The oldest form of taxation in Spain is the taxation of property ownership and has a long tradition for going against non-resident even when some choose to register their property trough corporate structures.
Recently wealth tax has been abolished and Capital gains tax reduced from 35% to 19%, the most discussed inheritance tax has been reduced also in different regions of Spain for resident, though peticions for reductions to residents and non residents continue in many regions.
Spanish legislation is now in place to prevent ownership trough a corporate structure from avoiding tax.
VAT tax (value added tax) is subject to 7% in case of purchase of a new property from Developer, and all the following transfers of the property will be subject to 7% in most of Spain; recently Spanish Government increased VAT index to 8% with the effect starting on july 2010.
Junta de Andalucia also increased the index applicable to property to 8% where the value of the property exceeds the amount of 400,000 euros with effect from March the 19th 2010; the transfer rate of urban land subject now at 16% VAT will also increase from July 2010 to 18%.
Concerning the stamp duty matters, all title deeds registered in a property register are normally subject to 1% on the value of the transaction, unless transfer tax is paid.
Tax advices before selling a property are to remind that no-resident person owner of a property in Spain will have 3% of the value withheld by the buyer upon transferring of the property; tax usually withheld by the buyer at the notary upon transfer of the property for any possible tax liability in Spain.
Capital gains tax will be paid at the sale of the property by the seller at the rate of 19% in addition also to the Plusvalia tax on the increase in the value of the urban land payable to the Town Council.