Tax obligations when buying property in Spain for EU & non-EU investors - expert insights from Marc Soriano (INVA BPO)
Financing your Spanish property the smart way
Buying property in Spain brings opportunity — but also legal and fiscal complexity. From choosing the right ownership structure to understanding when and how taxation applies, even seasoned investors can stumble over Spain’s administrative nuances.
To make sense of it all, Homely sat down with Marc Soriano Gironella, Partner at INVA BPO, a Valencia-based firm specialising in business outsourcing, tax compliance and financial advisory for international clients. With over 25 years’ experience, Marc has helped hundreds of foreign buyers structure their investments efficiently and avoid common mistakes.
Our firm deals with foreign investors — people who have already bought property in Spain, or who are planning to,” Marc explains. “We assist them if we can before they take the decision, because it’s always better to set the structure first. Otherwise, we try to help with the surprises that appear later.”
Why defining your investment structure matters
Every successful property purchase in Spain begins not with a viewing, but with a plan.
Marc explains that defining the property’s purpose determines everything — from the ownership model to taxation.
The most important thing is that the investor has a clear idea of what they want to do.
If it’s a holiday house, that’s one path. If it’s an investment project or a hotel, that’s completely different.
He adds that many issues arise when clients buy first and structure later. “You can fix most problems,” he says, “but it’s cheaper and easier when you set things correctly before signing.”
When (and when not) to buy through a limited company
In many countries, buying through a limited company is standard practice. In Spain, however, it depends on the type of investment.
It doesn’t make much sense to incorporate a company if you’re buying just one property for private or holiday use, but if you want to make a business out of it — renting commercially or buying several units — then it can make sense.
Creating an SL (Sociedad Limitada) offers liability protection and privacy but adds significant maintenance costs.
You need official accountancy, quarterly and annual tax forms, and a local accountant,” he says. “It’s expensive to keep it going.
That said, some clients do value the privacy aspect. “Land Registry in Spain is public,” Marc notes. “Anyone can find out who owns a property. Some people prefer using a company simply so their name isn’t visible.”
The key tax differences for EU and non-EU investors
Taxation is one of the most misunderstood areas for foreign buyers — particularly the divide between EU and non-EU residents.
“EU investors have it simpler,” Marc says. “The bureaucracy is lighter, and the taxation is more favourable.”
The difference becomes clear once you start earning rental income:
EU/EEA residents pay 19% on net income (after deducting maintenance, insurance, utilities and depreciation).
Non-EU residents pay 24% on gross income (no deductions allowed).
That’s a big difference; someone from the Netherlands or Poland can deduct expenses. But if you’re from the UK or the US, you pay 24% on everything you earn. Straightforward, but tougher.
He adds that double taxation treaties between Spain and most countries usually prevent investors from paying twice. “Whatever you pay here, you can declare at home,” he explains. “You usually only pay the difference.”
Tax residency, timing and annual obligations
One of the most critical — yet often overlooked — considerations is tax residency.
Tax residency is the key concept. If you spend more than 183 days in Spain in a year, you become tax resident here. That means you pay Spanish tax on your worldwide income — wherever it’s earned.
For anyone relocating, timing matters enormously.
If you’re selling your home in the UK or the US to buy in Spain, do it before you become Spanish tax resident. If you sell after you’ve moved, that gain will be taxed under Spanish rules — and it’s not the same. You can save a lot by planning the timing correctly.”
Even non-residents face annual tax obligations. Every foreign property owner must file a non-resident income tax return once a year, even if the property is used only for holidays.
“You’ll pay a small amount — maybe €300 or €500 a year based on the cadastral value,” Marc explains. “But if you don’t, when you go to sell, the tax office will ask for those unpaid years plus penalties. One annual form prevents that.”
Wealth tax, inheritance and essential paperwork
High-value property owners should also understand Spain’s Wealth Tax (Impuesto sobre el Patrimonio).
There’s a €700,000 allowance per person. Say a couple buys a villa for €2 million — each owns €1 million, so €300,000 each is taxable. You might end up paying €700 to €1,000 a year. If you can afford a €2 million property, that’s manageable.
For non-residents, this tax is filed centrally, often through Madrid, but it only applies to the value of Spanish assets. “Below that threshold, you don’t pay,” Marc adds.
Inheritance planning, meanwhile, is another area that surprises many foreign buyers.
Spanish inheritance law is very peculiar. By law, two-thirds of your estate go automatically to your descendants. If you already have a will in your home country, that will usually overrule Spanish inheritance law — so make sure it’s valid and up to date.
Finally, no property purchase in Spain can proceed without an NIE (Número de Identificación de Extranjero) — the foreigner’s tax identification number. Marc warns clients not to underestimate the bureaucracy.
“It’s a nightmare sometimes,” he admits. “In big cities, getting an appointment can take weeks. My advice is: get your NIE through the Spanish consulate or embassy before coming to Spain. It’s much easier that way.”
He also recommends obtaining a digital certificate — Spain’s secure online ID — to manage taxes and council bills remotely. “It lets you pay IBI, file taxes and receive notifications online,” he says. “Just be careful who has access — it’s powerful.”
Marc’s practical checklist for foreign investors
After 25 years advising international clients, Marc summarises his advice in a few key points:
Get your NIE early — preferably through the Spanish embassy.
Allow around 15% extra for purchase costs (transfer tax, notary and registry).
Plan your tax residency carefully if relocating — timing saves money.
File your annual non-resident tax to avoid future penalties.
Make a will that covers your Spanish assets.
Get a digital certificate to manage property obligations online.
“It’s not complicated if it’s well explained,” Marc says. “But Spain isn’t a country where you can just do everything yourself. You need someone who understands the system.”
Final thoughts
For Marc Soriano, successful property investment in Spain starts with preparation, not paperwork. A clear strategy, correct structure and early documentation — from the NIE to a digital certificate — prevent unnecessary costs later.
“You save a lot of stress and money when you prepare things properly,” he concludes.
Whether you’re an EU resident benefiting from lower tax rates or a non-EU investor navigating more complex filings, Spain rewards those who plan ahead.
If you’re considering investing in Valencia and want personalised guidance, get in touch with our team. Fill in our contact form and let’s discuss your next smart move.
If you’d like to speak directly with Marc Soriano or be introduced to INVA BPO for tailored fiscal and legal advice, the Homely team can coordinate the introduction. You can also learn more about INVA’s services at invabpo.com
Want to explore the full picture of property taxation in Spain? For a detailed breakdown of purchase taxes, annual obligations, rental income, and capital gains — and how these differ for EU and non-EU investors — read our comprehensive guide: How EU and non-EU citizens are taxed on property in Spain?