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How to buy your home in

Spain


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Index Introduction

1

1.

The process of acquiring property

1

1.1

The conveyance process

2

1.2

Ownership in Spanish Law

4

1.2.1 Plots of land, villas and independent houses

5

1.2.2 New Properties – “Off plan acquisitions”

5

1.2.3 Apartments, flats and terrace houses

5

1.3

Checklist before entering into a contractual agreement

5

1.4

Additional legal considerations

6

2.

The Spanish tax system

8

2.1

The Spanish residence criteria

8

2.2

The Non-resident taxation regime

8

2.3

Income Tax

8

2.4

Wealth Tax

9

2.5

Capital Gains Tax

10

2.6

Council Tax

10

2.7

Inheritance and Gift Tax

10

2.8

Tax administration

12

2.9

Tax efficient investments

12

2.10 Tax planning considerations

13

3.

Other considerations

3.1

Summary of costs involved in the acquisition of property

15

3.2

Social Security arrangements

15

3.3

Mortgages

15

3.4

Opening a bank account

15

3.5

Driving in Spain

15

4.

Spain: a profile

14

16

Disclaimer and Credits This Guide was written by Leon F del Canto, from Deloitte & Touche, on behalf of the Spanish Institute for Foreign Trade (ICEX). This guide is correct to the best of our knowledge and belief at the time of publication. It is however written as a general guide so it is recommended that specific professional advice be sought before any action is taken, and therefore no responsibility whatsoever is assumed for the contents, including opinions, contained in this guide or for any actions based on such contents. This publication has been edited with the technical advice of Invest in Spain.The Department within the Office for Economic and Commercial Affairs of the Spanish Embassy in the United Kingdom in charge of promoting foreign investment in Spain. London October 2002.

5.

Relevant institutions in the UK

20

Copyright ©Spanish Institute for Foreign Trade (ICEX).


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Introduction The acquisition of properties in Spain, whether for holiday

generation retire and flexible working patterns become more

purposes or as an investment (i.e. buy to let), has experienced

widely adopted. It is even possible that the introduction of the

an unprecedented boom over the past years. The combination

euro together with Spain’s economic growth will encourage

of factors such as Spain’s climate, Spanish lifestyle, the proximity

more people to consider working, setting up business or living

of both countries thanks to the air transport industry and the

in Spain.

strong UK economy has already encouraged more than 500,000 British citizens to own property in Spain.

Therefore, the Spanish Institute for Foreign Trade (ICEX) of Spain’s Secretariat of State for Trade and Tourism has considered

Furthermore, our research suggests a very positive outlook for

it suitable to produce this guide with the purpose of exploring

the next decade, showing increasing trends towards British

the most common tax and legal issues affecting the UK resident

property ownership in Spain, as more of the baby boomer

interested in acquiring Spanish properties.

1. The process of acquiring property Searching for a home in Spain is not more difficult than in the

Enlisting the help of a registered real estate agent (API) is a good

UK although you are likely to face additional challenges such as

way to find your property. Commissions vary and may go from

the language and legal and tax concepts, most of them foreign

2.5% to as high as 20%, depending on the area. In some areas of

to the UK system.

Spain it is a common practice to share the commission between the vendor and the purchaser and occasionally the commission

Nevertheless, our experience is that despite the difficulties, the

can be negotiated after reaching an initial agreement.

level of satisfaction of the foreign purchaser after acquisition is generally high.

The next thing to consider is choosing a Spanish Lawyer (Abogado), specialising in property transactions and the various

There are certain recommendations to ensure a sound transaction, starting with choosing the right area to acquire the property. It is always good to talk to other UK owners in that area, – easy to find in the local pub if you ask for the English! If your preferences are rural or remote areas, pay attention to transport, communications, and health & safety issues.

tax implications for the UK client. The Abogado must be registered with the Local Law Society (Colegio de Abogados) and must speak English and Spanish. If you are using a Solicitor in England or Scotland the same principles will apply, and the Solicitor must be qualified to give advice in Spanish Property Law and Tax.

We strongly recommend not proceeding with any transaction where the price declared in the deed is inferior to the real price paid. This would constitute a Spanish tax offence. It is advisable to have a good look around and to compare prices, visit Estate Agents and read the advertisements in local papers to gauge the prices in a particular area.

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1.1 The conveyance process

The preliminary arrangements

Let us now outline the legal consequences of the acquisition

After selecting the property, the transaction process starts with

process, from choosing the property until registering the Public

the preliminary arrangements. The vendor and the purchaser,

Deed (Escritura) in the Land Registry (Registro de la Propiedad).

without committing formally, express reciprocally the intention

A summary flow chart of the Spanish conveyance process is

to draft a contract. Usually, pulling back at this stage does not

shown below.

create any obligation for the parties, if the nature of the agreements is clearly defined as not binding to the parties.

Although these are the basic steps involved, there are multiple variations especially in the initial stages. The parties are free to

The term “preliminary arrangements” does not necessarily

negotiate the terms and conditions of the Private Purchasing

mean that you are not entering into a contractual relationship.

Contract (Contrato Privado de Compraventa), with the limits

It must be noted that once there is an agreement as to the

established by certain statutory provisions. It is important to

property to be bought and the price the contract is actually final

understand that the absence of certain requirements in the

and legally binding.

contract will determine the application of the default statutory provisions according to the Spanish Civil Law Code (Código Civil), such as the consequences of gazumping or defaulting after signing the contract, costs and expenses, etc.

It is worth noting that a verbal agreement can be enforceable according to Spanish law, although in practice there are obvious difficulties in terms of legal evidence. Traditionally, and this may be still true in many parts of rural Spain, the verbal agreement

Every transaction must be considered taking into account the

had a fundamental importance and it was commonly accepted

particular circumstances and the will of the parties. Bilingual

as a binding contract by itself, after shaking hands.These days, in

skills, sound legal knowledge and a good understanding of both

a less romantic scenario, it is essential to commit to writing in

parties’ intention are crucial.

order for the agreement to be enforceable.This is of paramount importance for the foreign client and translation of the documents should be requested if possible.

Main Steps

Flow of Money

Main Parties Involved

Purchaser + Vendor and intermediary

Preliminary Agreements

Paying the deposit Private Purchase Contract (Contrato Privado de Compraventa)

Public Deed (Escritura)

Land Registry

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Above + Abogado and Bank Manager

Final Payment/Mortgage

Above + Public Notary

Abogado + Registrar


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One of the more conflictive areas is the down payment

should be crystal clear for both parties. In Spain it is not

requested to reserve the property.The most habitual legal form

uncommon for the purchaser to conduct the transaction with

of this deposit is the payment of a signal (arras o seĂąal), often

the vendor directly, although it is more usual for an agent to be

included in the Private Purchase Contract, or as an independent

involved on behalf of the seller. If the purchaser decides to

contract by itself.The signal is an amount paid as a token, usually

appoint an agent to act for him a commission agreement should

5 or 10% of the price to guarantee the transaction.This signal, if

be requested, clarifying the commission payable and all the

the agreement is properly drafted, may be considered as a

other terms and conditions, as well as the professional standing

forfeit which can be lost if the purchaser defaults any term,

of the agent.

however double the amount of the signal is refundable by the seller if he defaults the terms.The purchaser may retain in most

The private purchase contract

circumstances the right to redress.

The proper contractual relationship starts when the property

If the sale is agreed, this type of deposit is described as a down

and the price have been determined and agreed by the parties.

payment or deposit and will constitute the first instalment of the

A private purchase contract (Contrato Privado de Compraventa)

final sale price. There is substantial case law intending to define

may be drafted at this point and the parties should fully

this element and it is crucial to draft this agreement properly.

THE RPOCESS OF ACQUIRING PROPERTY

Before committing in writing, the nature of the agreements

understand and agree the nature of the obligations and rights arising from this contract, before signing it and make it

When paying any monies on account for properties under

executable. In Spain there is no requirement to witness the

construction, proper bank guarantees or insurance policies

signature of the parties to a private contract.

should be arranged. There are statutory provisions (Spanish Laws L 38/1999 and L 57/1968) for the developers and agents

The private contract serves as the legal instrument to clarify the

to guarantee the payments on account for properties in

will of the parties, with the intervention of their respective

progress, until the completion stage. These statutory provisions

lawyers. The signed private contract (signed always on all the

also establish the developer’s obligation to guarantee the

pages), is fully executable and valid according to Spanish Law,

properties themselves against any building defects up to ten

although the ownership will not be deemed to be transferred

years after the construction date.

to the purchaser until the property is actually conveyed. This may happen in a number of ways, the most usual being the

The signature of the Public Deed

signature of the Public Deed (see below). The legal rule is that the signature of the Public Deed will entail the conveyance of the property to the purchaser, unless clearly indicated to the contrary in the Public Deed.

The private purchase contract cannot be registered in the Land Registry without the intervention of a Public Notary (Notario), who is the only person entitled to grant a Public Deed (Escritura de Compraventa) based on the terms privately negotiated by the

The Purchasing Contract is an agreement between two parties,

parties in the private purchase contract.

the vendor, offering the property and the purchaser, accepting it. The agreement is made on the transferring of a clearly defined property by receiving a payment as a counterpart. The transferring of the property and the payment do not need to happen simultaneously, and specific terms may be negotiated on that aspect.

The Escritura de Compraventa is technically the public transfer deed, and it cannot be compared with the concept of deed of title in the English system. There are no title deeds as such in Spain and proof of ownership is provided and guaranteed by registration of the deed of transfer at the Land Registry (Registro de la Propiedad). The original deed of transfer is retained indefinitely by the Notary, who would be able to issue copies as requested.

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The registration of the Escritura de Compraventa in the Land

The registration in the Land Registry is the only public record

Registry is the step needed for the purchaser to be

available to demonstrate the ownership of the property. The

acknowledged as owner by third parties, other than the seller, as

local Land Registry keeps historic records of all the charges

well as to be entitled to specific legal protection provided by the

related to every single property in that location. Registration is

Land Registry regulations.The Land Registry can issue a certified

fundamental to protect the purchaser against third party claims

copy of the entries in the Registry (Nota o Certificado Registral),

against the vendor.

however this will not act as deed of title. It is worth noting that deeds attested by UK Public Notaries can The role of the Notary is to draft and authenticate the contract,

enter the Land Registry in Spain if they are properly drafted

to witness the signature, as well as to advise the parties of some

according to Spanish Law, attaching the official translation and

of the statutory civil, administrative and tax provisions. The

being duly legalised with The Hague Apostille stamp from the UK

Notary will thereafter send to the Tax administration the

Foreign and Commonwealth Office.

relevant tax information concerning the transaction.The Notary will only witness that the price of the property has been actually paid if the payment takes place before him (for instance, hand

1.2 Ownership in Spanish Law

over of a bank cheque to the seller). If the property is going to

The ownership concept is defined in Spanish Law (Civil Code)

be mortgaged, it can be done at this stage, as well as to cancel

as the right to enjoy and dispose of a thing, with no other

pre-existing mortgages or charges.

limitations than those established by certain statutory provisions. The ownership concept could be compared to the

The Notary in Spain fulfils a very important role in the transaction and his function can be summarised as: 

To prepare the document, based on the instructions of the

freehold in English Law, although there are substantial differences in the way in which the right of ownership is exercised and the different forms of ownership and possession.

lawyers to make sure that the intention of the parties is clearly represented. 

To identify the parties and determine their legal capacity to complete this transaction and witness the date and signature of the document, giving it probationary status.



Give the information needed to comply with certain legal, tax and administrative regulations governing the transfer of property and ownership, including the need to declare the true price of the transaction and the applicable taxes to be paid.



There is a singular concept of property in Spain, known as Horizontal Property (Propiedad Horizontal) regulated by specific Laws. The horizontal property is defined as the property of a complex where private and common elements coexist in the same building or development. Usually the rules to determine the rights and obligations of the common elements are determined by the establishment of a community of owners (Comunidad de Propietarios). This regime may establish certain limitations affecting the owner of the individual property, in a similar way to the regulations of some leasehold agreements

To retain the original deed in his register and issue certified

governing the ownership of flats in England. It is always advisable

copies.

to check the community of owners’ regulations with a lawyer.

The Land Registry After signature, the notarised deed needs to be submitted to the local Land Registry (Registro de la Propiedad), once the relevant indirect taxes have been paid. The registration of the deed provides the highest public level of protection.

It is also possible to purchase property with a company if the property is going to be shared between a number of owners. A limited company (Sociedad Limitada, SL) or a public one (Sociedad Anonima, SA) can be formed in Spain to own the property. If the company is not trading according to certain requirements it is considered a property investment company (Sociedad de mera tenencia de bienes), subject to a special tax regime affecting the individual resident shareholders.

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The acquisition of an independent house or villa already built is

UK or offshore. However there are different tax consequences

usually a very straightforward process if the Land Registry

in Spain and the UK for the companies and the shareholders.

position is clear. However, the purchaser may find that the

Offshore companies owning property in Spain and registered in

property being acquired is not fully registered and new additions

a country with no Double Tax Treaty with Spain, will be charged

to the property over the years have not been updated in the

a 3% annual tax on a deemed income based on the rateable

Land Registry.This should be a cause of concern and although a

value. Tax planning should be undertaken prior to proceeding

specialised lawyer in Registry Law would be able to clarify the

with any corporate scheme (see ‘Tax planning considerations’

position, substantial legal costs may be involved in this exercise.

below). Finally it is important to mention that the Trust as a legal entity

1.2.2 New properties – “off plan acquisitions”

is not recognised in Spanish legislation. Trusts cannot own

When buying new property in a building development, the

property in Spain unless the acquisition is made by a corporate

acquisition is off plan (sobre plano) i.e. before it is built. A

structure owned by the Trust. Otherwise, the trustees,

complete description of the property to be built with the

beneficiary or settlor should make private arrangements to

specifications, municipal permissions and other details should be

acquire the property in their own name, overriding the legal or

made available to the purchaser by the developer or agent.

tax advantages of the trust in England. Anyone contemplating purchasing on behalf of a Trust should discuss the details involved in both jurisdictions.

THE RPOCESS OF ACQUIRING PROPERTY

The company acquiring the property can be registered in the

The private contract should be signed at this stage, containing a clear description of the property to be bought, schedule for completion and stage payments as well as all the other elements established by legislation and which should be included in this

1.2.1 Plots of land, villas and independent houses

type of contract.

If a plot of land is acquired to build property, the new owner To protect the purchaser when acquiring residential property,

should consider:

there are certain statutory provisions which the developer or 

Legal enquiries regarding the ownership of the property.



Planning

searches

to

determine

the

permitted

agent should meet, such as: 

construction rules for that specific land. 

agent.The former must issue a guarantee insurance policy

Tax efficient ways to organise the project as VAT and

with the purchaser as the beneficiary in the period of 15

municipal taxes will be involved from the beginning of the

days after payment.

construction process until the registration of the property. 

Secure the payments on account given to the developer or



Financial advice to determine the most efficient way to finance the operation, especially when funds are going to be raised in the UK or offshore.

Maintain a separate bank guaranteed account to receive the payments on account.



Provide a ten-year insurance policy to guarantee against loss due to building defects.



A building project draft by an architect.



Obtaining a building permit based on the building project.

1.2.3 Apartments, flats and terrace houses



The building contract and technical supervision of the

Flats, apartments and terrace houses are regulated under the

construction, including the provision of proper guarantees

horizontal property regime mentioned above.The independent

on construction according to legal requirements.

flat owners own not only their homes but also a share of the

Obtaining all the Administrative documentation on

common elements of a building or development, i.e. gardens,

completion.

stairs, entrances, sport facilities, pools and so on. One of the

Obtaining the public deed and registering the deed in the

advantages of buying such a property is the sharing of the

Land Registry regarding the new construction.

common property taxes and expenses, however the





community charges may override the benefits.

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1.3 Checklist before entering into a contractual agreement



Although a formal planning search cannot be conducted in Spain according to English standards, it is worth checking

Notwithstanding the typical pressure exercised in these

with the Town Council for any potential new development

transactions by the vendor or the agent, there are certain

or public works planned which may affect the property, i.e.

documents that should be requested by the lawyer acting on

motorway constructions, etc…

behalf of the purchaser, the most important being: 



If a company sells the property, the details of the registered

surveyor’s report is not a usual practice in Spain, however

Power of Attorney should be obtained before signing any

if there are serious doubts in respect of the property, this

document.

report should be requested.

When a company is the owner of the property and the



If the property is currently let, a copy of the letting

shares of the company are going to be acquired, in lieu of

agreement should be obtained and reviewed by a lawyer,

the property, it is strongly recommended to use a

as the purchaser will inherit the seller’s legal position in

commercial lawyer to assess the legal, tax and financial

respect of the tenant. 

When purchasing furnished property the value and details

Land Registry details, including the registration complete

of the furniture should be inventoried (different tax rates

references, as well as any charges or mortgages on the

may apply to the purchase of furniture). 

Details of the location where the property is located

(Nota o Certificado Registral). An updated registry certificate

should be checked, i.e. unemployment rate, health and

will be requested again before signing the public deed of

educational services and so on. Although this information

transfer. If there is a mortgage on the property, a copy of

is not readily available in many cases it is worth gathering

the mortgage terms should be obtained, as well as a debt

this information before making the decision to buy. You

certificate, signed by the creditor entity.

may visit the Internet site of the “National Statistics

If a new property is being acquired, copies of the building

Institute” (Instituto Nacional de Estadistica) for information

permits, architect’s completion certificate and habitation

(www.ine.es).

certificate should be requested, although not all of them



It is always recommended to make a personal inspection of the property to determine the state of the building. A

property, and updated copy of the Land Registry entry





Compraventa).

liabilities of the company. 

The rights to build or extend the property should also be investigated.

To obtain all the details of the private individual selling the property and copy of the Deed of Transfer (Escritura de







The bank will request a valuation report, if applying for a

will be available until completion

mortgage. Otherwise a valuation report can be obtained

To check the situation of the utility contracts, local taxes

from an independent valuer.

and community service charges and make sure that payment of bills is up to date as well as making sure that water, electricity supply and septic tanks situation is clear. 

If the property is part of a community of owners, the articles of association (Estatutos de la Comunidad de Propietarios) should be reviewed together with the last accounts and details of any extraordinary expenses made

1.4 Additional legal considerations It is almost impossible to cover all the legal implications of purchasing property in this short booklet and we strongly recommend checking with a professional regarding your particular case before making any decision to buy.

during the current accounting year or which are

Due to the fact that the property is located in Spain, most of

anticipated. It is advisable to obtain a certificate from the

the legal conflicts would be dealt with according to Spanish Law.

community chairman stating that there are no outstanding

Most of the contracts would usually state that Spanish Law

payments due in respect of that property.

would govern the transaction and establish that any claim must be brought to the Spanish Court where the property is located.

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THE RPOCESS OF ACQUIRING PROPERTY

When requesting professional advice from a Spanish Abogado or tax specialist it is important to check that the professional is properly registered and insured to provide this advice according to the standards of the Bodies regulating their professions. All the disputes in relation to the services provided by the professionals or any problems will be dealt with according to the rules of the professional body in the jurisdiction where the services were provided. In respect of legal, financial or tax Spanish implications, the UK purchaser should be familiar with the different requirements involved in the conveyance and should proceed with the same care as when purchasing property in the UK. If this is not the case, it is strongly recommended to seek professional advice in the following areas: 

Financial advice regarding financing the acquisition.



Legal advice to make sure that legal and planning enquiries are conducted and a proper private contract is negotiated.



Tax advice to find out the most tax efficient way to acquire the property, considering the tax position in the UK and Spain for all the different taxes involved, including Capital and Inheritance tax potential liabilities.

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2. The tax system in Spain Spain applies a residence-based system of income taxation, as

(4) Residence in territories considered Tax Havens by the

opposed to a system based on citizenship or domicile. The

Spanish Government: There are more stringent rules in respect

concept of Tax domicile, as understood in the UK system does

of probing the residence in a country regarded by the Spanish

not exist in Spain and all the worldwide income or gains are

Tax Agency as a Tax Haven, including Gibraltar, Isle of Man,

taxable in Spain for the Spanish resident, even if they have not

Channel Island, British Virgin Islands, Malta and several other

been remitted to Spain.The Spanish income tax returns should

offshore jurisdictions, as determined by the Spanish Royal

report the income of the taxpayer, spouse and dependants,

Decree 1080/1991.

although each member or the family can file independent tax returns.

If there is a conflict in determining the residence according to the above criteria, the Tax Authorities would determine where

In the Inheritance Tax system the residence will determine that

the individual’s investments are located and where their income

all the assets of the resident will be subject to the Spanish

is derived from, whether the source is employment, business

Inheritance Tax.

income, or investment income in Spain. In the event of residence disputes with other countries, the international Tax Treaties take precedence over domestic rules of residence.

2.1 The Spanish residency criteria Under Spanish domestic law, and the Double Tax Treaty with the United Kingdom, individuals are deemed resident for tax

2.2 The non-resident taxation regime

purposes in Spain according to the following criteria:

There are currently more than one million non-resident property owners in Spain and to tackle this booming market

(1) 183 days rule: The individual spends in Spain 183 or more days during the Spanish tax year, ending 31 December. An individual will be treated as resident for Spanish Inheritance Tax if 183 days have elapsed since they first took up residence. Temporary absences from Spain are not counted to reduce the 183 days rule, unless the individual is able to prove his tax

the Spanish Parliament passed the Non-residents Income Tax Act (Ley 41/1998, Ley del Impuesto Sobre la Renta de No Residentes). According to this Act and the Self-Assessment regime, non-residents receiving any income or owning any assets in Spain must file a return every year, including all Spanish taxable income calculated according to certain rules.

residence in a country with a Double Tax Treaty with Spain. There is a possibility for European Union residents, while (2) Spain is the centre of economic interest or the principal place of professional activity: To be deemed resident under these criteria, the Spanish Tax Agency (Agencia Estatal de Administración Tributaria or AEAT) will look at where the individual’s investments are located. They will also look where

maintaining their non resident status, to pay taxes according to the rules of the Spanish Resident Income Tax Act (Ley 40/1998, Impuesto sobre la Renta de las Personals Físicas), which may be more beneficial in some cases. The application of this regime should be always discussed with your tax advisor.

the income is derived from as well as whether the source is employment, business or investment income. To determine the place of professional activity the Tax Agency look at the country where the individual spends most of his time

2.3 Income Tax according to the Non-residents Income Tax Act

performing his professional activity (the principal activity).

Owning property in Spain is deemed to produce a taxable

There are other elements being used by the Spanish Tax Agency to determine the residence, such as:

income, notional in nature, equal to a 1.1 or 2% of the property value based on the town council rateable values (Valor Catastral). The 1.1 or 2% percentage would depend on the

8

(3) The location of the family home: this is the place where the

Council where the property is located. A standard 25% tax rate

individual and his/her family live on a habitual basis. If the spouse

is applicable to the notional income calculated that way and will

and children live in Spain there is a presumption of residence in

be payable on submission. The tax payable will be prorated

Spain.

according to the ownership period during the year.

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always requested for the non-resident individual letting his

Considering a rateable value of Euros 100,000, in a town where

Spanish property and he needs to account for VAT in Spain

the applicable rate is 2%, for a property acquired in May 2001,

when renting to commercial entities.

the tax payable in June 2002 would have been Euros 375, Mortgage interest costs, or any other costs and expenses

calculated as:

100,000 @ 2%=

Euros

incurred, can not be offset against the rental income by a non-

2,000

resident individual to determine the taxable income. The only

2,000 x 25%=

500

500 x 9/12 =

375

THE TAX SYSTEM IN SPAIN

Spanish withholding Income Tax of 25% on the gross rent is

Example

exception being the non-resident landlord operating a proper rental business, registered in Spain as a permanent establishment and corporation tax returns are submitted in Spain. The letting income received by the UK resident is subjected to

It is important to note that there are no expenses, deductions

UK tax according to Schedule D Case V and in the context of

or allowances available for non-residents in calculating this

the Double Tax Treaty.

deemed income, although a general donation deduction to Any other income will generally be taxed at 25%, although

certain Spanish charities (determined by Law) is still available

Double Tax Treaty provisions may override some of the

when calculating the tax payable, as with any other income.

provisions of this Law. It is always worth checking with a tax This tax, charged on a deemed income, has not got a UK

advisor the specific situation of the income received in Spain.

equivalent, therefore there is no tax relief available to be offset against UK tax payable according to UK Tax legislation, nor in the

2.4 Wealth Tax (Impuesto sobre el Patrimonio – IP)

Double Tax Treaty context. Non-resident companies will be taxed annually at 3% of the

This tax is charged annually on the value of any assets situated

Catastral value of the property they own in Spain.This tax is not

in Spain at 31 of December every year, and the value can be

applicable if the company and shareholders are resident in a

determined ultimately by the Spanish Tax Agency. There are no

country with a double tax treaty with Spain, i.e. UK. In those

allowances for non-residents although some deductions are

instances the normal corporation tax charges and rules will

available. The assessment is made on the value of all the assets

apply to the Spanish business.

situated in Spain according to this scale for the year 2001

Please note that where you are purchasing a “buy to let” property, the taxation on the rental income differs slightly depending on the circumstances of the letting.

Taxable Value up to Euros

Tax chargeable

Difference up to Euros

Tax rate from then on (%)

0

0

167,129.45

0.2

167,129.45

334.26

167,123.43

0.3

334,252.88

835.63

334,246.87

0.5

668,499.75

2,506.86

668,499.76

0.9

1,336,999.51

8,523.36

1,336,999.50

1.3

2,673,999.01

25,904.35

2,673,999.02

1.7

5,347,998.03

71,362.33

5,347,998.03

2.1

10,695,996.06

183,670.29

Onwards

2.5 HOW TO BUY YOUR HOME IN SPAIN

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Example A non resident landlord owning a property of Euros 400,000 will pay tax of Euros 1,164.36. If the property is jointly owned the scales would apply to each one of the owners for their share of the property, utilising more efficiently the lower tax rate bands.

There is no UK equivalent to this tax; therefore no tax relief is available for the UK taxpayer.The UK resident should submit an annual Tax return in Spain by June in respect of previous year Income and Wealth tax payable.

The Capital Gain obtained should always be included in the UK Tax return for UK resident individuals.The Spanish Tax paid can be relieved against UK tax payable, according to the terms of the Double Tax Treaty. Note that the computation of the gain for UK purposes follows different rules and taper rate.

2.6 Council Tax (Impuesto sobre Bienes Inmuebles -”IBI”) This is a local tax payable to the town council by all property owners, residents and non-residents alike.The Council maintains a registry with the rateable value (Valor Catastral) of all the local

2.5 Capital Gains Tax

properties and the tax is calculated on that value. The Council

Transferring property located in Spain by a non-resident in Spain will be subjected to Capital Gains Tax in Spain, both according to Spanish legislation and to the provisions of the Double Treaty with the UK.

Tax assessment is issued annually for each property in the

The disposal price must be the real price obtained, and will be checked by the Tax Agency several months after the transaction has been completed. Some professionals still think that it is fine to follow the former Spanish practice of under-declaring the real value of a property. This practice is no longer recommended as the Tax Agency has statutory powers to determine the real value of the property and to issue an amended assessment including interest and penalties if the under valuation is deemed intentional.

2.7 Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones-ISD)

The net gain, after deducting the acquisition price and certain allowable expenses, will be taxed at a standard rate of 35% for non-residents. An indexation allowance is applicable to the price of acquisition according to the schedule published every year with the annual Budget. The purchaser withholds 5% of the agreed price, and will pay it to the Treasury on account of the vendor’s Capital Gain Tax liability. He will need to inform the vendor of the amount paid to deduct this amount from his Capital Gains Tax due. If the amount withheld exceeds the tax due, the vendor may request a tax refund.

council property registry, and the payment can be arranged by direct debit.

Spanish Inheritance and Gift Tax (IHGT) is an acquisition tax and not a transfer tax like its UK equivalent (IHT).The acquisition by inheritance or gift of a property situated in Spain carries a real obligation to IHGT payable by the inheritors or the receiver of the gift.The beneficiary position- and not the transferor’s estate – should be considered for tax planning purposes. Upon death the British domiciled resident in Spain will also be taxed in the UK on his Spanish property, as part of his worldwide assets.The legatees or recipients, resident or not in Spain, will be taxed in Spain in respect of the Spanish property and assets. At this point, it is important to make some comments regarding the Spanish “forced heirship rule” and how it may affect United Kingdom nationals. Spanish Law determines that the deceased’s estate must be distributed according to these rules: 2/3 of the estate goes to the

If the property, which is being purchased, was originally acquired prior to 31 December 1994, the capital gain will be tapered by 11.11% annually for each year of ownership according to certain rules. In some cases the effective Capital Gains Tax position can be reduced down to nil after a ten years period of effective ownership according to those rules. In these circumstances it is recommended to check the Capital Gains Tax position with your Tax advisor.

10

HOW TO BUY YOUR HOME IN SPAIN

closer heirs and 1/3 can be distributed freely, according to the will. From the 2/3 distributed to the closer heirs, 1/3 must be for the usufruct (life tenancy) of the spouse.These rules apply even if a will has not been drafted.The law provides specific rules for intestacy (sucesión intestada) as in England.Technically, if the “force heirship rule” has not been followed, the heirs may bring this issue to court in order to claim their share on the estate.


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Example

UK or Spanish will (drafted in Spanish or duly translated and legalised in the UK) will be executable in Spain, according to the

The Andalusian Estate of a deceased UK resident is valued at

inheritor’s terms, as governed by English Law. This is in

Euros 414,734.41, after allowable costs. The recipient of the

accordance with the latest Spanish Supreme Court Case Law

estate is the Non-resident daughter and she has not got any

(Jurisprudencia del Tribunal Supremo).

other assets in Spain. She would be able to deduct Euros 15,956.87 to come up with

If there is a concern with a potential claim brought by a closer

THE TAX SYSTEM IN SPAIN

In practice, the Land Registry’s officers will accept that the last

the taxable amount, which will be Euros 398,777.54. After

heirs, it is recommended to check the position with a lawyer and

applying the tax scale the Inheritance Tax Payable comes to

try to structure the transaction preferably as a lifetime transfer.

Euros 80,655.08, a 19.45% effective tax rate.

For tax purposes, spouses are not exempt beneficiaries and their allowance is Euros 15,956.87, being the same amount for If the overall estate of the beneficiary is valued above Euros 402,678.11, the tax charged is multiplied by certain indexes – from 1.00 to 2.40. The indexes increase proportionally to the value of the assets as well as to the kinship relationship with the donor. A general tax planning approach may be to divide a large estate amongst a number of beneficiaries, as close to the transferor as possible.

the children. Other close family members may benefit from an allowance of Euros 7,993.46.There are additional allowances for children under 21.The allowances, and some rules, may vary depending on the Spanish territory (Comunidad Autónoma) where the recipients or the assets are located. It should be noted that there is no available allowance for Lifetime Gifts (Donaciones inter vivos). The following scale is applied to the taxable value of the estate received by each beneficiary, after applying the allowable deductions and costs.

Taxable Value up to Euros

Tax chargeable

Difference up to Euros

Tax rate from then on (%)

0

0

7,993.46

7.65

7,993.46

611.50

7,987.45

8.50

15,980.91

1,290.43

7,987.45

9.35

23,968.36

2,037.26

7,987.45

10.20

31,955.81

2,851.98

7,987.45

11.05

39,943.26

3,734.59

7,987.45

11.90

47,930.72

4,685.10

7,987.45

12.75

55,918.17

5,703.50

7,987.45

13.60

63,905.62

6,789.79

7,987.45

14.45

71,893.07

7,943.98

7,987.45

15.30

79,880.52

9,166.06

39,877.15

16.15

119,757.67

15,606.22

39,877.16

18.70

159,634.83

23,063.25

79,754.30

21.25

239,389.13

40,011.04

159,388.41

25.50

398,777.54

80,655.08

398,777.54

29.75

797,555.08

199,291.40

Onwards

34.00 HOW TO BUY YOUR HOME IN SPAIN

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THE TAX SYSTEM IN SPAIN

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There are no IHGT provisions in the double treaty with the UK

Following the property acquisition, non-residents must declare

and it is very important that the Spanish Inheritance Law

any investments in Spanish properties over Euros 3,005,060.52

regulations are considered together with the UK IHT rules.

(Royal Decree 664/1999 on foreign investments).This declaration

There are domestic provisions in Spanish and UK Laws for

is for statistical purposes mainly and it is made at the registry of

unilateral tax relief in respect of overseas IHGT paid by Spanish

investments kept by the Tax Authorities (Registro de Inversiones

or UK residents, but they will not affect the Non-resident

del Ministerio de Economía y Hacienda). If the investor is a

individual.

resident in a Tax haven listed in the Royal Decree 1080/1991, the transaction needs to be approved before completing the

There are three factors to be considered to determine the tax

transaction.

payable: 



The assets received – the tax payable will be progressively

The Spanish Tax Agency web site is www.aeat.es. An English

higher depending on the value of the assets received.

translation of a page for Non-Residents is available. It is always

The relationship of the legatees with the deceased – the final tax bill will be lower for closer relatives, such as spouse and children.



recommended to double check any information with the current Spanish legislation, as the English translation is offered only for general information purposes.

The wealth position of the recipient – The tax payable will depend on the overall value of the recipient’s assets. For non-residents only the Spanish assets will be considered, for residents the worldwide assets will be taken into account.

As mentioned above, the legal concept of Trust does not exist in Spanish Law, and this is an important issue to be considered by the UK tax adviser. There is no concept of beneficial title distinct of the legal title on the same asset. Consequently, if the asset is given in trust, the executor or trustee will be taxed as receiving a gift.

2.9 Tax efficient investments In order to provide an appropriate level of income when retiring to Spain it may be worth considering investments in certain Spanish financial products. The use of an approved life insurance policy providing an annuity or a regular income upon survival may be considered by the British resident who could start contributing whilst still living in the UK. There is no Income Tax payable until the annuity is paid out or a withdrawal made. Once the individual becomes Spanish resident the money received will be taxed according to the Income Tax Act (IRPF) which provides a favourable tax

2.8 Tax administration

treatment for residents.

In any communication with the Spanish Tax Agency (Agencia

Other tax efficient investments such as investment funds,

Estatal de Administración Tributaria, AEAT) Non-residents need a

treasury bonds, and deposits may be considered. Bank accounts,

tax reference number (NIE). To facilitate the relationship with

treasury bonds and government stocks interest received by UK

the Tax Agency a Spanish tax representative (Representante

residents will not be taxed in Spain, however they will need to

Fiscal) should be appointed, although it is not always mandatory.

be included in the UK tax return. The tax efficiency of different

The importance of the representative is mainly for notification

investments will depend on various factors such as age, total

purposes as very strict deadlines are laid down in the Spanish

income, terms, type of insurance policy and other circumstances

Fiscal regulations on this respect.

that should be discussed with a professional Spanish financial adviser.

12

HOW TO BUY YOUR HOME IN SPAIN


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It should be noted that the fiscal year in Spain ends on the 31

Tax legislation in Spain has changed substantially in recent years

December. Once the foreign individual becomes resident in

and some of the traditional UK tax planning schemes, such as

Spain, the principle of “personal obligation” is applied in contrast

using an offshore trust or company to hold the property, should

with the principle of “real obligation” governing the non-resident

be reconsidered under the new non-residents rules and the

tax position. Any income received in Spain, or in any other

Spanish tax treatment for offshore entities. Under this regime,

country, is deemed as taxable in Spain, even if the income is not

offshore companies resident in a country without Double Tax

remitted at all.This concept contrasts with the domicile concept

Treaty will be taxed annually at 3% of the Catastral value of the

in the UK, where a non-domiciled resident is only taxed on

property.

remittance basis. It is worth noting that the UK concept of

THE TAX SYSTEM IN SPAIN

2.10 Tax Planning considerations

resident but non-ordinarily resident is not recognised in Spain It is important to note that in order to avoid the application of

and the UK non-ordinarily resident will be considered non-

this regime to non resident companies, including UK companies,

resident in the UK for Spanish tax purposes.

the Tax Agency will need to be satisfied that the company and the shareholders are resident in a country with a Double Tax

According to the above “personal principle” the Spanish wealth

Treaty with Spain.

tax will apply to all the assets owned by the individual worldwide. Here, tax-planning advice should be undertaken and

In the UK following R v Dimsey and R v Allen cases implications

offshore advice considered as a general wealth protection

should be reviewed if a residential property is acquired using a

measure.

corporate structure. A UK Benefit in Kind taxable in the hands of the directors will be deemed if they are using the property.

An offshore scheme may be considered taking into account the

The concept of director has been extended to “shadow

Spanish tax treatment of offshore entities.These are highly taxed

directors”, ultimately controlling the company. The corporate

and the Tax Agency is always very keen to query individuals or

body would also be liable to Class1A National Insurance

companies using offshore entities. Dealing with a tax enquiry in

Contributions on the deemed annual value. Additionally the

Spain is subject to many administrative requirements and terms,

company would be liable to a charge in Spain for the benefit

and generally involves high costs for the client.

received by the directors from property sited in Spain. The administration costs and tax involved in these schemes should be considered according to: 

Value of the property and other assets.



Plans for transferring the property.



Age of the owner and family status – inheritance tax planning is a must and it should be considered in all cases.



Current residence and domicile position, as well as plans for the future.



Value of worldwide assets and existing or planned trusts.

HOW TO BUY YOUR HOME IN SPAIN

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3. Other considerations 3.1 Summary of costs involved in the acquisition of property



This is a summary of the main costs involved in the acquisition.



deeds. The purchaser pays the bank charges involved in the

There are statutory provisions establishing who is responsible to

transaction, until the monies reach the vendor’s account.

pay the different taxes and charges, however it is recommended

The UK purchaser can not claim currency exchange losses,

to agree this in the preliminary agreements.

if this has not been agreed specifically with the vendor, and



Municipal capital gains tax on the value of urban land

of course it can not be claimed if the price is established in

(Impuesto sobre el Incremento de Valor de los Terrenos de

Euros.The price can be established in any official currency.

Naturaleza Urbana). It is a direct tax payable by the vendor,

It is very important to make sure that all the payments

taxing the capital gains realised by the increase of value of

from the UK are made via bank transfer and the name of

the land (not the buildings) and it is only payable in respect

the purchaser is indicated in the bank documents, following

of urban land (not payable on rural land). We should

your lawyer’s instructions.

mention that it is an accepted practice for the purchaser to



tax replaces the old tax known in Spain as Plusvalia, and if



the vendor, to the purchaser or to both of them. The

on the property, as used to be the case with the Plusvalia.

commission should be specified in the agency contract. 

VAT (IVA) on new properties. New properties are levied a 7% VAT charge payable by the purchaser. If the property is



The fees charged by the lawyer handling the conveyance are usually in the region of 1% on the value of the

instead of VAT.The purchaser pays this tax.

property, although this depends on the situation of the

Transfer Tax and Stamp Duty (Impuesto sobre transmisiones

property and the complications arising in the course of the

Patrimoniales y Actos Jurídicos Documentados, ITP y AJD) The

transaction. Each party will pay the fees of the professional

Transfer tax (ITP) is charged at 6% generally on the value

advisers acting on their behalf. The Spanish Abogados are

of the property on second and subsequent transfers of the

registered with the Spanish Law Society (Colegio de

same property. It is worth noticing that in some territories

Abogados) or if acting in England with the Law Society or

in Spain (Communidades Autónomas) the rate is 7%. The

Bar Council.

purchaser pays this tax. The Stamp Duty is generally



charged at 0.5% on the value of the property when issuing

Tax Agency.

and a 1% may be charged instead in some Comunidades Autónomas.The purchaser or the person applying for these



acquisition in order to plan the most tax efficient way to

Notary fees: The costs of granting the public deed are

structure the transaction. Qualified UK or Spanish tax

established according to a schedule of fees determined

advisors should be registered with the CIOT (The

officially and they are based on the value of the transaction.

Chartered Institute of Taxation) or ATT (The Association of

The costs of granting the first copy of the deed are payable

Taxation Technicians) in the UK or with the AEAF

by the vendor and the second copy by the purchaser. If a

(Asociación Española de Asesores Fiscales) in Spain.

charge or mortgage is established on the property, it is is requested, it is payable by the vendor, although they can negotiate a different arrangement.

HOW TO BUY YOUR HOME IN SPAIN

Tax advisor fees will depend on the complication of the transaction and it is worth getting a tax report prior to the

documents will be responsible for paying the tax.

paid by the purchaser, if a cancellation of previous charge

In some instances you may be requested to appoint a fiscal or legal representative in Spain to liaise with the Spanish

public documents. There are some territorial differences



If a surveyor or valuer report is required, the purchaser pays for it.

located in the Canary Islands a regional tax is applicable



The Real Estate agency will usually charge a commission to

the vendor fails to pay, the tax does not become a charge The Local Tax office deals with the calculation of this tax. 

The purchaser pays the expenses related to changing the names in the utility contracts.

pay this tax, if this has been included in the contract. This

14

Land Registry fees are paid by the purchaser registering the



Contents and building insurance should be undertaken when acquiring the property.


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Finally, the UK citizens acquiring property in Spain must

Bank fees covering the bank’s administration costs are variable

register with the Spanish Tax Agency and obtain a

and can be negotiated, although usually there is a 1% charge for

Foreigner Identification Number (Número de Identificación

applying for a mortgage loan.

de Extranjeros or NIE).

3.4 Opening a bank account 3.2 Social Security arrangements

Non-Spanish nationals may open a resident or non-resident

By virtue of European Law, reciprocal agreements exist within

bank account and the only requirement is to provide your

the European Community member countries. It is possible for

passport and the Foreign Identification Number (NIE). When

UK residents to enjoy the Health services provided by the

opening the bank account, you will need to show proof of

Spanish Social Security Administration as well as to obtain other

identity, your residence card and may be asked for proof of

benefits if moving to Spain as a resident.

income.

OTHER CONSIDERATIONS



9:08 AM

In the UK please contact the National Insurance Contributions Office, International Services, to obtain more details of the coverage for UK citizens moving to Spain.Their helpline is 0845 915 4811 and website at www.inlandrevenue.gov.uk/ nic/intserv/osc.htm. A free UK Inland Revenue booklet NI38 is available by post and on the web.

3.5 Driving in Spain If you are intending to move to Spain, you will be required to obtain a Spanish driving licence after six months. Whether you are required to retake your driving test depends on the country of origin of your driving licence. For some countries it is purely an administrative formality whereas for other countries you may

3.3 Mortgages The most usual mortgage terms will allow you to borrow between 70 and 80% on valuation for up to 25 years, depending

be required to pass the driving test in Spain, which involves written and practical tests. Individuals with a British driving licence will simply exchange their UK licence for the Spanish one.

on income and age, although other arrangements may be possible with specific banks. For a UK purchaser, usually a P60 form from the previous tax year and 3 payslips, or any other proof of current income, plus proper identification are the only requirements to apply for a mortgage in Spain. Offshore, UK or Spanish Banks can offer mortgages in Euros, Pounds or any other accepted currency. Spanish mortgages are repaid using the capital and interest repayment method. Interest only, endowment and pension-linked mortgages are not commonly available in Spanish banks. Spanish loans can be arranged with a fixed or variable rate. It is possible to convert a variable rate mortgage to a fixed rate mortgage at any time. Redemption penalties may be charged for early repayment of mortgages and this should be discussed with the bank. For the majority of mortgages, insurance policies are a requirement and you should check the details with your bank.

HOW TO BUY YOUR HOME IN SPAIN

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4. Spain: a profile1 Introduction

Despite the differences among the various regions of Spain, the

Spain is, at the beginning of the twenty-first century, one of the

country can be said to have mainly a typical Mediterranean

world’s most developed countries, with a very important role in

climate. The weather in the northern coastal region (looking

the international political and economic arenas. The country’s

onto the Atlantic and the Bay of Biscay) is mild and generally

well proved capacity to effectively translate its consistent

rainy throughout the year, with temperatures neither very low

economic growth into significant investments, including

in the winter nor very high in the summer. The climate on the

communication networks comprising thousands of kilometers

Mediterranean coastline, including the Balearic Islands, Ceuta

of highways, high-speed train services and satellite facilities, and

and Melilla is mild in the winter and hot and dry in the summer.

the constant effort made to ensure the competitiveness of its

The most extreme differences occur in the interior of the

economic structure enable Spain to be placed among the

Peninsula, where the climate is rather dry, with cold winters and

world’s main economic players.

hot summers.

Spain’s leading role within the EU is particularly patent in 2002

The Canary Islands have a climate of their own, with

during which year Spain is holding for the third time the

temperatures constantly around 20 Celsius degrees and only

Presidency of the European Union with the aim of further

minor variations in temperature between seasons or between

fulfilling the European project through the development and

day and night.

consolidation of the process of modernizing, liberalizing and

Spain has an excellent quality of life and is very open to

enlarging the European economy.

foreigners. The fine climate, over four thousand kilometres of

Year 2002 also brings the first step in an event of unprecedented

beaches, abundant sporting facilities and events and social

importance in the process of European integration: the

opportunities are crowned by the diversity of the country’s

introduction in twelve European Union Member States of a

cultural heritage as a crossroads of civilizations (Celts, Romans,

single currency, the euro (g), which will enable the Euro Zone to

Visigoths, Arabs, Jews, etc.).

form a monetary zone comparable to the United Sates and a consolidated, tariff-free market of more than 379 million

2. Population and human resources

sophisticated consumers. With the euro, the opportunities of

The estimated population of Spain in 2000, was 40.499 million

growth and development for Spain have been further increased.

people, with a population density of more than 80 inhabitants

The impressive economic performance of Spain is the result of the effective legislative reforms undertaken by the Spanish legislative bodies and the heavy investments made by Spanish enterprises to ensure competitiveness, develop foreign networks and join multinational projects.

per square kilometre. Spain is a markedly urban society (see Table 1), as evidenced by the fact that more than 34% of the population lives in the main cities of the provinces of Spain. Table 1 The biggest cities in Spain Population

I. The country, its people and its institutions

Madrid

2,957,058

1. Geography, climate and living conditions

Barcelona

1,505,325

The Kingdom of Spain occupies an area of 505,992 square

Valencia

746,612

kilometers in the southwest of Europe, and is the third largest

Seville

702,520

country in the EU. The territory of Spain covers most of the

Zaragoza

610,976

Iberian Peninsula, which it shares with Portugal, and also includes

Malaga

534,207

Las Palmas de Gran Canaria

364,777

Bilbao

353,943

the Balearic Islands in the Mediterranean, the Canary Islands in the Atlantic Ocean, and the North African cities of Ceuta and Melilla. Guide to Business in Spain 2002.Garrigues Abogados y Asesores Tributarios. The Spanish Institute for Foreign Trade (ICEX)

1

16

HOW TO BUY YOUR HOME IN SPAIN

Source: Revised registered population in Spanish cities as of January 1, 2001. Instituto Nacional de Estadística.


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with other official regional languages (such as Catalan, Basque,

Table 2 Labour force structure by economic sector

Galician and Valencian) in specific Autonomous Communities. Education is compulsory until the age of 16 and English is the

(Percentage) 1985

1990

1995

2000

2001

Agriculture

18.2

11.8

9.3

6.6

6.2

Industry

24.5

23.8

20.1

19.8

19.7

7.3

9.7

10.4

11.1

11.5

50.0

54.7

60.2

62.5

62.6

main foreign language studied at school. Compared with other OECD countries, Spain’s population is relatively young: approximately 23% are under 19 years old, 60% are between 19

SPAIN: A PROFILE

The official national language is Spanish, which is used jointly

and 65 years old, and only 17% are over 65 according to year 2000 figures. Spain has a labour force of around 17.6 million people, representing 51.79% of the country’s population over 16 years old. Although this percentage is in line with the average

Construction Services

Source: Instituto Nacional de Estadística. Labor Force Survey, 2001.

for European countries, it is lower than the proportion in some countries in Europe because there are fewer women in the labour force in Spain in comparison with the rest of the European countries (40.22% of the Spanish working population are women), although these figures are increasing at a fast rate.

3. Political institutions Spain is a parliamentary monarchy.The King is the Head of State, and his primary mission is to arbitrate and moderate the regular functioning of the country’s institutions in accordance with the

In general, the working population as a whole cannot be said to

Constitution. He also formally ratifies the appointment or

be getting appreciably older. Additionally, Spain is also

designation of the highest holders of public office in the

experiencing in recent years a relevant inflow of immigrants

legislative, executive and judicial branches.

which is expected to lower the work population’s age in coming years.

The Constitution of 1978 enshrined the fundamental civil rights and public freedoms and assigned legislative power to the

The structure of the labour force by economic sector has also

“Cortes Generales” (Parliament), executive power to the

changed significantly in recent years, with a notable increase in

Government of the nation, and judicial powers to independent

the number of those employed in services and a decrease in the

judges and magistrates.

number of farm workers (see Table 2).

The responsibility for enacting laws is entrusted to the “Cortes

The labour force is highly qualified, productive and capable of

Generales”, comprising the “Congreso de los Diputados”

adapting to technological changes, productivity growth being, as

(Lower House of Parliament) and the “Senado” (Senate), the

a consequence, among the highest in Europe.

members of which are elected by universal suffrage every four years.

Lastly, in line with the existing commitment within the European Union to guarantee employment, since the mid-nineties the

The “Cortes Generales” exercise the legislative power of the

Government implemented wide-ranging reforms of the labour

nation, approve the annual State budgets, control the actions of

market regulations, introducing a high degree of flexibility in the

the Government and ratify international treaties. The

use of the labour force by companies. The success of the

Government is headed by the “Presidente del Gobierno”

reforms undertaken is attested by the fact that in 2001 the

(President of the Government) who is elected by the “Cortes

percentage of job creation in Spain in relation to the previous

Generales” and is, in turn, in charge of electing the members of

year was seven times higher that the percentage of the Euro

the “Consejo de Ministros” (Council of Ministers).

Zone.

The members of the Council of Ministers are appointed and removed by the President of the Goverment at his or her discretion.

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SPAIN: A PROFILE

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For administrative purposes, Spain is organised into 17

The motorway network, totalling more than 10,000 km, has

Autonomous Communities each containing generally one or

tripled in length since 1982 and has undergone continuous

more provinces, plus the Autonomous Cities of Ceuta and

renovation to enhance efficiency and convenience. The

Melilla in Northern Africa; the total number of provinces is 50.

Government investment plan will result in a 13,000-km motorway network for year 2010, with total investment

Each Autonomous Community exercises the powers assigned to it by the Constitution as specified in its “Statute of Autonomy”. These Statutes also stipulate the institutional organization of the Community concerned, consisting generally of: a legislative assembly elected by universal suffrage, which enacts legislation applicable in the Community; a Government with executive and administrative functions, headed by a President elected by the Assembly, who is the Community’s supreme representative; and a Superior Court of Justice, in which judicial power in the Community’s territory is vested. A Delegate appointed by the Central Government directs the Administration of the State in the Autonomous Community, and co-ordinates it with the Community’s administration.

expected to surpass 25 billion Euros between 2000 and 2006, thus becoming one of the most modern networks in the world. As far as rail transport is concerned, Spain has a network of over 15,000 km of track, and in 1992 introduced a 471-km highspeed train line from Madrid to Seville that reaches 350 km per hour. High-speed train lines have become a priority for the Government infrastructure plans, and as a consequence of them, by December 2004, Madrid will be connected by highspeed train to the French border via Zaragoza (Aragón) and Barcelona (Catalonia) and additionally via Vitoria and Irún (Basque Country). Furthermore, by the year 2005 it will be connected to the Mediterranean coast via Valencia (the Government has announced that the project will start in year

The Autonomous Communities are financially autonomous and

2002). The high-speed train lines have recently been further

can share in the revenues collected under central taxes or can

extended with 122 kilometers, which will soon connect the

levy their own taxes. The Autonomous Communities also

cities of Córdoba and Málaga, providing the south with an

receive allocations from the general State budgets. As a result of

extensive high-speed network. Additionally, high-speed train

the structure above described Spain has become one of the

lines are being designed in order to connect Portugal and the

most decentralized countries in Europe.

remaining major Spanish cities. The investment forecast for railroads totals 28.2 billion Euros between 2000 and 2007.

II. Infrastructure Over the last decade Spain has undergone a process of modernization that has included an extensive renewal of its infrastructure.

the approximately 250 airlines with scheduled flights operating out of the country’s 33 international airports ensure complete service abroad. Spain is an important intermediate stop in the lines between Latin America and Europe and lies in a crucial

The Government plans to continue investing heavily in the

position in the network to America and Africa from Europe.

future. This is reflected in the Overall Infrastructure Plan for

Spain also has excellent sea communications, with 44

1993-2007, which provided for investment totalling US$ 133

international ports on the Atlantic and Mediterranean coasts.

billion. Intercity transport is the main item in the Infrastructure Plan, followed by urban transport. There will also be accompanying measures in hydraulic works and environmental infrastructure.

18

There are air transport services between the main cities and

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SPAIN: A PROFILE

Spain is also well equipped with industrial land and technological and industrial infrastructure. In the last few years, technology parks have proliferated in the main industrial areas and near universities and R&D centres.There are currently 24 technology parks. In these technology parks there are 874 companies, 88 R&D centres and 12 incubators operating. R&D expenditure has risen significantly in recent years, after annual increases of 15% in the 1983-89 period. The fourth national R&D Plan (2000-2003) forecasts that R&D expenditure in the following term will amount to 1.3% of GDP. Lastly, Spain has a good telecommunications network. In addition to the extensive fibre optic network which covers almost all the territory, Spain manages one of the largest international undersea cable networks and has satellite connections with the five continents. In this respect, it is worthwhile mentioning the strong liberalization process undertaken in most industries, including the telecommunications sector, well within the European schedule. Among other benefits, this implies a more competitive and cost effective offering of this type of services, essential for an appropriate economic development.

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5. Relevant institutions in the UK SPANISH GOVERNMENT

Instituto Cervantes in London 102 Eaton Square

Embassy of Spain in the UK

London SW1W 9AN

24 Belgrave Square

Ph: +44 (0) 20 7235 0353

London SW1X 8QA

Fax: + 44 (0) 20 7235 0329

Ph: +44 (0) 20 7235 5555

E-mail: seclon@cervantes.es

Fax: +44 (0) 20 7259 5395 Office for Economic and Economic Affairs of the Spanish Embassy in the UK

BRITISH GOVERNMENT

66 Chiltern Street 2nd and 3rd. fl.

Department of Health

London W1 M2 LS (UK)

Richmond House

Ph: 00 (44-20) 7467.23.30

79 Whitehall

Fax: 00 (44-20) 7487.55.86/7224.64.09

London SW1A 2NS

EMail:buzon.oficial@londres.ofcomes.mcx.es

Ph: +44 (0) 20 7210 3000

Spanish Consulate in London

Fax: +44 (0) 20 7210 5523

20 Draycott Place

Department for Work and Pensions Benefits Agency

London SW3 2RZ

Overseas Division Medical Benefits

Ph: +44 (0) 20 7589 8989

Tyneview Park

Fax: +44 (0) 20 7581 7878

Whitley Road

Spanish Consulate in Manchester Suite 1A

Newcastle-upon-Tyne NE98 1BA

Brook House 70 Spring Gardens Manchester M2 2BQ Ph: +44 (0) 161 236 1262

Spanish Chamber of Commerce

Fax: +44 (0) 161 228 7467

126 Wigmore Street

Tourist Office 22-23 Manchester Square London W1M 5AP Ph: +44 (0) 20 7467 5502 Fax: +44 (0) 20 7486 8034 Spanish Labour Office 20 Peel Street London W8 7PD Ph:+44 (0) 20 7727 2161 Fax: +44 (0) 20 72297270 Spanish Education & Science Office 20 Peel Street London W8 7PD Ph: +44 (0) 20 7727 2462 Fax: +44 (0) 20 7229 4965

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TRADE ORGANISATIONS

HOW TO BUY YOUR HOME IN SPAIN

London W1U 3RZ Phone: + 44 (0) 20 7009 9070 Fax: +44 (0) 20 7009 9088 National Association of Estate Agents (NAEA) Arbon House 21 Jury Street Warwick CV34 4EH Tel: +44 (0) 1926 496 800 Fax: +44 (0) 1926 400 953


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How to buy your Home in Spain  

The complete official guide published by the Spanish Embassy in London and Deloitte and written by Leon Fernando del Canto, a Spanish Abogad...

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