Spain’s capital gains tax reform comes into force

SPAIN’S capital gains tax reform comes into force on Wednesday, November 10.

THE royal decree-law with which the municipal capital gains tax is calculated came into force on Wednesday, November 10 after its publication on Tuesday, November 9 in the Boletín Oficial del Estado– official state bulletin (BOE).

The decree sets out two options to determine which tax rate that the taxpayer may choose to apply to obtain the most beneficial rate. Specifically, citizens may choose to calculate the amount by the objective result of multiplying the cadastral value by new coefficients that will take into account the current real estate value ( by area and meterage) or they may opt for the calculation based on the profits made on the sale of the property compared to the purchase price.

The new regulations will not have a retroactive effect, that is, it cannot be applied to taxable events that have already occurred. All operations that, in the opinion of José María Salcedo, a lawyer in the firm of Ático Jurídico, “are, in our opinion, orphaned by regulations with which to calculate and demand the tax to be paid “.

As the law will not have any retroactive effects, Salcedo says that “any settlement that is notified from now on, and that refers to taxable events produced before the entry into force of the Royal Decree-Law, must be appealed, because we consider that it could be declared illegal.”

Capital gains obtained in Spain by non-residents without a PE are taxed at a rate of 19% when they are generated from transfers of assets otherwise they are taxed at the general NRIT rate of 24% (for residents of other EU member states or EEA countries with which there is an effective exchange of tax information).

When you sell a house in Spain, you pay capital gains tax on your profits. There’s no exemption for senior citizens — they pay tax on the sale just like everyone else. However, if the house is a personal home and you have lived there several years, you may be able to avoid paying tax- speak to your gestor or tax adviser for more information.


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