Please find attached a full copy of the bill which the Socialist Parliamentary Group (PSOE) has submitted to the Parliament on May 22 nd
The following is a summary of the key points of this proposal:
1.- New tax, called ‘Complementary State Tax on the Transfer of Real Estate to Non-Residents in the European Union’.
1.1.- Taxable event:
– The transfer of real estate located in Spanish territory.
– The constitution or transfer of rights in rem over said real estate (except for those of guarantee such as mortgages).
The exception is that this new tax does not apply to first transfers, thus excluding from its scope the purchase of new development, subject to and not exempt from VAT.
1.2.- Taxable Person: Non-EU resident individuals or companies.
1.3.- The tax liability would be calculated by the result of applying the rate of 100% to the transfer price (or to the reference value, if this is higher).
For instance, if the proposed law were to be approved and, subsequently, a resident in the USA, England, Russia or any other non-EU country were to buy a property in Andalusia for a price of 1,000,000 Euros, this being the second or subsequent transfer, the purchaser would pay a further 1,000,000 Euros in taxes (70,000 Euros in ITP and 930,000 Euros in the new state tax).
2.- Taxation of holiday rentals under Value Added Tax (VAT).
At the moment, tourist rentals are exempt from VAT, unless additional services typical of the hotel industry are provided.
However, the bill aims to eliminate the VAT exemption for all holiday rentals of less than 30 nights; and that are located in municipalities with a population of 10,000 inhabitants or more, regardless of whether or not such hotel services are provided. The tax rate would be 21%.
3.- Increase in the rate applicable to the presume income from the use of second residences.
At the moment, the presumed yield of the property other than the habitual residence that is not rented is taxed annually in the Income Tax, and is quantified at 2% of the cadastral value, or at 1.1% of the same, if this had been fixed within the ten tax periods prior to the moment at which the income is to be imputed.
The bill adds up the cadastral value of the properties other than the main residence owned by a person and apply the percentage established in the scale. Thus, up to a sum of cadastral values of 100.000 €, 1,1 % would be applied; up to 500.000,00 €, 1,5 %, up to 1.000.000,00 €, 2 % and from 1.000.000,00 €, 3 %. The result of applying the above percentages to the sums of cadastral values is the taxable base, to which the rate of 19 %, or 24 % if the taxable person is not resident in the European Union, would have to be applied.
There are other measures in the proposal, such as tax incentives in favour of long term rental.
4.- Conclusion.
We must insist that we are dealing with a bill that has not yet been approved by the Congress and has not yet been ratified by the Senate, and it is doubtful that it will achieve sufficient parliamentary support to be approved in these terms.
