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How to file a 3% tax rebate on the sales proceeds of your Spanish property

Raymundo Larraín Nesbitt, April, 3. 2024

Raymundo Larrain explains how a non-resident seller is entitled to a tax rebate on his sales proceeds

Marbella-based Larraín Nesbitt Abogados (LNA) has over 21 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of April 2024

Introduction

Non-residents selling property in Spain undergo a 3% retention which is practised on the sales proceeds. This money is withheld by the buyer (or his lawyer) which is then transferred to the tax office.

Unbeknownst to most people, sellers are legally entitled to apply for a tax rebate on the full 3% of the sales proceeds providing they have sold at a loss, or have broken even.

This procedure is technical, meaning it requires the input of a seasoned lawyer to file this tax rebate (a seller cannot do this on his own).

Additionally, a seller is also entitled to legal interest when the tax office takes longer than usual to repay the withheld sales proceeds. This can be rather substantial, and most certainly higher than what any high street bank is paying savers nowadays for their deposits!

Surprisingly, most sellers are oblivious to this rebate and never bother to ask for their money back, which is lost!

3% retention explained

The purpose of this retention is to act as guarantor of a seller’s Capital Gains Tax liability on selling property in Spain. If a seller makes a profit, he must pay CGT. The 3% ensures sellers will not be doing a ‘runner’.

However, not all sales make a profit. Moreover, you would be surprised to learn that after adding all the associated costs and expenses most sellers are breaking even! Which would mean they are all entitled to apply for this tax rebate.

When you add up the associated conveyance expenses (both on buying and selling the property), the associated taxes, professional fees due (estate agent, notary, land registry, lawyer), and improvements on the property over time it is often the case that sellers are breaking even, or even making a loss, however small.

When you sell at a loss, or break even, the 3% retention is no longer justified legally. Meaning, the seller has a legal right to claw it back from the Spanish Tax Office, plus interests on top!

Procedure

As mentioned, on selling property in Spain, a 3% retention is practised on the non-residents’ sales proceeds at completion. For example, on selling a €500,000 house, €15,000 will be withheld by the buyer at the notary’s office.

Following completion, this retention is paid by the buyer to the tax office.

Depending on whether a profit or loss was made, the seller’s lawyer can apply for a tax rebate on the full, or part of the €15,000. Additionally, contingent on how long the tax office takes to pay the rebate, legal interests accrue, which can be quite substantial over time.

Law firm LNA helps you getting your money back

At LNA, we have assisted thousands of sellers getting their money back over the last two decades.

We offer the following competitive tax service: Calculating seller’s taxes

We offer a highly demanded tax service to calculate seller’s taxes (Capital Gains Tax and Plusvalia Tax) without having to instruct us on the conveyance. This includes filing a seller’s 3% tax rebate.

You can of course also hire us to handle your conveyance too, we act all over Spain.

Our team of pro-active lawyers will get your money back within months.

Our fee is tax-deductible from your seller’s taxes, meaning you pay even less taxes!

Conclusion

If you plan to sell your property in Spain, and you are a non-resident, you can contact us to recover your money in a timely manner.

Don’t let your money go to waste! It is your seller’s right to recover this money, your money.

Because every penny counts.

Contact us at LNA if you need us to calculate your seller’s taxes, and/or want us to file a tax rebate for the 3% on your behalf. Tax rebates are usually paid within months.

Related tax and legal services available from LNA:

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. Ní neart go cur le chéile. VOV.

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Luxury rentals in Spain explained

Raymundo Larraín Nesbitt, March, 4. 2024

Lawyer Raymundo Larrain explains luxury rentals and their unique legal advantages.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of March 2024

You are probably aware of Spain’s Tenancy Act (LAU, in Spanish). This law is somewhat infamous because it (over)protects tenants (read biased) at the expense of landlords’ rights. The logic behind this is that lawmakers view tenants as the weak party in need of protection. Thus the LAU is heavily biased towards tenants to the point it crosses a thin red line and may even act as a deterrent cutting down the supply of suitable rented accommodation (specifically long-term), which in turn drives rental prices further up harming tenants. The law of demand and supply at work.

You will have likely heard that *all* long-term rental contracts in Spain are subject to the LAU, right? Well, not true. Meaning landlords can take advantage of legal loopholes to neatly circumvent lenient LAU tenant entitlements. Nuances are at play.

A number of rental contracts fall outside the remit of Spain’s Tenancy Act, such as seasonal contracts, holiday rentals, accommodation for military personnel, luxury rentals, and more. Today’s short article is going to focus on the latter, on luxury rentals. Known in Spanish as alquileres suntuarios.

In plain English, luxury rentals fall outside of the scope of Spain’s infamous LAU, which opens up a slew of advantages for landlords. In effect, luxury rentals give landlords the upper hand, as they are able to legally override all the pesky tenant entitlements laid out in the LAU.

What conditions need to be met for a rental contract to qualify as a luxury rental?

In short, either of the two:

The property rented is 300 m², or larger.
The monthly rental exceeds 5.5 times the average minimum wage. For 2024, that’s a €7,300/month rental.

If one, or both, of the above conditions are met, the rental contract is excluded from the protection of the LAU.

What legal significance does this have?

In short, a lot.

Basically, it means that all the thoughtful entitlements the LAU meticulously lays out for the protection of tenants do not apply. Meaning landlords are greatly favoured because all the lenient entitlements and rights the LAU rules on are waived legally, leaving the contract to be ruled only by the will of the parties. The legal significance of this is huge, as it basically conveys a huge leverage to landlords, if they play their cards right.

This is done because our lawmakers surmise that a luxurious rental contract is signed by a tenant who is either a shrewd businessman or an affluent person; either way someone who does not warrant the protection of our (biased) tenant laws, such as the LAU.

Advantages of luxury rentals: practical examples

Unlimited security deposits. Standard long-term contracts, subject to the LAU, are capped at a one-month security deposit (fianza, in Spanish). In luxury contracts, landlords are free to demand, for example, the equivalent of a full year’s rental in advance, or more, as a security deposit.
Freedom to terminate contracts. In standard long-term contracts, subject to the LAU, you can pull out only after 6 months have passed. In a luxury contract, you may pull out at any time, even on the following day.
Heavy penalties apply to early terminations. Following on the above point, in a standard long-term contract it could be agreed that if a tenant pulls out after 6 months a capped penalty applies which equates to the months left to complete a full year, on a pro rata. That, by law, would be the maximum. However, on luxury contracts there is total freedom; a tenant could be liable for all the rentals left to complete a full year. I.e. over €100,000 if you pull out a week after signing for whatever reason!
Standard eviction rules do not apply – evictions are (greatly) expedited. As opposed to standard rental agreements, where a tenant is regarded as the weak party and in need of legal protection, in luxury rentals both parties are viewed and treated as equals. This translates in practice to landlords being able to instigate fast-tracked eviction procedures that only last a couple of months, as opposed to standard ones, which under new laws, can take up to several years. In short, evicting tenants in luxury rentals follows an expedited procedure that lasts months, not years.

Conclusion

If you plan to sign up for a luxury pad in Spain, whether a villa or a penthouse, you are strongly advised to take legal advice before signing on the dotted line. Spending a few hundred euros in a lawyer’s advice can save you from losing, or being sued, over €100,000, or more!

From a landlord’s perspective, luxury rentals are a win-win. The freedom this type of contract confers landlords on wording clauses cannot be overstated enough. Landlords are normally constrained to work within the narrow legal framework and limitations of the LAU in standard lease agreements. By contrast, luxury rentals allow total freedom to landlords, placing them in a position of great power.

Related legal services available from LNA:

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8 reasons to buy property on the Costa del Sol

Raymundo Larraín Nesbitt, February, 7. 2024

You can review here our client’s testimonials.

Featured: Marbella, Andalusia’s tourist flagship.

Article copyrighted © 2024. Plagiarism will be criminally prosecuted

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
21^st of February 2024

The Costa del Sol (Málaga) remains a prime location for the foreign worldwide community, attracting millions of visitors every year for a host of reasons collated below. Marbella, Málaga, Benahavís, Benalmádena, Mijas, Estepona, and more, are all household names in the real estate market.

Although a hike in interest rates has indeed taken a toll on the real estate market, the Costa del Sol’s unique advantages, listed below, contribute to making it a resilient market where properties stand to lose little, and gain much, with the turn of each economic cycle. The underlying reason for this is mainly the always high demand for accommodation in this sought-after area which in turn piles pressure on property prices, increasing year on year.

The Costa del Sol is an ideal place for Digital Nomads or Golden Visa applicants to settle in, alone, or with their families.

Eight reasons to buy property on the Costa del Sol

(Still) affordable property prices. When you compare property prices, they are still far cheaper by rapport to the United Kingdom. For the same amount of money that buys you a semi-detached in the UK in a poor location with no views, you get to buy a gorgeous villa on the Costa del Sol with commanding views over the sea, a mature garden, and still have money to spare on a property makeover! Then there is also the little fact that property prices are appreciating by two digits on the Costa del Sol. Life is all about choice.
A pleasant all-year-round climate. Whilst in Nordic countries, like the UK, you can expect 200 days of miserable rain, the Costa del Sol boasts 300 days on average of sunshine a year. This gorgeous weather is precisely what gives it its namesake. Light and warmth are never too far away!
Ultra-low taxation. As explained in our taxation articles, Andalusia’s new regional government is hell-bent on pro-low taxation. They have introduced significant tax breaks on buying property (almost) turning it into a tax haven. This political agenda translates into the lowest taxes in all of Spain, on Inheritance and Gift Tax, on Wealth Tax (was suppressed in 2022), on Property Transfer Tax, and Stamp Duty which were both slashed. So much so, that most taxpayers pay nil on IHT (including non-resident and non-EU taxpayers). Inherited estates under one million euros (per taxpayer) are tax-free for next-of-kin which includes both descendants (children) and ascendants (parents, grandparents). Over one million is taxed at only 1% on the excess. If you invest on a buy-to-let, landlords can save 70%, or more, on their tax bill. On long-term rentals, you can expect a net annual yield of 5%, on tourist rentals you can expect a net yield of 10%. Spain approved this month, besides a generous 5% increase to the minimum wage which applies nationwide, a personal allowance of €15,876 per taxpayer on income tax. In plain English, the first €16k you earn in Spain is tax-free. Yay!
A privileged lifestyle. The Costa del Sol spoils you for choice, as it caters to all tastes: whether you enjoy taking in its beautiful unspoiled scenery, wandering through its pristine mountains and Mediterranean pine forests, going out on a fancy dinner, practising sports, sunbathing on the beach, night-time clubbing for party owls, skiing (Granada is only a two-hour drive), or feeling the flutter of placing a wager (Marbella’s Casino), or simply chilling out al fresco sipping a glass of a fine Rioja while you watch a dramatic sky dusk against a dashing blue sea in good company. The Costa del Sol simply has it all!
Excellent modern connections. Malaga’s airport, Gibraltar’s airport, a modern rail network, modern highways, Malaga’s upgraded port, all help to connect Malaga to the modern world.
First-class amenities. Lavish restaurants, luxury shops, trendy designer boutiques, refined theatres, glam discotheques, 18 and 9-hole golf courses, international private schools, and exclusive yacht-filled marinas (Puerto Banus, Cabopino, La Duquesa, Sotogrande). Your problem is that won’t have enough time to enjoy it all!
Quality healthcare. Malaga offers several state-of-the-art hospitals that will cover your every health need. There are also specialised beauty medical facilities that assist enhancing your physique, because everyone deserves a little nip and tuck. For those in the know!
A vibrant cultural life. Malaga’s vast cultural offering spans from the Picasso Museum, Pompidou Museum, Carmen Thyssen Museum, Saint Petersburg’s Russian Museum, the bullring, to a slew of glam theatres, such as the trendy Teatro del Soho. Music concerts and refined classical music galas featuring world-renowned artists are all organized by Starlite during the long summer season. All these contribute to giving the Costa del Sol the lustre of a cosmopolitan venue. But if we dig deeper into its historical roots, history buffs will get lost in Malaga’s Roman and Carthaginian ruins, Augustus’ two-millennia-old amphitheatre and the imposing one thousand-year-old Moorish Citadel await to capture your imagination!

Are you ready to be spoiled? Invest and live on the Costa del Sol, live the dream!

Conclusion

Larrain Nesbitt Abogados (LNA) offers a competitive conveyance service. Our English-spoken lawyers and economists handhold you throughout the entire purchase procedure. We also assist you filing taxes and applying for visa or residency permits.

You can read here our free property guide kindly hosted by SPI.

You only live once, make the most of it.

“Action is the key to success.” – Pablo Picasso.

“La acción es la clave fundamental de todo éxito.”

Pablo Ruiz Picasso (1881 – 1973). Málaga-born, he was a Spanish painter, sculptor, printmaker, ceramicist, stage designer, poet, and playwright who spent most of his adult life self-exiled in France. Regarded as one of the most influential artists of the 20th Century, he is credited for co-founding the Cubist movement. A child prodigy, Picasso achieved universal renown and immense fortune for his revolutionary artistic accomplishments, becoming one of the best-known figures in 20th-century art. He was a prolific artist who left behind thousands of works of art. Perhaps his most iconic piece was the 1937 Guernica painting which depicts the horrors of war and foreshadowed the dark days of WWII (exhibited in Madrid, Centro de Arte Reina Sofía). Picasso was one-of-a-kind, une force de la nature, a towering artistic figure who casts a long shadow over every other artist that has followed in his wake.

Related conveyance services available from LNA:

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Spain’s Digital Nomad Visa

Raymundo Larraín Nesbitt, January, 8. 2024

Inset photo: James, busy at work from his Spanish ‘office’ (tie is optional)

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of January 2024

Introduction

Spain’s new Digital Nomad Visa (DNV) has taken the visa market by storm! Fancy working remotely from a beach in Spain, sipping a mojito with 21 degrees in good company paying almost no tax (*)? The DNV has you covered!

The DNV offers unique tax advantages that no other Spanish visa can hope to match, not even a coveted Golden Visa. Its main outlier, and what distinguishes it from other available visas, is precisely the wide array of tax benefits it offers. The DNV has been purposely devised so successful applicants pay few taxes in Spain; the purpose is to incentivize overachievers to relocate and work (remotely) in Spain.

The DNV is modelled after Beckham’s Law, enacted in 2015, and which applies to EU nationals which in turn was inspired by the UK’s wildly popular Non-Domiciled taxpayer scheme. The DNV applies to non-EU nationals and offers basically the same tax advantages as Beckham’s Law.

It’s a legal fiction whereby a non-EU taxpayer is treated as a non-fiscal resident in Spain, but for administrative purposes, they are regarded as fully resident in Spain. The tax significance of this nuance simply cannot be understated enough and opens the door to a slew of tax benefits I collate below.

(*) Precisely because of its huge tax advantages, the law time-gates them to a maximum of five years plus one.

Needless to say, a DNV makes you tax resident in Spain (that’s precisely the whole point!).

Because of its nature (to attract talented individuals), and similar to Golden Visas, all DNV applications are fast-tracked. In under 3 weeks you know if your application has been successful.

In a nutshell, the DNV is all about paying (very) low income tax, or none at all (as assets & interests held abroad Spain go untaxed!)

DNV tax benefits

All income & assets held abroad go untaxed. In other words, any source of worldwide income is tax-exempt (just like with the popular UKs non-dom tax scheme). The only exception is any income derived abroad from working.
DNV holders only pay tax strictly on the income they derive working remotely in Spain for a foreign employer. They will pay a flat tax rate of 24% on the first €600,000 of gross annual earnings over a five-year period.
They are not required to file a 720 tax return (unlike Spanish tax residents)
They are not required to file Wealth Tax (unlike Spanish tax residents)
You can request to defer the payment of tax on the first and second year without penalties or delay interests being rolled on top (as is standard)
For the purposes of other tax agencies, you are considered tax resident in Spain.

General staple requirements

Non-EU national.
Hire private health insurance from an approved health provider in Spain (you need to be under 75 years old), or
Enrol in the Social Security
Clean criminal record (previous 5 years).
Be self-supporting (you will not claim benefits from the state): you need to show a minimum bank balance of €30,000 for the main applicant (recommended amount is €34,000). A further €7,200 for every dependent (recommended amount is €8,400).
Not be already in Spain illegally at the time of making a visa application.

DNV specific requirements

If employed, you need to prove you are hired by a foreign company. You need to have been working for this employer for at least 3 months prior to making a DNV application. A work contract is the core requirement (12 months, or more). A copy of your job contract will be required. Alternatively, if self-employed (freelancer), a letter from the company stating you are self-employed, and company records proving it has been operational for over 12 months.
You need to supply a copy of holding formal academic qualifications i.e. a university degree, business school, or professional qualification, or,
alternatively, you need to prove you have at least 3 years of work experience in the job position you are being hired for.
Not to have resided in Spain during the previous 5 years of making an application.
Not to obtain income from a permanent establishment in Spain.

LNA has a 100% track record attaining Spanish residency

At Larrain Nesbitt Abogados, we have assisted hundreds of non-EU nationals, and their families, to successfully attain a Spanish residency permit since 2013.

Interested? Come and speak to Larraín Nesbitt Abogados’ friendly staff who will be pleased to guide you through the different residency options, choosing the one that appeals to you most.

Your family’s success is only one call away: (+44) 07543 838 218, or (+34) 952 19 22 88.

Larraín Nesbitt Abogados, small on fees, BIG on service.

Residency services available from LNA:

Golden Visa Service (Investor Visa)
Non-Lucrative Visa (Pensioner’s Visa)
Lucrative Visa (Business Visa)
EU-Family Regroupment (Marriage Visa)
Digital Nomad Visa (Tax-free visa)
Non-Domiciled Tax Scheme (Beckham's Law)
Spanish Residency permit for EU nationals

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Spain’s Golden Visa: 10 reasons to apply

Raymundo Larraín Nesbitt, December, 1. 2023

Lawyer Raymundo Larraín highlights the main advantages of Spain’s Golden Visa.

Marbella-based Larraín Nesbitt Abogados (LNA) has over 21 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of December 2023

Introduction

Spain has undergone a spectacular property boom over the last 8 years, only marred by the Covid pandemic in 2020. In coastal areas and large cities, properties have almost tripled in price since 2015.

During this time, the Spanish Government introduced two new immigration schemes which have rocked the game board: Beckham’s Law in 2015 and the Digital Nomad Visa in 2023. Both mirror each other; the former is devised for EU nationals and the latter for non-EUs. They introduce a swathe of enticing tax advantages with an aim to attract foreign talented individuals, both from the Union and non-EU. Over 10,000 people benefit from Beckham’s Law lenient tax breaks (which apply nationwide, regardless of where you settle down in Spain).

We learned in a post-pandemic world that working remotely is not only a possibility, but frankly a necessity for many. For those who are able to escape the foul weather of their home countries, and seek the warmth and light of milder climates, all year round, coupled with ultra-low taxation, these new immigration schemes prove a temptation too hard to resist. So, why even fight temptation? It’s simply smarter to give in.

Starting life anew abroad is a compelling idea that lurks in the minds of millions day to day. But in reality, only a handful musk the courage to break away from the constraints of narrow-minded traditional work moulds that hearken back to previous centuries. Working remotely from Malaga on your laptop with 21 degrees, whilst paying little to no tax, is no longer an unreachable dream, it’s a reality made true for thousands of individuals. Break away from the heavy chains of social conventionalisms, and carve your own path in life, embrace a new lifestyle befitting of the 21^st Century.

However, despite the roaring success of the above two immigration schemes, the undisputed king of all visa permits still remains to this day the coveted, and often elusive, Golden Visa, introduced in 2013. It is the only visa in Spain which does not make you automatically tax resident on attaining it. The unmatched freedom and choice it confers its privileged applicants cannot be overstated enough. It’s a blue-ribbon visa that throws the red rug at their feet allowing them unfettered access to Spain and the Schengen Area beyond (27 countries).

Law firm LNA gets you, and your family, a golden visa in under 3 weeks.

Capture-arabic

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10 reasons to apply for a Golden Visa in Spain

Tax - A Golden Visa does not automatically make you tax resident in Spain, unlike every other visa in Spain. This is a unique trait exclusive only to GVs. No other visa in Spain shares this unique (tax) advantage. Only for this reason, affluent investors find it most appealing.
Freedom - Allows you to override the 90/180-day that limits stay in Spain (and by extension the Schengen Area/European Union).
Autonomy - Allows unfettered access to Spain. You can enter and leave the country as you please, even overriding Covid flight bans, as you will hold a select residency permit that (very) few people have.
Choice - No minimum stay is required. You can spend as little as one day, or the full year-round in Spain, at your choice.
Clear rules - Initially on a 3-year stay, then on 5-year renewals.
Family – all are included as dependents.
Fast-tracked. Golden visa applications are greatly expedited by rapport to standard visa applications. Golden visas are granted in 3 weeks.
Work - You can work in Spain. Unlike other visas, which ban you from working in Spain, it allows you and your family the right to work in Spain (optional).
Leads to permanent residency (optional).
Leads to Spanish citizenship (optional).

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Conclusion

Control your own destiny, pay less taxes, and enjoy with your loved ones a new life in a beautiful country at the heart of Western Europe.

Interested? Come and speak to Larraín Nesbitt Abogados’ (LNA) friendly staff who will be pleased to guide you through Spain’s Golden Visa programme. On applying for a Golden Visa, we assign you one of our seasoned immigration lawyers, who will be assisted by an in-house visa specialist, guiding and handholding you throughout the whole procedure, from start to finish.

Did I mention LNA attains Golden Visas in under 3 weeks?

Life is simply too short not to be lived.

For those few who want to make the most out of it:

Golden Visa (Investor Visa)

At LNA we have made true the dreams of hundreds of non-EU investors, and their families, assisting them to attain a Golden Visa since its inception in 2013. You can browse our clients’ visa testimonials here.

Your family’s success is only one call away:

UK: (+44) 07543 838 218

Spain: (+34) 952 19 22 88

“The only way to get rid of a temptation is to yield to it.” – Oscar Wilde

Oscar Fingal O'Flahertie Wills Wilde (1854 – 1900). Was an outstanding and brilliant Irish poet and playwright. He is best remembered for his epigrams and plays, and his novel The Picture of Dorian Gray, featuring the soulless ever-young Victorian aristocrat. My personal favourite is The Selfish Giant. He died young, incarcerated by narrow-minded social conventionalisms, both figuratively and literally, he was unable to escape. Simply, he was one-of-a-kind.

Residency services available from LNA:

Golden Visa Service (Investor Visa)
Non-Lucrative Visa (Pensioner’s Visa)
Lucrative Visa (Business Visa)
EU-Family Regroupment (Marriage Visa)
Digital Nomad Visa (Tax-free visa)
Non-Domiciled Tax Scheme (Beckham's Law)
Spanish Residency permit for EU nationals

Please note the information provided in this article is of general interest only and is not to be construed or intended as a substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No pact with the devil was made on writing this article. Ní neart go cur le chéile. VOV.

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Beckham’s Law Explained (Spain’s Non-Domiciled Tax Scheme)

Raymundo Larraín Nesbitt, November, 1. 2023

Lawyer Raymond Nesbitt explains to us one of four legal ways to bypass the pesky 90/180-day rule that now affects all UK nationals post-Brexit.

Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1st November 2023

In 2015, Spain introduced a special tax regime for wealthy EU expatriates who relocate to Spain. Following in the footsteps of other countries’ successful non-domiciled tax schemes, namely the United Kingdom, the self-declared goal of this programme is to attract high achievers to relocate to Spain on the back of a job offer. The typical taxpayer profile that qualifies would be a high-profile artist, techy, high-ranking corporate employee, etc. Over 10,000 foreigners settled in Spain have benefitted from this special tax arrangement.

In a nutshell, this tax scheme allows EU nationals to make spectacular tax savings on paying Income Tax in Spain (IRPF). If you opt into this scheme, you stand to benefit from substantial tax breaks on both income derived in Spain as well as worldwide income.

On opting into this special tax regime, a legal fiction takes place whereby EU expats are treated (for admin purposes) as if they are a resident taxpayer in Spain. Albeit in practice, for tax purposes, the taxpayer is regarded as a non-resident. Meaning you in fact get the best of both worlds; you get all the perks from being legally resident in Spain, yet you pay a substantially lower tax bill as you are deemed in practice as a non-resident taxpayer.

Who can apply?

Any European Union national relocating to Spain as a result of a professional contract. You need to be hired by a Spanish company or else by a foreign company with a permanent establishment in Spain. The contract is the core requirement to opt into this tax scheme. Non-EUs may also apply but may require a visa to live and work in Spain. Non-EUs are advised to benefit instead from a Digital Nomad Visa, which offers almost identical tax benefits and is also a visa permit.
Not to have resided in Spain on the previous 10 years.
No earnings derived from a permanent establishment in Spain.

The tax benefits

Spanish income. The first €600,000 earned from a source within Spanish territory will be taxed at a flat rate of 24% (in lieu of the standard top marginal rate of 47%). As can be surmised, even for earnings whose source is derived exclusively in Spanish territory, the tax savings are huge.
Worldwide income. However, it is here where this tax scheme truly shines and comes into its own. Spanish Tax Authorities only tax you on your income derived within Spanish territory. Meaning, any other source of worldwide income is tax-exempt (just like with the popular UKs non-dom tax scheme). Needless to say, this unique tax advantage offers a hugely attractive prospect for those taxpayers with substantial earnings, assets, and interests overseas. The only exception is any income derived abroad from working.
Exempt from submitting tax return 720
Exempt from submitting wealth tax *
Five years plus one. Because of its outstanding tax advantages, the government time gates the tax benefits. It applies on the fiscal year of relocation as well as on the following five years (total up to six years).

*contingent on the value of your Spanish estate.

Potential disadvantages

As written above, a legal fiction applies whereby you are regarded as a non-resident taxpayer (non-domiciled). The implication of this is that as you are not regarded as a tax resident, you may not benefit from lenient tax allowances on personal income tax as would be standard practice.
This tax scheme only works out if the taxpayer's country of origin has a double taxation treaty in place with Spain.

Conclusion

Beckham’s Law addresses a gap for high-end professionals who wish to relocate to Spain (on the back of a job contract), alone or with their families, and enjoy all the country has to offer, including ultra-low taxes, regardless of where they settle down in Spain i.e. in Mallorca.

If you are a high-flyer, don’t fancy paying many taxes, and wish to relocate to Spain (legally), this is the tax scheme for you. Give us a call!

In effect, this blue-ribbon tax scheme allows you, and your family, to get the best of both worlds; you get to enjoy all the perks of being legally resident in Spain albeit you are fiscally treated as a non-resident taxpayer, paying little to no tax. In my book, that’s a win-win.

At Larrain Nesbitt Abogados, we offer the following immigration service: Beckham's Law

“I don’t do anything unless I can give it 100%.” – David Beckham

David Robert Joseph Beckham (1975). OBE. Born in a humble background, from a young age he became a footballer, quickly rising through the ranks given his innate talents, becoming England’s captain. He retired after a very successful 20-year career, during which he won 19 major trophies. He married a spicy posh businesswoman, and they’ve had four children. He’s a known philanthropist who has created several football academies to benefit children who come from deprived backgrounds. Surprisingly – and most annoyingly – he hasn’t been bestowed (yet) the title of ‘Sir’, despite others attaining it with half of his accomplishments.

Residency services available from LNA:

Golden Visa Service (Investor Visa)
Non-Lucrative Visa (Pensioner’s Visa)
Lucrative Visa (Business Visa)
EU-Family Regroupment (Marriage Visa)
Digital Nomad Visa (Tax-free visa)
Non-Domiciled Tax Scheme (Beckham's Law)
Spanish Residency permit for EU nationals

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Spain’s Non-Lucrative Visa Explained (Pensioner’s Visa)

Raymundo Larraín Nesbitt, October, 9. 2023

Lawyer Raymond Nesbitt explains to us one of four legal ways to bypass the pesky 90/180-day rule that now affects all UK nationals post-Brexit.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8^th of October 2023

The non-lucrative visa has proven wildly successful over the last few years. The typical applicants are a retired couple who wish to spend their twilight years enjoying the very best of the gorgeous Spanish weather & fine food at affordable prices.

Please note this visa service is only open to non-EU residents (i.e. British). NLVs make you tax resident in Spain.

NLV general requirements

Not to be already in Spain illegally at the time of making the application.
Clean criminal record (previous 5 years).
Hire your own health or medical insurance (full coverage) with a Spanish healthcare provider (applicants must be under 75 y.o. to apply).
€29,000 in savings for the main applicant. For every additional dependant, you need to add a further €8,000.
You must not suffer from any of the diseases that may have serious public health repercussions.
Proof you can secure accommodation in Spain.
You cannot work in Spain, you can also not be working at the time of making the application.

LNA offers the following visa service (Ts & Cs apply): Non-Lucrative Visa

What’s holding you back from enjoying a well-earned retirement? Give us a call.

You can call us at our UK line: (+44) 07543838218

LNA has a 100% track record of attaining Spanish visas & residency permits

Larraín Nesbitt Lawyers, small on fees, big on service. Your family’s success is only one call away: (+44) 07543838218.

At Larrain Nesbitt Abogados, we have assisted hundreds of EU and non-EU nationals to successfully attain Spanish residency permits & visas.

Interested? Come and speak to Larraín Nesbitt Abogados’ friendly staff who will be pleased to guide you through the different residency options, choosing the one that appeals to you most.

Other residency services available from LNA:

Golden Visa (Investor Visa)
Digital Nomad Visa
Lucrative Visa
Non-Lucrative Visa
Marriage Visa
Spanish Residency permit for EU nationals

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How to discharge a mortgage loan in Spain

Raymundo Larraín Nesbitt, September, 11. 2023

Lawyer Raymundo Larraín outlines the procedure to cancel your mortgage loan in Spain attracting little to no tax.

How to discharge a mortgage loan in Spain

Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of Septermber 2023

Introduction

The sharp rise of interest rates over the last 12 months, has prompted scores of borrowers to look into cancelling their Spanish mortgage loans. This is done to avoid servicing large monthly repayments.

Mortgages, besides their obvious purpose of financing a house purchase, have long been used by lawyers and accountants as a useful tool to reduce clients’ tax burden. With careful forward tax planning they prove extremely helpful to mitigate client’s overall taxes. It is for this very reason that even wealthy individuals (that do not really need them) actually apply for them to benefit from the lenient tax breaks available.

However, when an inflection point is reached of high interest rates – such as the one we are now in – clients are inclined to re-assess their tax planning strategy and lean to discharge them.

Additionally, on selling a property, a buyer, or his lawyer, will demand from the seller they cancel the existing mortgage loan. Properties need to be sold with a clean title.

With this in mind, in today’s article we give a brief overview on the procedure to fully discharge a mortgage loan in Spain. Unlike other countries, the conveyance procedure involved is not automatic and requires the input of a seasoned lawyer. You will need to instruct a lawyer to carry it out on your behalf (with a specific power of attorney, or POA). This is not a legal procedure that can be followed by laymen.

Preliminaries

Your lawyer, in use of a specific POA will contact your lender and start the procedure.

The bank needs to agree to it. The borrower is free to choose a notary of his choice to formalize the procedure. The legal representative will sign several documents with the lender. Almost every mortgage loan applies a small penalty for early redemption.

The borrower will finish paying off the balance presented by his lender, with penalty interests rolled on top.

Signing the deed

A bank’s representative will then attend the notary of choice and sign a deed fully discharging the mortgage loan.

In plain English, the property is now legally ‘freed’ from the encumbrance. But it doesn’t stop here.

Land registry

The notary deed then needs to be lodged. Once done, the property will appear as free of charges and encumbrances.

How long does it take?

Overall, you are looking at 2 to 3 months on average, always dependant on how fast a lender accommodates you.

Conclusion

Mortgage loans in Spain are not cancelled automatically when you finish paying them off.

Moreover, banks are perfectly content leaving a mortgage charge against a property indefinitely (as it improves their ratios in investor’s eyes), even when the mortgage was paid off long ago. Lenders are in no rush whatsoever to discharge them, and it takes the proactivity of a lawyer to gently nudge them time and again to cancel them over the course of several months. Without a shadow of a doubt, one of the most aggravating tasks that falls on lawyers, is precisely this; assisting borrowers to cancel them as there is a huge amount of red tape involved.

On paying off a mortgage loan, you ought to cancel your mortgage loan. Banks do not do this automatically.

On selling property in Spain, you need to cancel a mortgage loan. No buyer will acquire a property with an existing mortgage against it. A buyer cannot get a new mortgage on the property if there is already one showing up in the title, that is why it must be cancelled.

In a context of high interest rates, most financial advisors will recommend you to cancel them, avoiding hefty monthly repayments which in fact negate the tax benefit sought on the mid to long run.

Bottom line, whatever the reason for cancelling a mortgage loan, you need to hire a lawyer.

Larrain Nesbitt Abogados offers a competitively-priced conveyance service: Discharging a mortgage loan.

At Larrain Nesbitt Abogados (LNA) we have over 20 years’ experience assisting clients buying, selling, or renting properties. We can also offer you a competitively priced accounting service to file your landlord taxes every tax quarter nationwide. We are also specialized in taxation, immigration & residency visas. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment.

Larraín Nesbitt Abogados, small on fees, BIG on service.

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Taxation on gifting property in Spain

Raymundo Larraín Nesbitt, July, 4. 2023

Lawyer Raymundo Larraín outlines the procedure to gift property (and money) in Spain attracting little to no tax.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of July 2023

Introduction

The continued (vertical) hike in interest rates pursued relentlessly by the ECB (basically to mend its own errors on printing money to no end during the Covid pandemic, which generated a huge inflation bubble) has continued to erode people’s income. In plain English, we are all poorer thanks to the errors of central banks. The good news is that no one in these central banks will be held accountable for their gross incompetence (not even a slap on their wrist), yay! The bad news is that all of us punters get to pay for central banker’s mistakes – as in literally. Nay!

The bottom line is that we are all now collectively poorer as a result of their gross negligence, and as a result many families are struggling to make ends meet as they are out-of-pocket with the rising cost of loans and life in general (inflation). This translates to loving parents lending a helping hand to their offspring, so they can get their paws on the first rung of the property ladder.

Gifting property

In today’s article, we outline a method so that parents – or other family members – support their children (or loved ones) financially so they can, for example, buy their first property. But it is also extensive to gifting properties between spouses, other family members, etc.

My professional experience is that most foreigners are blissfully unaware of the legal procedure involved on gifting property (or money) in Spain to their loved ones saving huge amounts in tax in the process.

Gifting property arises when:

Joint owners (i.e. spouses) decide to re-arrange property holdings.
When parents gift their property, or money, to their children.
When property owners gift their property to other family members, or friends.

Gifting property (or money) has indeed become very popular in Spain, as several regions have approved new tax laws that suppress inheritance and gift tax (Andalucia, Madrid, Galicia, etc). People are jumping at the chance of paying little to no tax in case these tax laws are changed again in the future when a new government takes power …

Taxes paid by the giftor:

Taxes paid by the giftee:

Gift tax (in several regions in Spain this is almost zero)

Additional expenses:

Lawyer’s fees
Notary fees
Land registry fees

Gift procedure

A lawyer needs to be retained from the outset to organize & supervise the gift deed which will be witnessed by a Spanish notary. This requires planning ahead carefully to mitigate your tax bill. If you fail to plan, you plan to fail.

If the legal procedure is not followed correctly (i.e. you do not bother to instruct a lawyer and attempt do it on your own), you will likely not qualify for the lenient tax breaks available and be slammed with a huge tax bill.

Please note we are only giving in this article a (very) basic outline on how the procedure works, the devil is in the details.

Dissolution of joint property ownership (DJPO)

If existing joint owners wish to re-arrange their property holdings, they can opt instead for a DJPO, which reduces taxes by as much as 86%, or more! More on this in our in-depth article: Dissolution of a joint property ownership.

A DJPO applies when:

1.- In divorce or separation proceedings. Couples owning property jointly may decide to split up. Taking for granted they own a property in equal shares, one of them decides to sell their 50% to his ex-partner. The ex-partner will pay him/her his quota.

2.- Re-arranging inheritances. Beneficiaries of an inheritance transfer their quota on a property to a fellow heir. E.g. Sisters who inherit property transfer a share between them.

3.- Re-arranging property holdings between family and friends. Stakeholders such as family, friends, or investors co-owning a property may decide to re-arrange their holdings.

Conclusion

If you care for your loved one’s well-being, and want to help them out in life, all the while paying little to no tax, you may wish to consider this option I explain above.

At LNA we will gladly assist you to re-arrange your property ownership by way of gifting it. Just give us a call, and one of our friendly staff will speak to you.

LNA offers this service: Gifting property & money

“If you fail to plan, you plan to fail.” – Benjamin Franklin

Benjamin Franklin (1706 – 1790). Founding Father of the United States. Exceptionally gifted statesman, scientist, inventor, diplomat, writer, printer, postmaster, and political theorist. He campaigned from early on for colonial unity, initially as an author and spokesman in London for several colonies. He was tasked to raise funds in Europe for the War of Independence. Malaga’s cathedral only has one tower (known as ‘La Manquita’), as the funds were gifted to 13 struggling colonies in their War for Independence against a mighty overseas empire. He was one of the drafters and signers of the Declaration of Independence of the 4^th July 1776. Appointed as the first United States ambassador to France, he exemplified the ingenuity and prowess of a young emerging American nation.

Benjamin was a politician in his spare time; nobody’s perfect.

Larraín Nesbitt Abogados, small on fees, BIG on service.

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Spanish Golden Visa: 10 reasons to apply

Raymundo Larraín Nesbitt, June, 13. 2023

Lawyer Raymundo Larraín highlights the main advantages of attaining a Spanish Golden Visa.

You can review here our client’s testimonials.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8^th of June 2023

Golden Visas do not automatically make you tax resident in Spain upon renewal, unlike every other visa in Spain. This is a unique tax advantage exclusive only to GVs. No other visa in Spain shares this unique trait. Only for this reason, affluent investors will find it most appealing if they do not fancy paying taxes in Spain.
Allows you to (legally) override the 90/180-day that limits stay in Spain (and by extension in the Schengen Area/EU). This visa allows you unfettered access to Spain. You can enter and leave the country when and as you please, even overriding Covid flight bans, as you will hold a select residency permit that (very) few people hold.
Clear rules. Initially granted for 3 years, then renewable every 5 years.
No minimum stay is required. You can spend as little as only one day in Spain, or the full year-round, at your choice.
Fast-tracked. Golden visa applications are greatly expedited by rapport to standard visa applications. Golden visas are granted in only 3 weeks.
Streamlined. Golden Visa applications are (greatly) streamlined, removing all the unnecessary admin red tape normally associated to standard visa applications, making applicant’s lives easier.
The whole family is included as dependents, even ascendants (such as grandparents).*
You can work in Spain (optional).
Leads to permanent residency (optional).
Leads to Spanish citizenship (optional).

*(subject to criteria)

Conclusion

The European Commission does not like golden visas.

The Spanish government doesn’t like golden visas either (although it greatly benefits from them).

Several countries in Europe don’t like them either and have already scrapped them in a trend that is growing and gathering pace throughout all the Union (Ireland, Portugal, etc).

On the back of this burgeoning trend, several political parties have piled pressure on the government to suppress them altogether registering proposals at congress (Mas Pais, Podemos, etc). The Spanish government jumped on the bandwagon last month, and made public it will either scrap golden visas, or raise the cap to €1,000,000. It seems they are leaning towards the latter (raising the cap, meaning doubling the required minimum investment).

So, what does all this mean for applicants? It means the window of opportunity to attain a golden visa in Spain, by way of investing €500,000 in real estate, is waning by the day. Over the next months, the Spanish government will approve to raise the cap, as reported by El Pais, in effect doubling the minimum investment to €1mn. Anyone who cannot afford to spend a minimum of one million euros in real estate, will be left out in the cold.

We strongly advise all non-EUs – who are considering filing for a golden visa in Spain – to do so immediately, before the window of opportunity closes. Obviously, if you are a multi-millionaire, this change does not concern you. But there is also the distinct possibility of the government caving into the political pressure and shutting down golden visas for good, in line with other fellow EU countries.

In any event, all would-be golden visa applicants, affluent or not, are strongly advised to act sooner rather than regret it later.

At Larrain Nesbitt Abogados, we have made true the dreams of hundreds of non-EU investors, and their families, assisting them to attain a Golden Visa since its inception in 2013. You can browse our clients’ visa testimonials here.

Your family’s success is only one call away: (+34) 952 19 22 88

Golden Visa (investor visa)

Larrain Nesbitt Abogados has a 100% track record of attaining Spanish residency.

“I’m self-made. I always wanted to make myself a better person, because I was not educated. But that was my dream – to have class.” – Tina Turner

Anna Mae Bullock (1939 – 2023). Was an-all American singer (later on in life she acquired Swiss residency & citizenship through investment). Born in a humble family, in the deep South, she picked cotton as a kid with her father in a farm. Family members soon noticed her natural talent for singing and she went on to join the local church’s choir. Without receiving a formal education, she would go on to work in several jobs, such as joining a household’s domestic service, etc until finally pursuing her dream, a singing career on meeting the man who would eventually become her husband, Ike Turner. He taught her all the basics. She became the featured vocalist of his band, and rose to prominence as the lead singer of the Ike & Tina Turner duo. Because of her husband’s constant abuse (fuelled by the unrestrained consumption of cocaine & alcohol), she bravely decided to split up and launch a successful career as a solo performer, at age 37, garnering worldwide recognition. And the rest, as they say, is history. Tina Turner will be fondly remembered as the Queen of Rock ‘n’ Roll.

She is one of the few singers who dedicated a song to us lawyers: “Typical male.” No doubt, the lady had class.

Larraín Nesbitt Lawyers, small on fees, BIG on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, residency, inheritance, taxation, and litigation. You can contact us by e-mail at info@larrainnesbitt.com, by completing our contact form, or by telephone on (+34) 952 19 22 88.

Residency services available from LNA:

Golden Visa Service (Investor Visa)
Non-Lucrative Visa (Pensioner’s Visa)
Lucrative Visa (Business Visa)
EU-Family Regroupment (Marriage Visa)
Digital nomad visa (Tax-free visa)
Spanish Residency permit for EU nationals

Golden Visa related articles

Investor Guide to Spain’s Golden Visa Law – 8th November 2013
????????????? – 8^th July 2015
Golden Visa Spain – 8th June 2017
Golden Visa Spain – 8/8/18
Golden Visa Spain: 10 frequently asked questions – 8th October 2019
Golden Visa for British – 21^st January 2021
Golden Visa: 8 Reasons to apply – 21^st March 2022
Spanish Golden Visa: 10 reasons to apply – 21st March 2022

Article also published at Larrain Nesbitt Abogados: Spanish Golden Visa: 10 reasons to apply

Marbella-based Larraín Nesbitt Abogados (LNA) has over 20 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speakinglawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

... Read more