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All resident and non-resident foreigners with financial affairs in Spain (such as ownership of property) must have a "foreigners identification number" (NIE). This is obtained very simply, and guidance will be given when you are at a stage of needing to open a bank account in Spain.
The interest rate in Spain (as part of the European single currency zone) is generally well below that in the UK, making Spanish mortgages relatively good value. Most of our offices in Spain can arrange mortgages for you through associated banks, at very competitive rates. The maximum recommended mortgage is 50% of purchase price of a property, although if necessary it may be possible to obtain more. As is the case in the UK, mortgages are given subject to status.
This is a rough overview - not necessarily a comprehensive list. Please consult our further reading list and don't worry - our offices in Spain will be happy to set you off in the right direction, and the appointment of a gestor will have you enjoying the sun free from any thoughts of the taxman!
Spanish VAT is charged at 3 different rates, 4% for essential items (including basic foods, some medicines and cars), 7% for other foods, drink, fuel and new properties and 16% for other items. Some goods and services are not liable for VAT, including many financial and educational services. A further 0.5% is payable as stamp duty on property purchases.
This is a local tax levied on property. The rate varies from one location to another and the charge levied is subject to the valuation of the property, and is paid annually. (See the page Organising Finance 2 for property related information)
You are liable for income tax if you are resident in Spain for 183 days in the year. Spain has a rate of income tax below the average for the European Union, although it should not longer be viewed as a "tax haven". If you appoint a "gestor" he/she will be able to advise you on tax liabilities and allowances. Allowances include deductions for social security payments, the standard tax allowance of around £2000 (increased for pensioners and people with disability), as well as allowances for dependants. Income tax is calculated in six bands, the lowest rate is 18% with the highest rate, 48%, payable on annual income over 11,000,000 Ptas.
When you sell a property, it will be liable for capital gains tax, payable on the increase in value of the property, less allowances.
Wealth tax is an annual tax payable on your material assets over 17,300,000 Ptas, less deductions. If assets are jointly owned (e.g. by a husband and wife, or by a group) then each partner should make separate declarations and claim the 17,300,000 allowance.
"Living and Working in Spain A Survival Guide" by David Hampshire, published by Survival Books is an excellent general text with a very good section on financial matters.
The information contained in this document does not constitute a legal contract or legal advice and we cannot guarantee the accuracy of any information. No claims against Eden Villas relating to information provided herein will be entertained
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