Which taxes are relevant/which transaction costs will be incurred when buying real estate as an asset (asset deal) and how are the transaction costs shared between the buyer and seller?
The relevant taxes are:
The transfer of land, both land for development and developed land, is subject to VAT at a rate of 21%.
A transfer of rural land or land which cannot be used for development is exempt from VAT but is subject to transfer tax at a rate between 6% and 11% (depending on the location of the property), unless the seller is VAT registered and the buyer is a VAT taxpayer entitled to deduct input VAT in full, in which case the option to make the transaction subject to VAT is available.
The first transfer of a new building, and the second and subsequent transfers of buildings which have been or are transferred with a view to them being substantially refurbished, as well as transfers resulting from the exercise of a call option by a lessee in a financial lease contract, are all subject to VAT.
The second and any subsequent transfer of a building, and the first transfer of a building that has been in continuous use for a period of over two years (under a lease agreement), are VAT exempt but are subject to transfer tax of between 6% and 11%, unless the seller is VAT registered and the buyer is a VAT taxpayer fully or partially entitled to deduct input VAT in full, in which case the option to make the transaction subject to VAT is available. Land and building transactions which are VAT exempt are subject to transfer tax at a standard rate ranging between 6% and 11%. The taxable base is the reference value (valor de referencia) of the real estate property established by the General Directorate of Cadastre (Dirección General del Catastro). However, if the value declared by the parties, the price agreed or both are higher than the reference value, Transfer Tax will be calculated on the higher of these values. If there is no reference value or the reference value cannot be certified by the General Directorate of Cadastre, the taxable base, shall be the highest of: (i) the value declared by the parties, (ii) the price agreed or (iii) the market value.
A transfer of property, other than rural land, is subject to a tax on the increase in the value of urban land as calculated by the town council at the time of sale.
Where the transfer is subject to VAT, the notarial deed is also subject to stamp duty (actos jurídicos documentados) at a rate ranging between 0.5% and 3% depending on the location of the property and the type of transaction.
Under the Spanish Civil Code, the seller pays the notarial fees relating to the transfer deed and the buyer is responsible for those relating to subsequent copies (this means that, in practice, the seller pays around 90% of the notarial fee and the buyer pays the remaining 10%). However, despite this, it is common instead for the buyer to pay all notarial fees.
