I AM BUYING A PROPERTY IN SPAIN

It is easy to see why buying a property in Spain has experienced such a boom in recent years. After a short air journey the climate and lifestyle can be experienced first hand.
An estimated 500,000 British citizens already own property in Spain, and this trend is set to increase as more of the baby-boomer generation is set to retire. With today’s more flexible working patterns, more and more people can now consider working, setting up a business or living in Spain.

Unfortunately, when a UK national buys property in Spain, there will inevitably be taxation implications in both countries. The exact issues to be faced will depend on the circumstances and intentions of the individual, and no two situations will ever be exactly the same.

The three main questions to be considered are: 

1. Do you wish to use the property simply as a holiday home, or are you buying to let?
2. Will you sell the property at some stage in the future, or leave it to your children or other family members?
3. Do you intend at some stage to move permanently to Spain, or will you continue to be UK based?

There are complex rules surrounding how long any individual can remain in Spain without coming fully under the Spanish tax system on their worldwide income, gains and wealth. Understanding these rules, and how they interact with the (equally complex) rules used by the UK Inland Revenue to determine UK taxation, will help you to survive the attentions of the two Exchequers.

Even if the Spanish tax authorities cannot tax your worldwide income, they still have wide powers to tax your presence and activities within Spanish territory. 

Did you know, for example, that as a property-owner, you will face three main types of Spanish tax?

1. Taxes payable at the point of purchase;
2. Taxes payable annually while the property is owned;
3. Taxes paid when the property is sold or otherwise disposed of.