Penitential Arras in Catalonia
Table of Contents (7)
- The notarial deposit of penitential earnest money in Catalonia and in Barcelona
- What protection does the notarial deposit of earnest money offer in Catalonia?
- How are penalty deposits taxed in Catalonia?
- Table: Taxation of penitential deposits in Catalonia
- Who must submit the 600 form for penitential deposits in Catalonia?
- Frequently asked questions when making penitential deposits in Barcelona
- The importance of notarial advice in the deposit of penitential notarial earnest money
The penitential deposits are a very common figure in real estate sales in Catalonia and Barcelona. At JLA Notarios – Notaria Barcelona we specialise in sales and real estate law, regularly managing contracts such as deposits and their escrow.
Penitential deposits are the legal figure by which, if the sale is not formalised due to the buyer's breach, the buyer loses the deposit paid. On the other hand, if the sale is not formalised due to a cause attributable to the seller, the seller must return double the deposit.
In this article, we will focus specifically on the taxation of the notarial deposit of penitential deposits in Catalonia, its possible registration in the Property Registry, and the obligation to submit form 600 to the Catalonia Tax Agency.
The most important thing is that the final outcome is that the deposits lodged at the notary's office do not incur any payment if the requirement to declare them to the Tax Office is met. We can take care of all this from the notary offices in Barcelona themselves.
The notarial deposit of penitential earnest money in Catalonia and in Barcelona
In a previous article we already explained what earnest money is, its legal effects, the different types, or the convenience of carrying out this procedure at a notary's office.
You can find it here:
The main idea you should have is that the greatest possible guarantee as a buyer is to deposit the earnest money at the notary of your trust, to ensure that the delivery in case of breach of the earnest money is made by the Notary, without having to wait for it to be returned by the seller.
The regulation of earnest money in Catalonia is in the Sixth Book of the Civil Code of Catalonia, approved by Law 3/2017, of 15 February, specifically in article 621-8.
In Catalonia there is an important legal peculiarity regarding penitential earnest money, which is that 621-8 of the Civil Code of Catalonia allows that, when penitential earnest money in Catalonia is deposited before a Notary for a period of 6 months, this deposit can be recorded in the Property Registry. Furthermore, the property is subject to the return of the earnest money.
“In the sale of real estate, the delivery of penitential earnest money agreed for a maximum period of six months and deposited before a notary can be recorded in the Property Registry and, in this case, the property is subject to its return. In case of withdrawal, the notary must deliver the deposited earnest money to the appropriate party.”
Precisely this possibility of registration is what causes tax consequences.
The General Directorate of Taxes, in binding consultation V1712-17, considered that the notarial deed of deposit of penitential earnest money meets the necessary requirements to be taxed under Documented Legal Acts (AJD), since:
- it is formalised in a notarial document,
- it contains an economically valuable amount,
- and it can access the Property Registry.
Therefore, when penitential earnest money in Catalonia is formalised by making a notarial deposit deed, the operation is subject to the Property Transfer Tax and Documented Legal Acts (AJD modality of Documented Legal Acts).
However, as we will see, they are 100% exempt, so if declared to the Tax Office, no tax is paid. We can take care of all these procedures from the notary’s office.
What protection does the notarial deposit of earnest money offer in Catalonia?
The notarial deposit system for penitential earnest money in Catalonia and Barcelona offers enhanced protection for both buyer and seller, as it is the Notary who will return the earnest money to the buyer in case of the seller's breach.
Furthermore, by recording it in the Property Registry, the property is subject to the return of the earnest money, which provides even greater security.
This means that the property acts as a guarantee for the return of the amounts paid if the sale is ultimately not formalised under the agreed terms.
For example, if the seller withdraws from the transaction and must return double the earnest money, the buyer has a much stronger legal guarantee than in a simple private contract.
Additionally, the Notary acts as an impartial third party custodian of the deposited amounts and, in case of withdrawal, will deliver the earnest money to the appropriate party in accordance with the agreement and applicable regulations.
The registry encumbrance disappears:
- when the sale is signed,
- when the legally established period expires,
- or when the withdrawal from the transaction is properly proven.
For this reason, this system provides greater legal certainty, more transparency, enhanced protection for the buyer, and a better guarantee of compliance with the real estate transaction.
Visit or contact our notary office near Passeig de Gracia, on the Diagonal in Barcelona.
How are penalty deposits taxed in Catalonia?
Currently, the notarised formalisation of the penitential deposit in a property sale is taxed in accordance with article 642.5 of the Catalonia Tax Code, approved by the Legislative Decree 1/2024, of 12 March, which approves the sixth book of the Catalonia Tax Code, integrating the consolidated text of the legal provisions in force in Catalonia regarding devolved taxes.
As we mentioned, the operation is subject to AJD, under the AJ8 tariff and has a tax rate of 1.5%.
However, the Catalan regulations currently establish a 100% exemption of the tax quota. This means that, although there is an obligation to file the tax, in practice no amount must be paid.
Therefore, the result is that nothing is paid on deposits made at the notary. The only thing that needs to be done is to declare it to the Tax Office, which is a procedure we can carry out at the notary’s office.
Table: Taxation of penitential deposits in Catalonia
| Concept | Taxation |
|---|---|
| Applicable tax | Documented Legal Acts (AJD) |
| Rate | AJ8 |
| Tax rate | 1.5% |
| Discount | 100% |
| Tax form | Form 600 |
| Tax base | Amount of the deposit |
| Taxpayer | Buyer |
| Applicable regulation | Article 642.5 Tax Code of Catalonia |
| Practical outcome | A form is completed at the Tax Office (by the notary or the interested party) and nothing is paid |
Who must submit the 600 form for penitential deposits in Catalonia?
According to the consultation and Catalan tax regulations, the person obliged to submit form 600 will be the buyer, as they are the one who delivers the deposit and has the status of taxpayer for the tax.
At JLA Notarios – Notary in Barcelona we can take care of filling out form 600 for you.
Additionally:
- the taxable base will be the amount delivered as a penalty deposit,
- and the self-assessment must be submitted applying the AJ8 rate.
Although the exemption is total, there is still a formal obligation to submit the self-assessment using form 600, applying exemption code 413: “Notarial public instruments in which penalty deposit payments are formalised”.
This exemption reduces the costs both of formalising the penalty deposit and of its cancellation, with the aim of providing more security in property sales.
Frequently asked questions when making penitential deposits in Barcelona
When the penitential deposits are not formalised through a notarial deposit, but only in a private document, the buyer's protection guarantees are lower, since in the event of a refund due to the seller's breach, it is the seller who must return the deposit.
Regarding taxation, in these cases, the Catalonia Tax Agency considers the operation as not subject, since there is no notarial document susceptible to registry access.
However, some parties still choose to submit form 600 for informational and administrative record purposes, indicating the operation as not subject.
No. The penitential deposits can be formalised through a private contract between buyer and seller. However, when they are deposited before a Notary, enhanced legal protection is obtained, as the refund is managed by your trusted Notary and they can also access the Land Registry.
The amounts paid as penitential deposits are held by the Notary until the sale is formalised or the transaction is withdrawn. In the latter case, the Notary will deliver the amounts to the appropriate party in accordance with the agreement and applicable regulations.
The importance of notarial advice in the deposit of penitential notarial earnest money
In many real estate transactions, buyer and seller are unaware that the way in which the deposit is formalised can have different legal, registration and tax consequences.
The notarial intervention allows the deposit of earnest money to be properly configured, its legal effects reviewed and ensures that the transaction complies with Catalan civil and tax regulations.
At JLA Notarios, Notaries in Barcelona specialised in real estate sale deeds, we advise on deposit contracts, notarial deposits and deeds related to real estate transactions in Catalonia. Contact us if you need to formalise penitential deposits with legal certainty and specialised advice.
