Recently, some friends have been asking about settling down in Spain, like buying a car and a house, but find the taxes here can be quite overwhelming. Today, I’m here to share some of the research I’ve done on this topic, hoping it can help those in need. Whether you’ve just arrived or have been here for a while, buying a car and a house are major decisions. Understanding the taxes for buying a house and car in Spain in advance can save you a lot of trouble.
Taxes on Buying a Car
In Spain, the tax systems for new and used cars are completely different, so it’s important to distinguish between them first.
New Cars
Buying a new car mainly involves two taxes:
- Value Added Tax (IVA): This is the most straightforward tax. The standard IVA rate in Spain is currently 21%, which is added directly to the car’s price. For example, if a car has a pre-tax price of €20,000, the final price you pay will be €24,200.
- Registration Tax (Impuesto de Matriculación): This tax is calculated based on the vehicle’s CO2 emissions. The higher the emissions, the higher the tax rate. This is designed to encourage the purchase of environmentally friendly cars. You can refer to the table below:
| CO2 Emissions (g/km) | Registration Tax Rate |
|---|
| Up to 120 | 0% |
| 121 - 159 | 4.75% |
| 160 - 199 | 9.75% |
| 200 or more | 14.75% |
Used Cars
When you buy a used car, you don’t pay IVA or Registration Tax. Instead, you pay the Property Transfer Tax (ITP). This tax is paid to the autonomous community where you reside, and the rate varies by region, typically ranging from 4% to 8%. For example, in the Community of Madrid, the rate is 6%. The tax is calculated not on your purchase price, but on the government’s official valuation of the vehicle model.
Taxes on Buying a House
Similar to buying a car, purchasing a home is also divided into two scenarios: new-build and pre-owned, with completely different tax structures. Don’t get them mixed up!
New-build Homes
When buying a new home from a developer, you mainly pay two taxes:
- Value Added Tax (IVA): The IVA rate for residential properties is 10%. This is the largest single expense when it comes to buying property and vehicles in Spain.
- Stamp Duty (AJD): This tax, for Documented Legal Acts (Actos Jurídicos Documentados), is also paid to the autonomous community. The rate varies between 1% and 1.5%, depending on the region. It is levied on the legal documents, such as the deed of sale, when purchasing a new home.
Pre-owned Homes
When buying a pre-owned (resale) home, you don’t have to pay IVA and AJD. Instead, like with a used car, you pay the Property Transfer Tax (ITP). This tax is also paid to the autonomous community, but the rate is much higher than for cars, generally ranging from 6% to 10%. For instance, it’s 10% in Catalonia, 7% in Andalusia, and 6% in Madrid. This is the biggest tax expense when buying a pre-owned home.
Taxes are a significant expense, so it’s crucial to understand them clearly and include them in your budget. In addition to these main taxes, buying a house also involves other costs like notary fees and Land Registry fees. Buying a car might also include administrative fees. While these are not taxes, they are real expenses. It is highly recommended to consult a professional gestor or tax advisor to confirm the details before proceeding, as policies and tax rates can vary between autonomous communities and may be subject to change. Does anyone have anything else to add? Feel free to leave a comment and discuss below!
