PROPERTY SALE IN MALLORCA – INCIDENTIAL TAXES
CAPITAL GAINS TAX
Selling a property in Mallorca/Spain the vendor is obliged to pay a capital gains tax (subject to income tax) which ensues of the difference of the original purchase price and the sales price (all expenses for betterments like costs of repairs, renovations, etc., taxes, brokers fee, etc. can be deducted).
Here we differ between RESIDENTS and NON-RESIDENTS:
You are a RESIDENT:
- Gain up to 6.000 € = 20 % tax
- Gain up to 24.000 € = 22 % tax
- Gain as of 24.000 € = 24 % tax
NON-RESIDENTS have to pay an overall tax rate of 19 %.
Further there are benefits for the first 400.000 € when the property has been purchased before the 31st of December 1994.
By selling their property all NON-RESIDENT´S are obliged to pay a 3% retention to the Spanish fiscal authorities already/immediately at/after the day of signing in front of the notary (the 3% will be deducted of the total amount of capital gains tax which will be due with the annual tax declaration).
CORPORATION TAX
By selling a property through a company (e.g. sociedad limitada), a corporation tax of 30 % of the capital gain will be due to be paid to the Spanish fiscal authorities.
PLUSVALIA (MUNICIPAL CAPITAL GAINS TAX)
The assessment basis of the so-called PLUSVALIA is the increase of value of (only) the ground of the the property since the property has last been sold. The cadastral value of the ground and the amount of years the vendor has been owner of the property are basis of calculation of this tax. In Spain the PLUSVALIA has to be paid by law through the vendor and can´t be passed on to the buyer.