Taxes for Danish Buyers of Property in Spain

Purchasing a new-build property on Spain’s Costa del Sol represents a significant investment and an exciting opportunity for Danish buyers. Navigating the Spanish tax system, however, requires careful consideration, especially for non-residents. This guide provides an authoritative overview of the taxes involved when buying, owning, and eventually selling a new-build (obra nueva) property in Andalusia, focusing on key figures and procedures for foreign purchasers.

Pre-Purchase Essentials: The NIE

Before any property transaction can occur in Spain, Danish buyers must obtain a Número de Identificación de Extranjero (NIE). The NIE is a unique identification number essential for all economic, professional, or social activities in Spain, including opening a bank account, signing utility contracts, and purchasing property. It can be applied for directly in Spain at a police station with a foreign citizens’ office, or at a Spanish Consular Office in Denmark.

Taxes on New-Build Property Purchase

When acquiring a new-build property directly from a developer, buyers are subject to different taxes compared to purchasing a resale property.

Impuesto sobre el Valor Añadido (IVA – Value Added Tax)

New-build properties in Spain are subject to IVA, which is a national tax. For residential new-build properties, the general IVA rate is 10% of the purchase price. This rate applies uniformly across all autonomous communities, including Andalusia. However, for subsidised housing (Viviendas de Protección Oficial – VPO), a reduced rate of 4% may apply, provided specific requirements are met.

Impuesto sobre Actos Jurídicos Documentados (AJD – Stamp Duty)

In addition to IVA, new-build property purchases also incur Impuesto sobre Actos Jurídicos Documentados (AJD), or Stamp Duty. This tax applies to certain notarised documents and registered operations. In Andalusia, the general AJD rate is 1.2% of the property’s declared value for transactions entered into from 28 April 2021. This rate is applicable to the purchase of new-build properties and mortgage deeds.

Other Associated Purchase Costs

While not strictly taxes, several other costs are inherent to the new-build property purchase process:

• Notary Fees: These are official fees for the public deed of sale. Rates are regulated but can vary based on the property price and complexity.
• Property Registry Fees: Costs for registering the property in the Land Registry, also regulated and dependent on the property’s value.
• Legal Fees: Engaging a solicitor specialising in Spanish property law is highly recommended to ensure due diligence and safeguard your interests, especially with off-plan new builds.
• Mortgage Costs: If financing through a Spanish mortgage, additional fees such as valuation (tasación) and opening fees may apply. Note that for non-residents, Loan-to-Value (LTV) ratios are typically lower, usually between 60% and 70% of the property’s valuation or purchase price, compared to up to 80% for residents.

Annual Property Ownership Taxes

As a non-resident owner of property in Spain, you will be subject to ongoing annual taxes.

Impuesto sobre Bienes Inmuebles (IBI – Council Tax)

The IBI is an annual municipal property tax, similar to council tax in the UK. It is levied by the local town hall where the property is located. The amount payable is calculated by applying a tax rate (set by each municipality within national limits) to the cadastral value of the property. Cadastral values are administrative values set by the Dirección General del Catastro and are usually lower than the market value. Rates typically range between 0.4% and 1.3% for urban properties. The IBI is payable by the individual who is the registered owner of the property on 1 January of the tax year.

Impuesto sobre la Renta de No Residentes (IRNR – Non-Resident Income Tax)

Non-resident property owners in Spain, even if they do not rent out their property, are subject to IRNR. This tax is declared via Modelo 210 to the Agencia Tributaria (Spanish Tax Agency).

• Imputed Income (for unrented properties): If the property is not rented out, the Spanish tax authorities impute a notional rental income to the owner. This imputed income is typically 1.1% or 2% of the cadastral value, depending on when the cadastral value was last revised. The tax rate applied to this imputed income is 19% for residents of EU/EEA countries (including Denmark) and 24% for residents of other countries. From the 2026 tax year (to be declared in 2027), the deadline for imputed income declarations (Modelo 210) is from 1 April to 31 December of the following year.
• Rental Income (for rented properties): If you rent out your new-build property, the net rental income is subject to IRNR. For EU/EEA residents, the tax rate is 19%, and certain expenses (e.g., IBI, mortgage interest, community fees, property management fees) can be deducted. For non-EU/EEA residents, the rate is 24% applied to the gross rental income, with no deductions generally allowed. From the 2026 tax year (to be declared in 2027), rental income is declared annually via Modelo 210, with the deadline between 1 and 20 April of the following year.

Impuesto sobre el Patrimonio (Wealth Tax)

Spain levies an annual Wealth Tax on net assets, including real estate. While there is a national exemption threshold, autonomous communities can modify the tax rates and thresholds. Andalusia introduced a 100% bonus on Wealth Tax in 2022, effectively eliminating it for residents and non-residents owning assets in Andalusia. However, the state-level Temporary Solidarity Tax on Large Fortunes (Impuesto Temporal de Solidaridad de las Grandes Fortunas – ITSGF) was introduced for 2022 and 2023, applicable to net assets exceeding 3 million euros (with a national exemption of 700,000 euros, meaning the tax effectively applies to net assets over 3.7 million euros). For the 2024 tax year (to be declared in June 2025), Andalusia has adapted its rules, allowing taxpayers affected by the ITSGF to elect to pay the regional Wealth Tax, thus ensuring the revenue remains within Andalusia rather than going to the state. It is advisable to seek expert tax advice on this complex area.

Taxes on Selling Property

When you decide to sell your new-build property, there are two primary taxes to consider.

Plusvalía Municipal (Municipal Capital Gains Tax on Urban Land Value Increase)

This is a local tax levied by the town hall on the increase in value of the urban land since the last transfer of ownership. The Plusvalía Municipal is legally payable by the seller. However, if the seller is a non-resident in Spain, the law mandates that the buyer is responsible for calculating and paying this tax to the local council. While the buyer is obligated to pay, they are legally entitled to claim reimbursement from the non-resident seller.

Capital Gains Tax (CGT) for Non-Residents

As a non-resident, any profit made from the sale of your property in Spain is subject to Capital Gains Tax (CGT). The taxable gain is the difference between the sale price (minus related expenses) and the acquisition price (plus associated purchase costs and demonstrable improvements). The current CGT rate for non-residents from EU/EEA countries (including Denmark) is 19%.

3% Retention on Sale (Modelo 211)

A crucial aspect for non-resident sellers is the 3% retention. When a non-resident sells a property, the buyer is legally obliged to withhold 3% of the sales price and pay it to the Spanish Tax Agency using Modelo 211. This retention acts as an advance payment towards the seller’s potential Capital Gains Tax liability. The non-resident seller then has a period of four months from the date of sale to file their own Modelo 210 declaration for capital gains. If the 3% withheld amount exceeds the actual CGT liability (e.g., due to lower gains or even a loss), the seller can claim a refund of the difference. If the CGT liability is higher, the seller must pay the outstanding balance.

Conclusion

The Spanish tax system for non-resident property owners, particularly for new-builds, is multi-layered and requires diligent attention. From the initial purchase taxes like IVA and AJD to ongoing obligations such as IBI and IRNR, and finally taxes on sale like Plusvalía Municipal and CGT, understanding each component is vital. Denmark and Spain have a Double Taxation Treaty, which typically means that property income and capital gains are taxed in Spain (where the property is located), and Denmark provides relief to prevent double taxation, usually by exemption or credit. Given the complexities, seeking advice from a qualified, independent solicitor and tax advisor specialising in Spanish property and non-resident taxation is highly recommended to ensure compliance and optimise your investment on the Costa del Sol.