Tax Implications and Fees 1.

Purchase Associated Taxes

ITP - PROPERTY TRANSFER TAX (REGIONAL TAX)

If you buy a pre-owned property the purchase is subject to the ITP (Property Transfer Tax). In this case, the tax rate varies depending on the purchase price appearing in the deed.

Currently, in the Balearic Islands, ITP is paid based on the property acquisition price and below scale:

Up to 400.000 €: 8%

400.000,01 € - 600.000 €: 9%

600.000,01 € - 1.000.000 €: 10%

1.000.000,01 € - 2.000.000€: 12%

From 2.000.000,01 €: 13%

Deadline: The buyer should pay ITP within one month after the date of granting the public deed of sale.

VAT - VALUE ADDED TAX (NATIONAL TAX)

If you purchase a new property it is subject to VAT, known as IVA in Spain. VAT is the national tax and it is the same wherever the property is located.

Currently, VAT is 10% of the purchase price of newly built residential properties and 21% for commercial properties, plots for development, warehouses, and garages.

Deadline: The buyer must pay VAT to the seller at the time of the transfer of the property.

IAJD (CERTIFIED LEGAL DOCUMENTS TAX OR STAMP DUTY TAX)

As VAT is a national tax, you also have to pay a regional tax to the Balearic government called IAJD .

As from 1 January 2023, the stamp duty is 2% for the first copies of deeds and notarial certificates for the transfer for valuable consideration or the constitution of rights in rem over real estate when the real or declared value (provided that the latter is higher than the actual value) of the real estate is equal to or higher than 1,000,000 euros.

Deadline: IAJD must be paid within one month after the date of granting the public deed.