How EU and non-EU citizens are taxed on property in Spain?
Your tax responsibilities depend on your residency status
Buying property in Spain is an exciting step — whether you’re purchasing a holiday flat in Valencia, a coastal villa in Jávea, or an investment apartment in Ruzafa. Yet alongside the dream lies the less glamorous but crucial side of ownership: taxes.
Understanding your fiscal obligations early helps avoid costly surprises later. In Spain, your tax responsibilities depend on your residency status and whether you are an EU or non-EU citizen.
This guide outlines the main property-related taxes for both groups, from acquisition to annual ownership and eventual sale, using Valencia as a reference point.
Taxes at the time of purchase
When buying real estate in Spain, every purchaser — Spanish, EU or non-EU — pays one of two primary taxes depending on whether the property is new or resale.
1. Transfer Tax (ITP)
For resale properties, buyers pay Impuesto de Transmisiones Patrimoniales (ITP).
In the Comunidad Valenciana, the standard rate is 10% of the purchase price (as of 2025).
Reduced rates may apply in specific cases, such as large families or protected housing (VPO), but these rarely benefit foreign investors.
2. VAT (IVA) and Stamp Duty (AJD)
For new builds bought directly from a developer, VAT replaces the transfer tax.
Residential property attracts 10% VAT plus 1.5% stamp duty in the Valencia region.
Commercial or land purchases may be charged at 21% VAT.
Buyers must also pay notary and land registry fees, which typically add another 1–2% of the purchase price.
Who pays what?
Both EU and non-EU buyers face the same purchase-stage taxes. The only difference may arise when funds come from abroad, requiring extra anti-money-laundering documentation for non-EU citizens.
Annual taxes during ownership
After completion, the property triggers annual taxes even if it remains empty. These are distinct from your home-country taxes.
1. Property Tax (IBI)
This is a local council tax (Impuesto sobre Bienes Inmuebles) based on the cadastral value — a government-assessed value that is usually lower than the market price.
Paid yearly to the local city hall, it typically ranges between 0.4% and 1.1% of the cadastral value.
It applies equally to residents, EU and non-EU owners.
2. Non-Resident Income Tax (IRNR)
If you are not a Spanish tax resident, you must file this tax even if you do not rent out the property.
It is calculated on an imputed income, assumed to be 1.1% or 2% of the cadastral value.
For example, a property with a cadastral value of €120,000 may generate a tax base of €1,320–€2,400.
Tax on rental income
If you rent your property — short or long-term — it becomes a taxable income stream in Spain.
EU/EEA investors: taxed at 19% on net rental income (rent minus eligible expenses such as maintenance, insurance, IBI, agent fees, and depreciation).
Non-EU investors: taxed at 24% on gross rental income (no expense deductions).
This 5% gap can meaningfully affect your rental yield, making tax efficiency part of the investment strategy.
Renters should also check local licence rules, particularly for tourist rentals, as the Valencia region enforces registration for short stays.
Filing frequency:
Taxes are declared quarterly via Model 210 for rental income and annually if the property is empty. Many owners appoint a Spanish tax representative to manage filings, especially non-residents who cannot access online systems easily.
When selling the property
When you sell, Spain levies Capital Gains Tax (CGT) on the profit (selling price minus purchase price and allowable costs).
EU/EEA citizens: pay 19%.
Non-EU citizens: pay 24%.
The buyer must withhold 3% of the sale price and pay it to the tax authorities on the seller’s behalf as an advance against CGT.
If you are an EU resident, you may later reclaim part of that withholding if your total gain is lower.
Example:
If you bought at €250,000 and sold at €300,000, your gain is €50,000.
EU CGT: 19% → €9,500 tax.
Non-EU CGT: 24% → €12,000 tax.
Double taxation treaties between Spain and most countries (including the UK and US) mean you won’t pay twice: taxes paid in Spain are usually credited in your home country.
Wealth tax and inheritance considerations
Wealth Tax (Impuesto sobre el Patrimonio) levies a wealth tax on individuals with net assets exceeding €700,000 per person.
It applies to Spanish assets owned by non-residents, such as property.
Rates range from 0.2% to 2.5%, depending on total value.
Couples owning jointly can each apply their allowance separately.
For most buyers, this tax only affects higher-end holdings (for example, villas above €1.5–2 million). Still, it’s worth assessing as part of long-term planning.
Inheritance Tax
Spanish inheritance law differs significantly from Anglo-Saxon systems. It divides the estate into three portions, two of which must pass to children or direct heirs.
Foreigners can override this rule by making a will in their home country that explicitly covers Spanish assets.
Inheritance tax in the Comunidad Valenciana is progressive but benefits from allowances for close family members.
Making a Spanish or international will before moving or investing can prevent complications later.
Key documents and setup essentials
NIE (Número de Identificación de Extranjero)
Every foreign buyer needs this tax identification number. Without it, you cannot open a Spanish bank account or sign at the notary. Apply at a Spanish consulate or local police station — waiting times can be long in major cities.
Certificado Digital (Digital Certificate)
This secure digital signature allows you to handle tax, council and administrative matters online, whether you live in Spain or abroad. It is increasingly required for notifications from the Spanish tax agency.
Annual representation
Non-residents must appoint a fiscal representative in Spain to receive official notices and ensure compliance. This is particularly helpful for investors based outside the EU, who may face stricter verification.
Tax planning and timing for movers
Timing matters if you are selling assets abroad to fund your Spanish purchase. If you sell your home in your country before becoming a Spanish tax resident, the gain is taxed under your home country’s rules. Sell after spending 183 days in Spain, and the gain falls under Spanish tax. For buyers relocating permanently, coordinating sales and purchases across tax years can save substantial amounts. Always seek professional advice before transferring large funds or finalising a sale.
Practical example
Let’s take two investors buying similar apartments in Valencia in 2025 for €250,000 each, rented for €1,000 a month.
Anna (EU resident, Netherlands):
Gross annual rent: €12,000
Deductible expenses: €2,000
Tax base: €10,000 × 19% = €1,900 tax
Tom (non-EU resident, UK):
Gross annual rent: €12,000 (no deductions)
Tax base: €12,000 × 24% = €2,880 tax
Tom pays nearly €1,000 more per year on the same property — an important consideration for net yield.
Conclusion
Buying property in Spain is straightforward once you understand the fiscal rules. The taxes themselves are clear — what changes is how they apply based on your residency and EU status.
All buyers pay similar purchase taxes, but once you own and rent, the difference between 19% net and 24% gross can be decisive. Add in non-resident tax filings, capital gains obligations and, for higher-value properties, wealth tax, and the picture becomes more nuanced.
The good news is that with the right setup — an NIE, a digital certificate, and a reliable tax adviser — your Spanish property can be both compliant and profitable.
If you’re considering investing in Valencia and want personalised guidance, get in touch with our team.
👉 Book a Consultation and let’s discuss your next smart move.
If you want to learn more about the practical side of tax structuring, ownership models and residency planning, read our exclusive interview with Marc Soriano, Partner at INVA BPO, in our Expert Insights feature.