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Capital gains tax reform in Spain comes into effect

The capital gains tax reform in SPAIN comes into force on Wednesday 10 November.

The Royal Decree-Law with which the municipal capital gains tax is calculated entered into force on Wednesday November 10 after its publication on Tuesday November 9 in Boletin Oficial del Estado– Official State Bulletin (BOE).

The decree provides two options for determining the tax rate that the taxpayer can choose to apply to obtain the most advantageous rate. Specifically, citizens can choose to calculate the amount by the objective result of multiplying the cadastral value by new coefficients that will take into account the current real estate value (by area and by meter) or they can opt for the calculation based on the profit made on the sale of the property relative to the purchase price.

The new regulations will not have retroactive effect, ie they cannot apply to taxable events that have already occurred. All operations that, in the opinion of José María Salcedo, lawyer of the firm Ático Jurídico, “are, in our opinion, orphaned by regulations to calculate and demand the payment of tax”.

As the law will not have retroactive effect, Salcedo states that “any regulation which is now notified and which refers to taxable events produced before the entry into force of the Royal Decree-Law must be subject to a recourse, because we consider that it could be declared illegal.

Capital gains realized in Spain by non-residents without PE are taxed at the rate of 19% when generated by transfers of assets, otherwise they are taxed at the general NRIT rate of 24% (for residents of other EU Member States or EEA countries with which there is an effective exchange of tax information).

When you sell a house in Spain you pay capital gains tax on your profits. There is no exemption for seniors – they pay sales tax like everyone else. However, if the house is a personal home and you have lived there for several years, you may be able to avoid paying taxes – talk to your manager or tax advisor for more information.