Did you know that the new Spanish property law will come into force on January 1, 2022? It is a norm destined to prevent tax evasion through fiscal control. Join us to discover how this normative change affects you.
New Spanish property law: Key to prevent tax evasion
Each year, the Spanish Hacienda loses 3,700 million euros because of tax scammers. Thus, the fight against fraud is one of the main priorities of the Government of Spain. In particular, many foreigners use legal lagoons to defraud taxes corresponding to the acquisition of real estate.
New Law 11/2021, of July 9, adapts the European Directive 2016/1164 and is revealed as a forceful way to prevent tax evasion. This norm establishes a series of measures aimed at enhancing tax control through various legislative modifications.
Tax control over the property becomes more rigorous because of the new law. In fact, the way we calculate the main Spanish tributes will change substantially in 2022. Thus, the so-called “cadastral reference value” will be a decisive data to know how much we will have to pay for the properties we acquire.
How does this new law affect you?
Notary, property registration, real estate agency… Taxes for property are only a part of the expenses involved in acquiring real estate in an onerous way (purchase) or lucratively (inheritance and donations).
Among the tributes that are most affected by the new Spanish property law are those who tax the purchase of properties. For its part, heritage taxes, as well as those of successions and donations are also modified by the new norm.
So is the purchase of properties after the new Spanish property law
The new Spanish property law modifies the calculation of the taxes associated with the purchase of real estate. In Spain, these are those of documented legal acts (for new construction) and the Patrimonial transmission tax (for resale).
The new Spanish property law has changed the fiscal base of taxes for property that tax the purchase of properties. So, before its entry into force, the real value of the real estate was taken into account (its acquisition price), unless the tax authorities proved otherwise.
Law 11/2021 establishes a reference value, which will be used as a taxable basis. However, if this is surpassed by the real purchase price, the latter will be used to calculate the corresponding tax.
The Catastral Office will be responsible for setting the reference value once a year starting according to the location, the type of property and the prices registered in the notary. However, the state of conservation of housing will not be taken into account, so the need to make reforms will not affect to the tax base.
If you are going to buy a property in Spain from January 1, 2022 and consider that the reference value exceeds the market price, you have the right to appeal. Consequently, it must prove this fact before the fiscal authority, so that taxes for property are not excessively burdensome.
What to do if no reference value had been planned? In this case, it will be taken as a taxable basis or the price agreed by the parties or the market value. The choice of one or another will be resolved in favor of the highest amount.
Tax control on heritage, donations and inheritance after the new law
The concept of reference value introduced by the new Spanish property law will also serve as a tax base when calculating the tax on donations and inheritance. Consequently, as of January 1, 2022, this tax will be governed according to it when we inherit or receive real estate in donation. This will be applied even if there exists a lower value in the notary transactions.
The reference value also affects to the heritage tax: the one who must pay those who have a net richness of great relevance. However, this concept is not used here as a taxable basis (that will be the greatest amount to choose between: the cadastral value, the determined price from calculating other taxes or the acquisition cost).
As happens with real estate purchase, there is also the possibility of appealing before the fiscal authority. For this, the taxpayer must prove the real price at the time of acquiring the property by means of sale, inheritance or donation.
In summary, the new Spanish property law enhances tax control to prevent tax evasion. Take into account its modifications if you plan to acquire a house in Spain through sale, donation or hereditary succession.
