Capital gains tax in Spain: how does it affect me?

Written by Juan Madridejos Velasco and Luis Alberto Álvarez Moreno, Notaries in Barcelona and partners at J&LA Notarios Asociados.

Capital gains tax in Spain is the responsibility of the people in this country to pay the levy. The law applies to both citizens and non-residents.

It is the obligation tax required once one has received profits from selling a given asset, like land or a building. So, you will be taxed on the difference whenever you sell a property at a higher cost than the buying price. It might be a criminal offense if one fails to pay taxes.

We do not offer consulting services related to taxes from our notary in Barcelona, but we know lots of our clients find hard to understand the calculation, mostly for when they visit us for services related to real estate and contractsInmobiliario y contractual. Therefore, we have wanted to share key information on this tax and how it can affect you.

For more precise advices, we recommend to contact an accountant (or a gestor in Spain).

General information on Capital gains tax in Spain

Being a resident in Spain, the following are the capital gains liability;

  • 19% for the first € 6, 000 profit
  • 21% for € 6, 00º0 – € 50, 000 profit
  • 23% for a profit above € 50, 000

So, what kind of assets are liable for the capital gains tax? They are as follows:

  • Bonds
  • Buildings
  • Jewellery
  • Stocks
  • Collectibles
  • Land

This paper presents the impacts of capital gains in Spain; read on to find out.

Effects of the Capital Gains Taxes in Spain

Various economists support a reduced rate of this form of tax, as it will lead to the following:

  • Growth of the country’s economic
  • The hike reduces the actual value of the capital gains, and the reduced rates help to offset the cost
  • Reduces the double taxation of the corporate income
  • Lower rate scares away investors from selling their assets

Here are some of the impacts of this tax on the taxpayers in Spain.

Tax Rates

The duration you took to sell a given asset will determine the tax rates. Well, this can be good and detrimental to a taxpayer, depending on the period of ownership. So, this is how it works: if you possessed the asset for more than a year and gained profit after selling it, you have a long-term capital gain liability. In this case, you will be lucky as you will pay a lower rate.

On the other hand, there is the short-term capital gain liability; here, you are taxed at higher rates for any assets sold within 12 months of ownership and gained profit. According to the scenarios, the only suitable capital gain in Spain for you is the long-term capital gain liability. Long-term liability has rates that can generate savings for you.

Tax Deferment

When you decide to sell a given property, tax delay earns you the benefit. An individual investor will not be required to pay taxes on the gained equity on a given asset until they sell the property for profit.

Double Taxation

In Spain, every citizen must comply with the rule of law and pay capital gains tax. There are other responsibilities like additional taxes like the income tax. Therefore, it is not only about the profits made from the sale of assets. The additional responsibilities become a heavy burden to the taxpayers.

Profit Reduction

Once an individual has sold a given asset for a profit, the authorities will require them to pay the capital gains levy in Spain. By paying, one is disadvantaged since the available profit gained tends to reduce.

Conclusion on the Capital Gains Taxes

As you have read above, the capital gains tax can negatively or positively impact an individual. Either way, you need to be careful with these taxes to avoid further punishments from the authority.

Notaries in Spain use to formalize legal documents such as contracts, purchases of land, mortgages, wills and inheritancesconstitution of companies… However, we considered we had to write this article because our clients frequently have doubts on this topic. For more precise information on tax declaration, we highly recommend you to contact a Gestor.

For more information on our role at JLA Notarios, you can check this article from our blog:

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