning that any UK national (or from any other non-EU country) that bought a property in Spain for over 500k on or after the 28th of September 2013 may qualify. Unlike the other visas listed below, renewals are not subject to proving you live in Spain all year round. They are based on keeping the investment. This ability to override the 90/180-day rule and not being ‘forced’ to live in Spain make it one-of-a-kind and explains why it is so coveted. GVs allow you to work in Spain should you choose to.
Suitable for:
Further reading: The Spanish Golden Visa: 8 Reasons to apply – 21st March 2022
We offer this competitively priced visa service: Golden Visa
It’s intended for families or couples that have been separated, in and out of the EU. It seeks to reunite them in an expedited manner within the EU. So, although this type of visa is popularly dubbed as ‘marriage visa,’ it would be rather more appropriate to refer to it as ‘family visa’, as its scope goes well beyond a married couple. It ought to be understood in broader terms, as in family reunion. As its own name implies, couples must be married (including same-sex partners). This visa allows you to work in Spain.
Suitable for:
Further reading: EU-family regrouping (marriage visa)
We offer this competitively priced visa service: EU-family regrouping (Marriage Visa)
As its own name implies, this permit allows the applicant to work in Spain as you will be self-employed. This residency applies to someone who is looking to set up his own business in Spain. Typically, you will be acting as director or company administrator. Needless to say, one of the key requirements is that you will have enough means to be self-supporting both for yourself and your family for one year. The catch, besides a cast-iron motivation, is that you need to invest in the ballpark of €100,000 in savings to open & run a business.
Suitable for:
Further reading: Lucrative residency permit (business visa)
We offer this competitively priced visa service: Lucrative Visa
As its own name implies, this visa allows the applicant to live, but not to work, in Spain. The applicant will be expected to be self-supporting and will be required to prove he or she has enough savings for at least two years. This visa is ideal for retirees who wish to spend extended periods of time in Spain – without working – enjoying the finer things in life. However, it should be noted that other applicants, who are not of pensioner age, are also welcome to apply. This visa is also a good option for those who want to test the waters and are considering living in Spain long term.
Suitable for:
Further reading: The Spanish Non-Lucrative Visa Explained
We offer this competitively priced visa service: Non-Lucrative Visa
Larraín Nesbitt Lawyers, small on fees, BIG on service.
At Larrain Nesbitt Abogados, we have assisted hundreds of non-EU nationals to successfully attain a Spanish residency permit since 2013.
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
Article originally published at Spanish Property Insight: How to spend over 90 days in Spain – Residency visa overview
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.
2.023 © Raymundo Larraín Nesbitt. All Rights Reserved.
... Read moreMarbella-based Larraín Nesbitt Abogados (LNA) has over 20 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
29th of December 2022
The Digital Nomad Visa was approved in Spain on the 23rd of December 2022.
The DNV is extensive to family members i.e. spouse and children under the age of 18 years old.
It allows you to work remotely from Spain.
The main advantage of a DNV is that it grants its applicants a special tax regime whereby they pay very few taxes as opposed to the standard IRPF (personal income tax) sliding scale.
Applications are now open for this visa. Please contact us to get the ball rolling.
Our law firm has a track record of 100% attaining Spanish residency permits since 2013.
Main advantages
Specific requirements
Larraín Nesbitt Abogados, small on fees, BIG on service.
At Larrain Nesbitt Abogados we have over 20 years’ experience buying, selling, and renting properties. We are also specialized in taxation, immigration & residency visas. 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.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 blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.
2.022 © Raymundo Larraín Nesbitt. All Rights Reserved.
Copyrighted © 2022. Plagiarism will be criminally prosecuted.
... Read moreThe Spanish government has approved another ‘temporary’ Wealth Tax on ‘big fortunes’ that is more about politics than economics, and likely to be counter-productive.
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 successfully assisting expats all over Spain. You can review here our client’s testimonials.
By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of December 2022
Spain is different.
In order to better understand why Spain would approve a second Wealth Tax, I need to preface this article with a political digression on how we got here in the first place because this new tax is being introduced solely for political reasons, serving no other purpose.
As frequent readers will recall, Spain already has in place another ‘temporary’ (read permanent) Wealth Tax, control over which was devolved to Spain’s 17 autonomous regions. This tax was once suppressed, and then reinstated again by a socialist government and applies nationwide (Impuesto de Patrimonio). Being a devolved tax Spanish regions have leeway to make adjustments as they see fit to the point of even suppressing the Wealth Tax.
In broad strokes, Spain is traditionally split into two ideological camps like many other countries:
1. Left-wing parties that favour higher taxes to finance the needs of an ever-expanding public administration, and increasing public expenditure to finance more services (health, education, etc).
2. Right-wing parties that favour low taxation and a slim but efficient public sector to dynamize the economy and increase employment.
These two opposing camps often clash on administrative and tax matters and coalesce on implementing different tax measures, depending on which side is ruling at any given moment.
Spain is now ruled at a national level by a coalition government of socialists and communists whose self-declared goal is to increase the fiscal pressure on taxpayers, which brings us to the new tax this article is about (known as ITSGF for short, explained below) to prop up an ever-growing public sector.
As I’ve already mentioned, Spain’s autonomous regions are run by governments of different political stripes. In the regions where centre-right parties have been elected like Madrid, Andalusia, and Galicia, they have put in practice (to great success) liberal fiscal policies that reduce taxation, even going so far as to suppress some taxes altogether like the original Wealth tax.
In these three liberal regions, as I have painstakingly recorded over the years through multiple articles, the economic phenomenon of Laffer’s curve can be observed. In a nutshell, this economic theory (penned by US economist Mr. Arthur Laffer) says that a tax reduction can actually increases tax revenue up to a certain marginal revenue point (only if supplemented by other measures, such as a reduction of public expenditure).
These regions have de facto suppressed both the Wealth Tax and Inheritance Tax, amongst many other tax instruments, as I’ve reported in several articles over the years:
The liberal fiscal policy pursued by these three regions has triggered strong economic growth with welcome consequences in those regions. Besides a notable increase in tax revenue, the unemployment rate has fallen, and foreign investment has increased. This resounding success is in stark contrast to the rest of Spain where economic policy has strangled the economy through higher taxation, fostering huge levels of unemployment.
Despite the success of liberal regions, the national government in Madrid has decided to enact a ‘new’ (second) Wealth Tax to quash the fiscal competencies of liberal regions under the cover of harmonising (read equalizing) the fiscal policy nationwide to avoid what they label as ‘unfair’ competition and fiscal dumping (Spanish anglicized made up word).
The frustrating thing is that all regions in Spain have the same freedom to pursue such liberal policies if they want to, prompting economic success on its wake, but they purposely deny themselves such an option because of their own ideology, which drags down their regional economies.
For example, take the case of Catalonia. This is one of Spain’s industrial and financial powerhouses whose rightful place should be at the forefront of the economy. However, the regional government has held the economy back through a series of misguided policies that reduce incentives for local companies to create jobs, and deter foreign investment. Take, for example Barcelona’s hostility to foreign property-investors.
In a nutshell, the purpose sought by our government in Madrid through this new tax bill is primarily to exert control, negating all the successful fiscal policies lawfully passed by these three liberal regions freely exercising their constitutional rights, and bring them to heel in line with the rest of Spain’s (failing) regions under the government’s direct control.
This will no doubt have serious repercussions for the Spanish economy, because Madrid is Spain’s financial powerhouse. If you mess up Madrid’s economy, the country will hurt (badly).
The instrument for this policy is a new ‘Temporary Solidarity Tax on Big Fortunes’ (known for short by its Spanish initials ITSGF) to be enacted on or before the 31st of December 2022 with retroactive effects to the 1st of January 2022. In other words, it covers all of the tax year 2022.
Its goal is to collect 1.5 billion euros a year from the ‘super rich’ (personally I’d call it a win if it even manages to rake in 300 million euros). As you can see from the wealth tranches below, it doesn’t take billions to be considered ‘super rich’ in Spain.
The ITSGF is divided into three tranches:
In practice, taxpayers have a minimum allowance of €700,000, so the above figures must take this into account, besides other personal tax allowance like a main home.
As mentioned above, the Wealth Tax was devolved to Spain’s 17 regions, as enshrined in Spain’s Constitution of 1978. It is no longer a (tax) competency held by Spain’s central government. The ITSGF in effect encroaches on a legal competency that was assigned to regional tax authorities and is constitutionally enshrined.
In other words, the central government has no business with the Wealth Tax, which is a matter for the regions, but that has not stopped it interfering with a new Wealth Tax dressed up as a ‘Solidarity Tax’ to gain an advantage over its political rivals by cornering them and negating their (economic) success.
Moreover, it is one of our general tax principles that you cannot be taxed twice for the same thing. It stands to reason that introducing a second tax that taxes exactly the same thing is unconstitutional and can – and should – be legally challenged at court.
Under normal circumstances, I can safely say this new politically motivated tax would be quashed by Spain’s Constitutional Court for self-evident reasons.
However, we are not living under ‘normal’ circumstances. We have a Spanish President whose relentless pursuit of power has led him to ‘colonize’ all independent democratic institutions in the country by appointing his own people, which includes tarnishing the prestige and independence of the Constitutional Court itself by promoting two allies who give the government a majority of vote in this court. Therefore, the outcome of this law being repealed is uncertain, at best.
In short, negative.
This could prompt an exodus of affluent taxpayers, who will relocate to neighbouring states with low taxation, such as Portugal and Andorra. This will enable them to mitigate their tax bill, within the law.
It will also disincentivize foreign investments in Spain. At a time when Andalusia (but also Madrid and Galicia) were attracting substantial foreign investments that translated into the creation of jobs and higher tax revenues, this new tax will throw a spanner in the works, dampening the business mood.
This new tax is – clearly – politically motivated having no economic or legal logic to it, to put it mildly. In fact, we can credit our President Mr Sanchez as the creator of political taxes that serve no discernible purpose other than to create a political advantage of sorts; even if it’s at the expense of the whole country.
Podemos, the pro-Russian, hard-left junior partner of the socialist government, has basically pushed for this law to be passed if Mr. Pedro Sanchez wants to secure their political backing in the new upcoming national elections in 2023.
But ultimately, it’s not even about this tax.
It’s about taking away the freedom and (tax) competency of autonomous regions and placing them under the control of a central government that seeks to quash any and all dissension and freedom, ‘equalizing us all’. Ironically, Mr. Pedro Sanchez is acting much as General Franco did under his loathsome four-decade dictatorship, killing freedom.
An economic meteorite is heading towards Spain in the shape of a ballooning public debt (€1.5 trillion) and soaring interest rates.
Unless decisive action is taken, either by the EU, or by a new government that adopts sensible economic policies such as lowering taxes and reducing public expenditure, Spain could find itself in a very delicate situation where it has difficulty borrowing and/or even repaying the (high) interests of its public debt. If, on top of this, its credit-rating takes a tumble, like it did during 2011-2013, it could push the country over the edge.
I get how most politicians are not economists and tend to overspend and overpromise with an eye on poll day. I really get it, it’s part of the game we call democracy.
However, when the ambitions of the few threaten the welfare of the many, we need to put checks and balances in place. And that onus, I’m afraid, now falls on our EU Overlords to rein in the exuberant excesses of our deluded political class.
For it is clear Spanish politicians are not up to the task, and their complacency blinds them from stepping up and taking responsibility for our economic future. Short-sighted career politicians who take decisions on the hoof, based on short-term opinion polls, are a nuisance under normal circumstances, but they can become a big liability when the economy slows down and is derailed by high inflation.
Next year we have general elections in Spain, so our government is in overdrive hyping all sort of promises and financial commitments to secure votes and political allies across the left of the political spectrum. Foremost amongst the government’s main objectives, in view of the general elections, is to bring down unemployment (13%, the highest out of any OECD country, that’s out of 38 member countries) that most affects collectives such as women and young adults. To ‘massage’ the high unemployment figures, which don’t reflect well in polls, the government has been busy hiring public-sector workers at full throttle using public money, and EU money.
A few key figures to keep on mind on where Spain is heading next economically:
So basically, what our government is doing is ploughing forward with blinkers on, over-indebting the country, and using all that borrowed money to hire yet even more civil servants with an eye on the next general election. In the words of Oscar Wilde: “The bureaucracy is expanding to meet the needs of the expanding bureaucracy.”
In a context of ultra-high inflation, where central banks are ‘forced’ to hike up interest rates like there is no tomorrow month after month, owing 1.5 trillion euros can pose a real threat for Spain’s ability to repay back loan interests in the future, let alone the principal.
It is no longer far-fetched to imagine a scenario of interest rates reaching two digits over the next two years, much like in the eighties. This would seriously compromise Spain’s ability to repay its ever-growing debt interests, even compromising its borrowing ability unless the ECB keeps its policy of open hands.
If Spain continues its present course unchecked, it does not seem unreasonable to expect ‘issues’ on repaying its loan commitments, or even raising new debt. As Italy’s situation is not much better, the European Union, in order to ensure its very own survival, should really start to rein in the borrowing of Spanish politicians and school them on the benefits of a frugal economy: to save money, invest it wisely, and think about the long run; not to overspend it and take on more and more loans they can’t repay.
Spain’s economy is not as resilient and strong as that of Germany; we categorically cannot be burdened with such high public debt figures in the long run least it compromises the economic viability of the country itself.
The EU should seriously consider monitoring where the over 130 billion euros in EU money sent to Spain is going. No one seems to know what this money is being spent on.
The EU’s high commissioner, Ms. Monika Hohlmeier, appointed to oversee the expenditure control of the EU’s Next Gen Funds across all EU member States, recently declared in an interview: “I have no clue what Spain is doing with it (EU funds)”. We could always ask Spain’s own national commissioner to shed some light on the matter but, oh wait, she resigned early on this year, so that’s that.
Billions of euros in EU taxpayers’ money are being squandered and no one knows where it’s going, and no one is held accountable. But clearly these EU rescue funds are not reaching struggling families or ailing SME’s, which was precisely the whole point of the Covid rescue funds.
I wrote an admonitory article on this almost two years ago: Now you see it, now you don’t - 12th February 2021
It is clear to me that Spanish politicians are burying their heads in the sand, refusing to acknowledge the harsh reality of a sharp rise in interest rates, all the while consumed by their own petty squabbles.
Unless the EU steps up, and acts decisively (even if spurred to act out of self-interest to ensure its own preservation), Spain will head down a dangerous path that could lead to repayment issues on its vast public debt.
As much as we are all (very) grateful to generous EU taxpayers’ solidarity through the Covid rescue funds (NextGen funds), the truth of the matter is that the EU is spoiling Spain like a child indulging it on its reckless credit addiction. Spain needs to grow up and face the harsh reality, adapting its economic policy to become more competitive and resilient in a digital economy, to reduce its overall expenditure (does our government really need 22 ministries?), to curb its insatiable reliance on public debt.
Madrid, Andalusia and Galicia have shown us there is an alternative, a way out of this vicious credit spiral through the pursuit of liberal policies that have helped their economies boom, unlike in the rest of Spain.
I fully understand that overcoming bipartisan rivalries is easier said than done, granted, but Spanish politicians really need to get their act together and start thinking about tomorrow, adopting a grand long-term strategy for the good of the country and its people, instead of just living for today burning borrowed money like there is no tomorrow; much like in Aesop’s fable of the ant and the grasshopper. Winter is coming.
The core argument I try make in this article is that the new ITSGF bill is a bad idea that exemplifies everything that Spain’s government is doing wrong economically, and that we ought to avoid at all costs. It is primarily a political tax whose purpose is more about firing up the base than raising tax. This government has proven adept at pinning the blame for economic woes they’ve helped create on easy targets such as banks, utility, and energy companies, and now the latest villain, the ‘super-rich’ (insert evil laughter here).
Back on planet earth, if our EU Overlords do not act to rein in Spain’s credit addiction, as clearly Spanish politicians are not fit for the task, Spain will endure serious financial problems in the future that could even threaten the EU itself.
The European Union is -without a shadow of doubt- the most ambitious and greatest political achievement of humankind of all time; a living testament to those eleven men that made it possible and averted all future wars in European soil. We should not jeopardize its future turning a blind eye on spoilt nations that are hell bent on inflicting themselves self-harm and which may even, in the near future, pose an existential threat to the strength of the Union.
There is still time to correct the course avoiding the choppy waters ahead. The EU must intervene and curb Spain’s unbridled craving for public credit embodied by Mr Sanchez. It is in the Union’s own best interests to put an end to it.
“Españolito que vienes
al mundo te guarde Dios.
una de las dos Españas
ha de helarte el corazón.” – Antonio Machado
Antonio Cipriano José María y Francisco de Santa Ana Machado y Ruiz (1875 – 1939). Brilliant Spanish poet and one of the leading figures of the Spanish literary movement known as the Generation of ’98. Died in imposed exile during the fratricidal Spanish Civil War. He is credited as being one of Spain’s most popular poets. Amongst his timeless classics, Campos de Castilla stands head and shoulders above the rest.
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 taxation, immigration & residency visas. 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.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 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. Ní neart go cur le chéile. VOV.
2.022 © Raymundo Larraín Nesbitt. All Rights Reserved.
Copyrighted © 2022. Plagiarism will be criminally prosecuted.
... Read more