The plusvalía tax in Spain or the capital gains tax is a municipal tax that is levied on real estate purchase and sale transactions, as well as inheritance and gifts. The full title of the tax is el Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (IIVTNU) or the tax on the increase in urban land value. Its short name is used most often, including official websites.
Since the tax is municipal, its rates may vary in different localities. Currently, there are rates from 5 to 30%.
The plusvalía tax in Spain: payers and payment terms
The obligation to pay the tax arises in three cases:
- When selling real estate;
- When receiving real estate as an inheritance;
- When receiving real estate as a gift.
The plusvalía tax in Spain is payable:
- If the seller is a tax resident in Spain, then the payer is always he himself.
- In case of inheritance, the tax is paid by the heirs.
- In case of gifts, the tax is paid by the beneficiaries.
If the seller is not a tax resident of Spain, the buyer pays the tax, subtracting previously the required amount from the seller at the time of signing the notarial bill of sale.
The following deadlines are established for paying the plusvalía tax in Spain:
- In case of gifts: 30 calendar days from the date of receiving the property as a gift.
- In case of inheritance: within 6 months from the date of death of the testator (with the possibility of extending the payment period up to 12 months).
- When selling: 30 calendar days from the date of signing the notarial bill of sale (in most municipalities).
The methods for calculating the plusvalía tax in Spain
From November 2021, Spanish legislation provides for two methods for calculating the plusvalía tax:
- the objective method (objetivo);
- the method based on real profit (real).
Online tax calculators can be found on the official websites of many municipalities. If there is no such calculator, you should contact your municipal tax office, a local lawyer or a tax advisor.
The objective calculation method of the plusvalía tax in Spain
With an objective method, the calculation of the plusvalía tax in Spain is based on the cadastral value of the property using coefficients. The coefficient depends on how many years the seller owned the property.
The law provides for an annual review of the coefficients. The current table can be found at the link (the paragraph II).
First, the tax base is calculated. To do this, the cadastral value of the land must be multiplied by the appropriate coefficient. If the seller has owned the property for less than a year, then the coefficient is adjusted according to the number of months of ownership.
The tax rate of the particular municipality must be applied to the resulting tax base.
The plusvalía tax calculation in Spain based on real profit
The calculation begins with determining the coefficient. To do this, divide the assessed value of the land (Valor catastral del suelo) by the total cadastral value (Valor catastral total). Both required amounts can be found on the last receipt for the property tax IBI (read more about it here).
The profit received from the sale of the property must be multiplied by the calculated coefficient – this is the way to receive the taxable base. In turn, profit is calculated as the difference between the purchase price and the sale price, excluding any additional costs and taxes. The easiest thing is to take the data from the notarial bill of sale.
In the third and final stage, the rate of a particular municipality must be applied to the taxable base.
We would like to note that the objective method of calculating the plusvalía tax in Spain is default. We recommend to make preliminary calculations in advance. If the seller sees that it is more profitable for him to calculate the plusvalía tax using the real method, he should bring to the transaction the original notarial bill of sale, where the purchase price is indicated, and also attach a written statement to the sales contract, where the intention to use the method based on the real profit (real) will be clearly indicated.
The plusvalía tax payment in Spain
In addition to rates, each municipality has the right to establish its system of benefits. As a rule, tax benefits apply to properties received by inheritance, as well as transactions with main home.
Also, at the level of municipalities, regulations of installment for the plusvalía tax payment are established. Violation of the terms of tax payments entails the accrual of penalties.
If the immovable property was sold with a loss or with zero profit, the obligation to pay the plusvalía tax does not arise. Also, the tax is not charged on transactions with objects of historical, art or cultural heritage.
If the property was inherited (gifted) and sold – regardless of the period of ownership – the heir and the seller in one person will be obliged to pay the tax twice, i.e. at the time of signing each notarial deed.
Refund of the plusvalía tax in Spain
If there is a need to challenge the tax amount, this must be done within a month from the date of payment. To do this, submit a written statement to the municipal tax office, attaching copies of both bills of sale and a tax receipt. We do not recommend doing this yourself. Any tax issues in Spain are best resolved with the support of a lawyer or a tax advisor.
