Plusvalia in Spain is a tax directly related to real estate transactions: sale, gift or inheritance. Those. its payers are sellers and beneficiaries.

The full name of the tax, according to regulations, is Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (IIVTNU), but its short and more familiar name, Plusvalía, is more often used.

Plusvalia in Spain is a municipal tax, so its rates are determined by local municipal authorities and, if we consider Spain as a whole, can differ several times in different localities. The basic principles of tax calculation are the same for all municipalities, only the rates differ. Very often, tax calculators are published on the city hall website. If you don’t have a calculator, the calculation can be done at the tax department at the mayor’s office, or at any legal or consulting company specializing in taxes.

Also, each city hall has the right to apply its own system of benefits and installment plans. First of all, heirs, as well as taxpayers selling their main home, can count on them.

There are two methods for calculating tax: objective and based on the actual profit received from the sale. The objective method is the one that is used by default. The method based on actual profit received can only be applied upon a written application from the taxpayer. Below we will discuss each of them in detail.

Who pays the plusvalia tax in Spain?

Responsibilities for paying plusval tax in Spain rest with the following persons involved in real estate transactions:

• When selling real estate:

1. on the seller himself, if he has tax resident status in Spain;
2. on the buyer, if the seller does not have the status of a tax resident of Spain (in this case, the required amount is withheld from the seller at the time of notarization of the purchase and sale transaction; in other words, the money is given by the seller, and the buyer only ensures their transfer to the local budget);

• Upon entering into an inheritance – to the heirs;
• When accepted as a gift – to the beneficiaries.

Deadlines for paying plusvalia tax in Spain

There are different tax payment deadlines for different situations:

30 calendar days:

• when accepting a gift of real estate – from the moment of execution of the relevant documents;
• when selling real estate – from the moment of notarization of the purchase and sale transaction;

6 months:

• upon entry into inheritance rights – from the date of death of the testator (with the possibility of extending the period to 12 months).

An objective method for calculating the plusvalia tax in Spain

The objective method (objetivo) of calculating the plusvalia tax in Spain takes into account the cadastral value of the property and the current system of coefficients. The coefficients, in turn, take into account the period of ownership of the object and are subject to revision at the legislative level once a year.

Stages of calculating plusvalia using the objective method:

• Calculation of the tax base. The cadastral value of the property is multiplied by the appropriate coefficient. In case of sale, if the period of ownership of the property was less than 12 months, it is necessary to make a proportional recalculation of the coefficient.
• Calculation of tax payable. The resulting tax base is multiplied by the rate applied in the municipality.

Method for calculating plusval tax in Spain based on actual profits received

The second calculation method (real) is a little more complex. It takes into account not only the cadastral value of the property, but also the profit received.

Steps for calculating plusvalia based on actual profit received:

• Calculation of the ratio of the cadastral value of the land on which the object is located to the cadastral value of the object itself. To do this, you need to divide Valor catastral del suelo by Valor catastral total. The data required for the calculation is always indicated on the IBI receipt (Impuesto sobre Bienes Inmuebles).
• Profit calculation. Profit is defined as the difference between the sale price of an object and its purchase price, excluding associated taxes and expenses. To avoid mistakes, it is better to take the amounts from the notarial deeds of sale.
• Calculation of the tax base. The profit is multiplied by the value obtained in the first step.
• Calculation of tax payable. The resulting tax base is multiplied by the rate applied in the municipality.

Choosing a method for calculating plusvalia tax in Spain

As we noted above, by default all municipalities in Spain use an objective calculation method. However, in certain circumstances, the second method, based on actual profits, may be more profitable. If preliminary calculations speak in favor of the second method, then when selling the property it will be necessary:

• firstly, present to the notary certifying the transaction the first bill of sale, where the purchase price is fixed;
• secondly, at the time of notarization of the transaction, attach to the documents a written statement about the application of the tax calculation method based on the actual profit received.

Features of paying plusval tax in Spain

Failure to comply with tax payment deadlines will result in penalties and interest. However, many municipalities accommodate taxpayers halfway and offer an installment plan system if necessary.

And, of course, a non-profitable or loss-making sale of an object does not imply the occurrence of tax obligations. It is also worth remembering that properties included in special registers of historical or cultural interest are not subject to the tax.

Receiving real estate as a gift or inheritance with subsequent real estate sales will be taxed tax in Spain in each case: first when registering ownership of the property, then when completing the purchase and sale transaction.