Buying business premise in Spain
Today we are going to talk about the taxes that are required to be paid when buying a business premise (generally called local) in Spain
VAT tax
According to the Spanish VAT law, if you buy a new business premise (i.e. directly from the builder) you have to pay IVA to the seller. If it is a second-hand property, then there is no VAT to be paid. This is very important because the amount of IVA is relatively large, so you should pay attention to whether you want to pay the tax or not, because if you accidentally overpay the seller, then it will be a toss-up to get your money back.
The VAT in Spain is paid directly by the buyer to the seller, who then turns it over to the tax office. The current law states that the VAT rate for the purchase of a local is 21%.
In addition, stamp duty (AJD) is payable on the purchase of a new property. The tax rate varies from one region to another and is around 0,5-1,5%.
Related article: Introduction to Spanish VAT tax
When is the transfer tax (ITP) payable?
As mentioned above, if it is a new store, then only the buyer has to pay VAT. On the contrary, if the property is second-hand, then the buyer needs to pay the property transfer tax ( “ITP” in Spanish).
One thing to note is that the property transfer tax should be paid directly to the tax office by the buyer filling out the form and then paying it in the bank. So, unlike VAT, this ITP is directly paid to the tax office. However, since in most cases, the notary who signs the sale contract will do it for you, so you may not need to worry about it.
The rate of the transfer tax on real estate is set by the regional government, so it varies from place to place. In Catalonia, for example, the default rate is 10%, while in Madrid, the default rate is 6%.
Note: You cannot pay the transfer tax and the VAT at the same time, you just have to pay one or the other depending on the situation.
Related article: Spanish Property Transfer Tax
Note: The regional government may reduce the tax rate depending on the individual circumstances of the buyer, for example, a young person who invests in a business.
