Tax changes in Spain in 2023

Tax changes in Spain in 2023: From 1 January 2023, there will be a number of tax changes in Spain. In this post, you will already find the main points.

Transfer taxes in Com. Valenciana to up

The transfer tax (ITP) in Costa Blanca North & South will go up from 2023. The ITP is similar to the sales law in Belgium and applies to the purchase of properties in resale. The current rate of 10% increases to 11% for properties with a transaction value of more than EUR 1,000,000.

It is not a progressive rate. From the time the (tax) value exceeds EUR 1,000,000, the rate of 11% applies in totality to the value above EUR 1M. So for a value of EUR 1,200,000, the rate of 10% applies to the first EUR 1,000,000 and the rate of 11% applies to the EUR 200,000.

However, it is true that the purchase value is calculated per buyer. Therefore, if you are not married under the community property regime, and you purchase with two people, the rate is calculated based on the purchase value per person. Suppose you buy a property of EUR 1,000,000 with two people, the purchase value comes to EUR 500,000 per person and the rate is therefore 10%.

VAT remains unchanged at 10% for new-build homes.

Read more about purchase costs in Costa Blanca.

Transfer taxes in Balearic Islands also up

The ITP in the Balearic Islands (Ibiza - Mallorca - Menorca - Formentera) is also going up. Unlike in Costa Blanca, the Balearic Islands do operate with a progressive rate of between 8% and 11.5%. The 11.5% rate of above EUR 1,000,000 will now go to 12%. In addition, there will be a new bracket of 13% for purchases above EUR 2,000,000.

Find more information on purchase costs in the Balearic Islands here.

New wealth tax in Spain

Spain already currently has a wealth tax for individuals. However, the autonomous regions have far-reaching powers to determine rates, reductions and exemptions. For example, in practice there is no wealth tax in Madrid and Andalusia. Partly to counter competition between regions, the Spanish national government has introduced a new wealth tax. A "temporary" solidarity contribution for the rich (just as the current wealth tax, from 1991, was a "temporary" measure).

This new tax is for individuals with net assets from EUR 3,000,000. On the first bracket of EUR 3,000,000 - EUR 5,000,000, the rate is 1.7%. Thereafter, 2.1% up to EUR 10,000,000. On the highest bracket from EUR 10,000,000 onwards, the rate is 3.5%. You can offset the solidarity contribution due against the ordinary wealth tax paid.

The solidarity measure is temporary and applies for 2023 and 2024. The tax will be reviewed in 2024. It applies to both residents (including those under the Ley de Beckham system) and non-residents. Non-residents are taxed on their assets in Spain. Residents are taxed on their worldwide assets.

Learn more about the 1991 wealth tax here.

Tax changes in Spain in 2023: Ley de Beckham

There are not just tax increases. Indeed, the Ley de Beckham for expats is being relaxed. For instance, you are no longer allowed to be a tax resident in Spain for the past 5 years (instead of 10). In addition, the regime remains longer: 11 years instead of 6. The need to physically work in Spain is removed. You also qualify if you only telecommute for your Spanish employer.

Good news for entrepreneurs. If you are a director of a Spanish company, you may now also be a shareholder. Indeed, the cap of 25% of the shares expires (unless the company is a holding company).

Technology start-ups and certain R&D functions can also benefit from the favourable regime.

Together with a new Ley de Startups for enterprises, these changes are likely to come into force during 2023.

Read more about Ley de Beckham.

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