IVA (VAT) and ITP in Spain: When do I have to pay it?

tax

It does not matter if you have just started looking for your ideal home or if you have been already searching for a while; most surely the terms “ITP or IVA” had pop out while looking to Property portals or real estate agencies , but what is IVA and what is ITP? And in which case applies each one?

Buying a property in Spain has different costs and expenses depending on which type of property you are buying, your personal conditions (age, legal status, nationality…) and even on which autonomous community you are thinking to buy.

As this might be very complicated at the begining for most of buyers, we are going to explain the two most important taxes that applies to all properties:

  • IVA (or VAT in English) is a tax charged on most goods and services in Spain. The full rate and the most common one is 21%. However, on property sales it is reduced to 10%, only lands for property developments are charged at 21%, therefore be aware of which kind of property you want to buy and its taxation.
  • ITP is a tax depending on the autonomous community. Is considered a transfer tax that in Andalucia is rated as following:
ITP in spain

ITP in spain

The main difference among these two taxes is that IVA (or VAT) is only charged to new property sales, while when buying a second-hand home you must pay ITP, which will be calculated depending on the community (Notice it is an accumulative tax).

Our aim is to make the process of buying a property in Spain as simple as possible for our clients, that’s why we will advise you through all steps of the purchase.  The agency has the duty of informing the client with all these details, that must be resume in a document called DIA (compulsory in Andalucia).

You can know more about the documents needed to buy a property in Spain and about ITP in Andalucia, and other taxes and useful advices in our Real Estate Blog.

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Comments

  1. Reply Estee Ratus

    Despite the header of “When do I have to pay it”

    This text does not actuallly say -when- you have to pay it.

    So my question is :
    For a NEW property in Andalucia where building has recently started { thus before 31 Dec 2021, to be finished in 2022 } , where a sales price is agreed upon, and the first payments are also due before 31 December 2021 , what is the percentage of AJD to be calculated ?
    Is the AJD considered as a lump-sum tax at the first installment, or a tax to be calculated/paid shortly before the key-exchange ?

    • Ainhoa

      Hi Estee,

      You will have to pay AJD when you purchase the property and sign the deed of sale in front of the notary. The percentage of AJD is now 1.2% until 31/12/2021, but as you mention your property will be finished in 2022, it will probably be 1.5% by then -It is the standard rate without the extraordinary reduccion the government made this year-

      You can see a guide on how to buy an off plan property here:

      https://andaluciarealty.com/blog/buying-an-off-plan-property/

  2. Reply Ali

    Thanks for this great article, helped me hugely. I have one question. I’ve owned a holiday house in spain for for two years. I’m a British resident with an Irish passport.Recently one of my British neighbours who also owns a house in spain asked who did my annual IVA accounts. I didn’t know what this meant. Apart from paying IVA on the purchase of my old house in Spain, I wasn’t aware I had to continue paying it except obviously on goods and services as I went along. They seem to be describing it as an annual tax I should be paying.

    Have I missed something?

    • Ainhoa

      Hi Ali,

      If you are a british citizen and you don’t rent your property or have any other business here in Spain, you do not need to do your IVA account. However, since the Brexit, Uk citizens are applicable for Tax returns (since the 1st of January of 2021). Perhaps your neighbour refered to that.

      If this comment has been useful, we would really appreciate if you could take a minute to rate our attention in google:
      https://g.page/r/CYgZgWCCZMBcEAg/review

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