Legislation

In principle there is no need for any specific form of sales contract to purchase a property in Spain. That means that theoretically a private sales contract will be sufficient. It is customary though to conclude the sale with a legally certified title deed, the so-called “escritura”, which obviously has some advantages and ensures the greatest possible security for such an important legal act. For the purpose of tax payments the title deed has to be submitted to the appropriate authorities. (This also applies for the private sales contract.) It is also customary to submit it to the land registry for changing the title. The latter is a voluntary step since, as mentioned above, the purchase of the property is concluded with the contract but with the entry in the land register one takes advantage of all the security offered by the Spanish legal system for ownership of land or property. To sum up we can say that we recommend submitting the property to the land register following the signing of a legally certified title deed.

In practice it is customary to sign a private contract before signing the legally certified title deed. (That applies for an “option to buy” contract, as well as for a sales contract.) It serves to establish the intentions of buyer and seller provisional and in writing. One shouldn’t forget though that this is already a legally valid, obliging contract, which means that both parties have responsibilities when signing. Therefore it is recommendable to enlist a qualified lawyer who can produce a university degree and practises his occupation which means is affiliated with the professional association of lawyers (Colegio de Abogados). It is certainly true that there are plenty of forms for “standard” contracts readily available to everybody, which are usually acquired through intermediaries or advisers (Asesores) so individuals that are not qualified lawyers. And since one is usually in such a hurry to get the business all wrapped up, one uses such a document and forgets that it is a real and legally binding contract. One always has to bear in mind that only the lawyer knows about the business and is legally responsible for any of his actions which doesn’t apply in the other cases. As experience shows one can often get into trouble later for signing a wrong contract. So lets forget about the private contract and lets turn to the legally certified title deed. A notary of the buyer’s choice’ll draft it since he has to cover the fees. A notary employee will sit down with both parties for a preliminary talk to establish the facts needed to set up the title deed. Of course all this is done under the constant supervision of the notary. Therefore it is not necessary to bring an adviser when going to the notary since the notary and his employee will always know what to do in any given case.

The land and property register (Registro de la Propiedad) is the public institution where one submits the contract of purchase for a property. Every entry will be registered in the book of the relevant municipality. Every register is an institution created by the government headed by a highly qualified civil servant “Registrador” who is assisted by a team of employees necessary for the job at hand. If one wants to register the purchase of a property or a mortgage for example, one will have to produce the legal papers at the land register, which show the right to the property. The land register office will only carry out the change if all taxes are paid. The register offices also have the responsibility to provide any information about properties registered in their land register. This can be done either as a certification (Certificado) or a simple land register extract (nota simple). The certification is a legal document with all the containing information witnessed officially while the “Nota Simple” is purely for informational use and is not obligatory. The billing of services provided by the register office is based on a scale of charges laid down by the provincial government.

Mainly the drawing and certifying of official documents in the area of civil law. He also has the responsibility to safe keep the original document in the so-called “Protocolo”. Like that it is ensured that further copies can be made of the secured original, even if another notary who might have been working for the office at that particular moment in time did the first certification. The notary also has the responsibility to advice both parties on all subjects concerning the document before the named document is to be signed in his presence. He is therefore a neutral adviser for both parties who strives for a contractual balance between the two parties. The execution of the certification comprises that the legal transaction is concluded under consideration of all the legal regulations and is in accordance with the intentions of all parties without putting anybody at a disadvantage. The notary doesn’t interfere with the legal transaction. He only chairs the meeting where all parties present state their intentions to then draw the legal documents and certify them. It is only in exceptional cases where the notary receives the purchase money to keep safe until the seller is allowed to have it. Finally it is customary that the notary is engaged by the buyer or the person who acquired deeds with the document in question, with the completion of all follow up work (Payment of taxes, land register entry, etc.) All these services are not subjected to the official scale of charges and will be billed separately. All other services will be billed according to the official scale of charge laid down by the government.

First of all the seller has to prove he’s got the right of ownership. For that he needs the document he received when he purchased the property at question. The document should be registered at the land register. Further he has to present the last receipts for property tax (IBI), water and electricity. If the property is an apartment or part of a community he has to prove that there are no debts owed to the community. The buyer has to be capable of contracting (18 years of age or over) and has to identify himself with a valid passport or identity card. If you happen to be a foreigner and haven’t got a “Foreigners Identification Number” (N.I.E.) yet, you should request one after changing the title deed to your name for all following proceedings. Also very important: If the property was bought from a Spanish national or a foreigner resident in Spain, the purchase price has to be paid in Spain and the import of the money has to be proven to the notary when changing the title deed.

1. Notary fees: according to official scale of charges. To give a general idea one can say that for a simple transaction with a purchase price of € 100.000, - the notary fee will be approximately € 500, -.

 2. Official taxes: the property tax for the purchase of a property will be 6,5% of the purchase price (as stated in the title deed). If the seller is a developer (so called “Promoter”) the tax will be 5,75%. 

3. Local tax: the so called “Plusvalia” (capital gain) is a local tax which is usually not very high and only payable for the capital gain on urban land not on rural land. 

4. Land register fees: according to official scale of charges. The total amount is usually lower than the notary fees. The information above is valid for certificates of purchase but it occurs on a regular basis that other transactions are included in the document. (For example: promissory note, reservation of proprietary rights, transfer of mortgage, acceptance of inheritance) which will obviously cause additional costs at the notary, the land register and in taxes.

Unlike in the German system, a notary in Spain is not involved in the payment of the purchase price and is therefore not under any obligation to take over a controlling function. Another matter though is the necessity of presenting proof of payment to the notary in those special cases where it is demanded by the legislature to prevent money laundering. If the seller acknowledges that he received the purchase price prior to the signing of the title deed and the buyer confirms this, this fact is noted in the certificate. This is the official meaning the legal part. Another matter is what is of interest to the two parties, which is of course entirely up to them. The notary only has the responsibility that the contract is drawn to suit both parties alike. That’s why both parties have to agree if the purchase price has to be paid in the notary office during the process of signing the documents or if they want it paid before or after these proceedings. To summarise it has to be said again that the Spanish legislature doesn’t have any regulation regarding this subject.

There is the possibility to conclude a contract without actually being present. In a case like this a third person has to represent the interest of the person who is absent, whether it is the seller or the buyer. The seller can only be represented with a full power of attorney or a special power of attorney for the sales of property. To make this point perfectly clear: A private legal authority or copies of documents (for example faxes or e-mails) are not sufficient. The buyer can also be represented. In this case there is also the possibility of representation without a power of attorney, a so-called verbal authorisation. This makes it necessary though that the buyer ratifies (meaning: confirm) the transaction after the conclusion of the contract. The certification of power of attorneys outside of Spain can be carried out by a local notary or by a resident Spanish consul who can take over notary functions outside of Spain. In the case of using a local notary it is necessary to obtain a so-called “Apostille” afterwards which enables one to use the document in a foreign country.

It is possible and perfectly legal. In practice though one will often encounter problems when trying to enter the transaction in the Spanish land register even when a competent notary carried it out. But first things first. Two British nationals can agree on a deal about an apartment in Spain and get it certified by a notary in Great Britain. It is possible that there are notaries in Great Britain, which will refuse to carry out the certification and will rightly claim that they don’t know if such a contract as they are supposed to certify is valid and effective. But there are plenty of notaries, which know the Spanish law sufficiently to carry out such a request. Some of them might even master the Spanish language which will make it possible to draw the contract in Spanish straight away which will have great practical advantages. All this might look like an attractive alternative in case both parties can’t sign in Spain, but as already mentioned: in practice there are obstacles. The government employees working in Spanish land register offices usually have their own special interpretation of the law and often contravene the EC law and decree by refusing to classify foreign documents as able to get registered. They usually refer to an alleged equal treatment that certificates drawn by Spanish notaries receive in Great Britain. The only thing we can do here is to point out that plenty of complaints have been filed in Den Haag and Brussels and that in our opinion it won’t be possible to keep up this behaviour much longer. In the meantime one should make use of an ingenious method, which consists of getting the British certification certified again in Spain. Like this, one wraps the document - as an outstanding British lawyer of our times put it once - in a “coat” to make it acceptable for the stubborn officials.

Considering that the starting position in a foreign country is more difficult due to language problems and lack of experience in everything to do with legal matters, one can only appeal to the “common sense”. It is necessary to reinforce precautionary measures without adopting the opposite extreme. One should only enlist professional assistance (that means: lawyers, notaries, tax consultants, qualified estate agencies etc.) and try to approach things mainly as one would do in their own country. That means: take your time, especially to think things over. If one follows this advice one can hardly go wrong. Unfortunately experience shows that ones attitude in a foreign country is quite often different to what it is at home. Maybe the tendency to make hasty decisions can be blamed on the good weather and the relaxation, which is usually present in our holidays. And therefore we want to appeal to you again to leave your common sense turned on. Basically it is pretty easy to safeguard oneself if one puts the good advice into practice. This is not the place to go into details since it would be beyond our scope, but it is conspicuous how often foreigners in a notary office follow blindly the advice of people who aren’t qualified, which means they are not notaries or tax consultants (and quite often this is only to the purpose of tax evasion). Maybe the reason is that we subconsciously tend towards thoughtlessly believing what we want to hear. And if we are out to save some taxes while doing a business transaction (which we almost always want to do…) we’ll always take any advice or help given to us in that department. The only one we don’t usually ask is the notary. Probably because we already know that he will tell us the complete opposite of what we heard already. But one should never forget that all this happens in a foreign country and that one might have to pay dearly for every mistake one makes. It is very interesting by the way that according to the statistics, most deceived foreigners are victims of their own fellow countrymen. Probably because they know best what their “clients” are like and how they will react.

We think that one should get good advice and check the property carefully. With all property - no matter what kind - one should always ask for the receipts of the property tax, community charges and supply services (water, electricity, etc.) and check the land register for entries about the ownership and mortgages. With plots of land one should get a certificate from the municipality about the suitability for building. But most important, never trust verbal information even when the other person claims that it is only at this moment in time that he can’t present any written proof. Always insist on it since verbal information has no legal effect. This is the legal aspect. Another aspect is the quality of buildings, which is a subject difficult to advice on. Not everybody has the same requirements, but it can be said generally that only one viewing usually doesn’t allow to draw a conclusion. Sometimes it is only possible to get a proper picture of a building if one has lived in it. Here it has to be said again that it is recommendable to enlist the help of a professional. An architect or an “Aparejador” (technical architect) can accompany us when viewing the house or apartment of our choice. Don’t hesitate if it is advisable to get a written report. This money is well spent.

If the deal was carried out by means of a legally certified contract, it is sufficient to follow the advice of the notary, which means to pay the taxes and enter the document in the land register. In this context the person concerned has to take the initiative himself, unlike in Germany where the tax office will send the notification directly to the address of the buyer. Equally important is it to communicate the transaction to the responsible authorities for their attention and administrative purposes. The first priority is to talk to the town hall (Ayuntamiento) and the land registry (Catastro) but also the public utilities (water, electricity, telephone) if one wants to be registered as a client with them. In case of an apartment one also has to register with the administration of the community.

It is said not without reason that one takes on responsibilities when buying property. Not the least of these responsibilities are the obligation to pay for services, periodical or one-off payments. One-off payments are the ones that are connected with the conclusion of the contract and are mentioned above already. There are also the payments that will reoccur on a regular basis like: a) Local tax: Property tax (IDI). For this tax, it is customary to set up a direct debit so one doesn’t have to go to the authorities every year to pay it.
b) State tax: income tax and wealth tax. These require a tax declaration, which is not very difficult if one, owns only one property in Spain. If not it can be a bit more complicated but it is always recommendable to have the tax declaration done by a qualified Spanish tax consultant.
c) General and special fees that have to be paid to the community where the apartment or business premises is situated: these can also be paid by direct debit. The amount usually varies from one year to another based on the decisions that are made about the budget and the split of costs of the particular year at the meeting of the apartment owners.

We already mentioned the lawyer and the tax consultant. There is another useful professional though who is quite unknown outside of Spain and that’s the “Gestor”. The “Gestor” carries on a private service office and his main job is to take all steps that are necessary for a successful conclusion of his client’s dealings with the authorities and other official matters. He can also assist with dealings with private institutions. Gestors are individuals who can bear the title “Gestor” after having successfully completed an exam in front of an official authority and are allowed to open a “Gestoria”. They can take care of all dealings to do with requesting a residence permit (Residencia), the public department in charge of controlling traffic (Tráfico), customs duty and much more. It is rare though that all subjects are covered though since quite often a further specialisation into work- and tax laws is necessary. Quite often the Gestor takes over an intermediary role when dealing with estate agents, translation offices customs authorities etc. If your Gestoria is not only fast and effective but also speaks your language you can consider yourself a very lucky person since this office will take care of a lot of matters which would be very difficult to deal with on your own and the whole thing is usually quite inexpensive.

This question can’t be answered with a clear yes or no. Experience proves that if you don’t tell your tax office about possessions in Spain it is very unlikely that they get the information through other sources. That is the way things stand at the moment. But of course it is possible that suspicious movements of large amounts of money or an insolvency registered in Germany will cause German tax authorities or courts to look into that matter. In cases like this the international co-operation works just fine and it is even likely that private detectives are enlisted to investigate which means it’ll be only a matter of time until the authorities will pick up a trail and follow I right up to the end. It is also indisputable that with the development of new technologies it won’t be long until every country in the EC will be able to determine what properties or bank accounts their citizens have in foreign EC countries and what kind of financial transactions take place in the EC.

For German national goes that the succession is regulated by the German law of inheritance irrespective of the location of the possessions. A change of the line of succession is not customary. So, if there is only one line of succession and one law, which regulates it, it is not recommendable to make wills in several countries. Though it is theoretically possible it comprises the danger that it will make the interpretation of the will more difficult. In the practice an existence of several wills in different countries will hinder the issuing of the certificate of inheritance. It is a different matter though if the intention is to have only one will which is drawn in Spain. In this case it is recommendable to have the will drawn by a notary since a hand written will has to comply with a whole lot of regulations to be valid in Spain apart from the legal procedures a will always has to go through. On the other hand will a hand written will have far less difficulties with a German probate court even if it was made in Spain because the law concerning succession is not nearly as strict in Germany as it is in Spain. In any case it goes that a private will doesn’t offer certain securities, they can get lost or withheld. A legally certified will doesn’t involve these risks. If you should decide to make a will with a notary in Spain and you don’t speak the language your will will be drawn in two languages. In Spanish and in the native language of the person who leaves the inheritance.

A whole lot of sorrows and lies are connected to this question. It is a fact that the tax burden is much higher in Spain than it is in Germany for example. It is also true though that a lot of nonsense has been said and written in connection with this matter. First things first. The appropriate tax authority will assess the inheritance no matter of what kind. Depending on the particular case deductions will be made from the total value, which are low, compared to Germany and only apply to relatives of the person who leaves the inheritance. (Attention in so-called similar to marriage relationships) Afterwards the tax liability will be assessed with a complicated procedure, which involves an official tax table. The rate of taxation varies between 7.65% and 34%. Depending on the degree of relationship and the pecuniary circumstances of the legal heir a multiplication factor will be applied which increases the tax burden even further. Nevertheless it is complete nonsense to say that the Spanish state would keep everything or the tax burden would be 70% if there is no will. Like always in matters of financial importance it is recommendable to obtain the advice of a competent tax- or legal adviser (tax consultant or notary) who will help you to regulate your line of succession under consideration of all financial and tax related aspects.

We can’t go into the subject of when and if a founding of a company is of advantage and when not but we can quickly mention the different kinds of companies and the legal requirements necessary for the founding. Just like in Germany there is a so-called private corporation in Spain. But this kind of company has become more and more rare in recent years and has been replaced by the so-called “Comunidad de Bienes” which means a community of property a decision that is often approved by advisers ignorant of civil law. The first place in the scale of popularity in matters of commercial law occupies the “Sociedad Limitada” which means the limited company followed by the “Sociedad Anónima” the joint-stock company. The characteristics of these companies are mainly the same than in other European countries not least because everybody uses the EC guidelines for orientation. The decision about choosing one or the other kind of corporations should be made with the help of a professional specialised in this area. The “sociedad limitada” like the “sociedad anónima” are subject to rights and responsibilities. They are founded by means of a legally certified document for which a proof of financial investment or contribution in kind is obligatory. The document has to be submitted into the register of companies of the particular province where the company is situated. But before that it is necessary to apply for the so-called “Identificación Fiscal Eespañol (CIF)”, the tax identification number since there is no administrative step possible without it.