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Have you ever wondered if it’s necessary to appraise the rent price in related party transactions in Spain? The answer is yes, and at Welex, your law firm and tax advisors in La Costa del Sol, we want to explain why it is so important.

Why is an Appraisal Necessary?

When renting a property from your own company, it is crucial to ensure that the agreed value matches the market value. This not only complies with Spanish legislation but also avoids potential adjustments by the tax authorities. In short, a precise and professional appraisal protects you and ensures that everything is in order.

Legislation and Regulations in Spain

To give you some context, Royal Decree 634/2015, which approves the Corporate Income Tax Regulations in Spain, clearly establishes in its Article 17 the need to determine the market value in related party transactions. This comparability analysis with similar transactions between independent entities is fundamental. It ensures that the agreed price respects the arm’s length principle.

Article 17: Determination of the market value of related party transactions: comparability analysis

Spanish Jurisprudence

Spanish jurisprudence also underscores the importance of appraisal. For example, the Judgment of the Superior Court of Justice of the Community of Madrid No. 552/2023 allows the tax authorities to check and adjust the value of related party transactions to ensure that they are valued at the normal market price. This may include the need for an appraisal in certain cases.

«The tax authorities may check that transactions carried out between related persons or entities have been valued at their normal market value and will make the necessary value adjustments.»

Administrative Decisions in Spain

Similarly, the administrative doctrine in Spain, such as Binding Consultation No. V0746-24 of the General Directorate of Taxes, highlights the importance of valuing assets in related party transactions at their market value. This suggests that performing an appraisal is essential to determine this value.

«The market value will be understood as the value that would have been agreed upon between independent parties, allowing for any of the methods provided for in Article 18.4 of this Law.»

Implications and Limitations

Although an appraisal is generally necessary to comply with tax regulations in related party transactions, it is important to consider that methodologies and accuracy may vary depending on the type of transaction and the assets involved. Additionally, administrative and judicial decisions can influence how these rules are applied in specific cases.

At Welex, we are here to help you with any tax and accounting queries, we are expert in those areas.

To read more about accountancy in Spain, visit our blog!

https://www.welex.es/category/spanish-accountancy/

Do not hesitate to contact us for professional advice and to ensure that all your transactions comply with the current regulations.

At Welex, a firm of lawyers and economists in La Costa del Sol Spain, we recognize the legal challenges faced by non-residents when selling a property in Spain. In this blog, we will discuss in detail the taxes and duties on the sale of property by non-residents in Spain.

If you are a non-resident in Spain and have decided to sell your property, you should be aware of two payments that need to be taken into account after the sale of property by non-residents in Spain:

  1. On the one hand: the payment of the capital gains tax.
  2. On the other hand: the payment of the plusvalia tax in Spain.
  1. Capital gain from a sale as a non-resident

When an individual buys a property in Spain and the seller is a non-resident, the buyer must withhold and pay on behalf of the seller 3% of the sale price as an advance payment of the non-resident income tax to the Tax Agency. However, this withholding is not necessary if the seller can prove that he is subject to personal income tax (IRPF) by means of a certificate issued by the Spanish tax authorities, i.e., that he is a tax resident in Spain.

The capital gain will be determined by the difference between the transfer value of the property and its acquisition value.

  • The transfer value of the property will be the sale price, from which the expenses and taxes inherent to the transfer paid by the seller in Spain will be subtracted.
  • The acquisition value will be the purchase price of the property, to which the expenses and taxes inherent to the acquisition will be added.
  • The gain due to the difference between the transfer value and the acquisition value will be taxed at the rate of 19%, being this the amount to be paid, after deducting the amount corresponding to the 3% withholding.

In the event that there is no gain on the sale of the property in Spain, the seller is entitled to request a refund of the 3% paid by the buyer.

For a better understanding, we will use an example from our office:

A non-resident,

  • Has a house that has been sold for 600.000€ in 2024 and which selling expenses amount to 45.433,29€.
    • Transfer value: 554.566,71€.
  • The house, which was purchased for 320,000 in 2010; whose purchase costs were 27,644.74€.
    • Acquisition value: 347.644,74€.
  • The gain is calculated in order to know how much tax to pay:
    • Gain: 206.921,97€
  • A 19% tax would have to be paid on the gain. In this case: 315,17€
  • As 3% (€18,000) will have already been withheld by the buyer and deposited with the tax office at the time of the transaction,
  • The non-resident seller in Spain, still has to pay 21.315,17€ (39.315,17 – 18.18€).

 

Taxes on the sale of property by non-residents in Spain

 

  1. Plusvalia tax in Spain

With regard to the plusvalia tax on the sale of property in Spain, the Tax on the Increase in Value of Urban Land (IIVTNU) is a tax on the increase in value of the land being sold as a result of the transfer of the property in Spain. Its payment corresponds to the seller, and the buyer is subsidiarily responsible for the payment in case of non-resident sellers in Spain.

If you are considering the sale of your property in Spain, we invite you to contact our offices. We will be pleased to provide you with detailed information on all costs and taxes related to the sale of your property. At Welex, we are committed to providing you with expert and personalized advice to ensure a smooth and seamless process. Please do not hesitate to contact us; we will be happy to assist you.

Building a swimming pool in Spain is an exciting project that adds value and enjoyment to any property on the Costa del Sol. However, it is crucial to follow a proper process to avoid long-term legal problems. In this blog, Welex, a firm of lawyers and accountants in La Costa del Sol, will explore the steps necessary to obtain the required licenses and permits, as well as the importance of legalization in the case of unauthorized construction.

 

The first step is to hire a competent technician to assist you in applying for the required licenses for the construction of a swimming pool in Spain. He or she will have to apply to the competent Town Hall for a Building Permit, presenting a technical and execution project which must include the following:

 

– Descriptive report.

– Construction report.

– Compliance with the technical building code.

– Calculation of structure and installations.

– Geotechnical information on the land.

– Health and safety study.

– Quality control plan.

– Construction waste management.

– Geotechnical information on the land.

 

If, from the documentation received, the Town Hall verifies that the project complies with the local regulations in force, you will be granted a Major Works License for the construction of the swimming pool in Spain.

 

With the license granted, you can proceed with the construction of the swimming pool following the approved technical project. Once the work has been completed, it is crucial to sign the declaration of new construction before a notary in Spain. In addition, it is recommended to register the swimming pool in the land registry to validate the construction against third parties and ensure its legality in Spain.

 

If for some reason the pool was built without the required licenses in Spain, it is possible to legalize it. To do this, it is essential to have a competent technician draw up a technical legalization project, complying with current regulations. The process will include the payment of municipal fees and taxes.

 

Once approved by, for example, the Marbella Town Hall, the declaration of new construction must be signed before a notary and we recommend registering it in the Land Registry in order to make it valid in the eyes of third parties.

 

The Declaration of New Construction, as we have mentioned, whether the swimming pool has been built with a Building License in Spain, or whether it has been legalized afterwards, the Deed of New Construction must be signed in the presence of a notary in Spain. This declaration of construction by means of a public deed is subject to Stamp Duty (Actos Jurídicos Documentados).

 

At Welex law and accountancy firm in Marbella, Spain, we can assist you with the signing of the declaration of new construction, the registration of the swimming pool in the land registry, land registry and the filing of the above-mentioned taxes.

 

Trust our expert property lawyers on the Costa del Sol for a professional and smooth legal process for the construction of your swimming pool in Spain, or for other legal matters.

Welex, a leading firm of lawyers and accountants in Spain, explains in this article everything you need to know about tourist rental licenses in Ibiza, Spain.

 

 

If you are considering purchasing a property in Ibiza with the intention of renting it out to tourists, we invite you to explore our blog. Obtaining a Tourist Rental Licence in Ibiza is not a straightforward process and not all properties are eligible.

Firstly, it is crucial to understand that a holiday rental covers periods of less than 30 days. To rent a property for less than 30 days, it is required to obtain a Tourist Rental Licence. Welex, a firm of lawyers and economists on the Costa del Sol, is here to answer any questions you may have.

The Tourist Rental Licence in Spain is a permit granted by the Administration, allowing owners to use their properties for tourist purposes. Each autonomous community has its own regulation, and in this blog, we will detail which properties can obtain the licence and the steps to follow in Ibiza, Spain.

It is important to note that not all homes in Ibiza can obtain this certificate. Only detached houses are eligible to apply. However, obtaining the licence does not guarantee approval, as the administration will analyse each case individually.

The following is a non-exhaustive list of minimum requirements that properties must meet in order to obtain a Tourist Rental Licence in Ibiza, Spain:

  1. Habitability Certificate.
  2. Location in Tourist Zone.
  3. History without Serious Sanctions.
  4. Antiquity of the Property: Minimum 5 years.
  5. Energy Efficiency Certificate: Category D or higher, for dwellings built after 31 December 2007; Category F or higher, for earlier constructions.

 

In addition, the following documents must be presented to the corresponding local council:

  1. Responsible Declaration of Commencement of Activity of commercialisation of Tourist stays in dwellings.
  2. Documentation on the property.
  3. Plans of the property.
  4. The number of beds for guests must be indicated, which may not exceed the number of persons legally authorised to occupy the property (as established in the cédula de habitabilidad).
  5. Certificate issued by the town hall accrediting that the property is located within the tourist rental zone.

The application must certify that the property complies with all the requirements for tourist rentals.

Once the application has been completed and the appropriate fee paid, a preliminary licence will be issued. The simple submission of the application implies the declaration of compliance with all legal requirements for renting, thus allowing to start renting the property in Spain immediately.

Subsequently, the competent authorities will carry out an inspection of the property to verify its conformity with the information declared above. In case of discrepancies, the property will be cancelled from the property register, leaving the property immediately ineligible for any activity related to tourist rentals in Ibiza, Balearic Islands.

The costs involved in obtaining such a licence for tourist rentals in Ibiza currently amounts to 600 euros for the application, plus the following fee per available bed in the accommodation:

Number of Beds Euros
1 4.300,00
2 8.643,00
3 13.029,40
4 17.459,70
5 21.934,30
6 26.453,70
7 31.018,20
8 35.628,40
9 40.284,70
10 44.987,50
11 49.737,40
12 54.534,80

 

To conclude, with reference to those properties that already have a Tourist Rental Licence, they maintain their validity and it will not be necessary to re-apply for such a licence.

Finally, and for information purposes, from February 2022 a moratorium of up to four years has been established for the construction of new tourist accommodation, as a consequence, all applications for new licences have been held back.

For more information about the Tourist Rental Licence in Spain and how to find out if the house you want to buy is eligible for such a licence, please do not hesitate to contact our team of lawyers specialised in real estate transactions throughout Spain.

At Welex, leading law and accountant firm in Marbella, we would like to explain briefly and simply the steps to be taken if you have decided to set up a limited company in Spain: The constitution of a limited company in Spain. It is compulsory for the company to be incorporated by signing a public deed and it must be registered in the Spanish Commercial Register.

 

 

First, you need to choose a name for the company and apply to the Central Commercial Register for a certificate to confirm that the name you have chosen has not already been registered in Spain.  An entity whose name is identical to an existing name cannot be entered in the Mercantile Register.

 

The application for the name to be registered must be made by the interested party or beneficiary of the certificate. Once the certificate has been obtained, it will be valid for a period of six months from the date on which it was issued in Spain.

 

In second place, you need to decide who will be the shareholders of the entity, the total share capital and the participation of each partner in this capital. The share capital in Spain cannot be less than one euro, and whenever it is less than three thousand euros, a figure at least equal to 20 percent of the profit must be allocated to the legal reserve until this reserve together with the share capital reaches the amount of three thousand euros. Furthermore, in the event of liquidation in Spain, if the company’s assets are insufficient to meet the company’s obligations, the shareholders are jointly and severally liable for the difference between the amount of three thousand euros and the amount of the subscribed capital. The company may also have a sole shareholder, whether a natural person or a company in Spain.

 

In third place, you need choose a domicile in Spain, at the place where the effective centre of administration and management is located, or where your principal place of business or operation is located in Spain.

 

In fourth place, you must appoint a sole director or several directors, or a board of directors, to manage and represent the company in Spain. The director may be a natural or legal person and, unless the articles of association do not allow it, does not need be a shareholder.

 

In fifth place, it will be necessary to draw up the articles of association that will govern the operation of your company in Spain, which will include, among other things, the name of the company, the corporate purpose, the registered office and its share capital, the number of shares into which this capital is divided and the nominal value and numbering of the shares.

 

Please note that the duration of the company shall be indefinite, unless the articles of association provide otherwise.

 

Once the deed of incorporation has been signed before a notary by the founding partners and the director of the company in Spain, within two months the deed must be presented to the Companies Register for registration, after settlement and payment of the corresponding taxes and expenses.

 

If you wish to have assistance with the incorporation and registration of your company in the Spanish Commercial Register, please do not hesitate to contact our offices of Welex, lawyers in La Costa del Sol. We will carry out all the necessary formalities for the incorporation of your company in Spain.

 

Welex, a law and economist firm in Spain, is pleased to write a few lines explaining the closing of a Spanish company’s accounting books.

Non Resident tax in Spain

It is customary to clear the books after the beginning of a new year, but in accounting, this is not possible. Even though the financial year typically ends on December 31, in Spain we cannot truly delete the past year until July when the corporate tax is filed.

In order to begin the process of closing the accounting books at the conclusion of each fiscal year, your company’s accountant in Spain must put in a lot of effort. In general, it is appropriate to note that the phases of accounting closing and fiscal closure consist of three extremely intricate and precise steps. Which are:

1º Accounting closing.

2º Presentation of accountancy books and annual accounts in the Mercantile Register.

3º Presentation of Spanish company tax form.

The accounting closing takes place on December 31, except in particular cases, and could be created or modified after that date, but never exceeding the period of presentation of accountancy books and annual accounts (April of the following year). Theoretically, the accounting closing helps us to obtain the losses or benefits of a company, but, in practice, it is a stage of revision, detection of errors, and adjustments.

 

If you are interested in finding out more about the Closing of a Spanish company’s accounting books, read on here.

Other articles of interest:

 

 

Breaking News about accountancy in Spain!accountancy in Spain

From Welex, accountants in Spain, we are proud to welcome a new member into our accountancy in Spain team.

Welcome Beatriz!

Discover all the information at this publication.

Do not hesitate contact us if you have any doubt related to any accountancy in Spain issue.

Nowadays, disposing a Digital Certificate in Spain is an important matter.

In Welex, we want to provide you the best legal advice in Costa del Sol, so we are aware about the doubts obtaining a Digital Certificate can entail.

For this reason, we have created a fast and easy way to dispel those questions.

Digital Certificate in Spain

For more information about that issue, visit our publication.

In addition, in our law firm in Marbella we will be pleased solving that or any other issues about the spanish law.

Do not hesitate contact our legal advisers if in doubt.

Do you have doubts about the actual changes in the urban lease law in Spain?

In Welex, your spanish law firm, we have prepared an easy vision about the actual situation of this juridical issue.

 

change urban law spain

 

For a more detailed information about that issue, we invite you reading our publication.

Our lawyers in Marbella can solve any accountancy in Spain related matter.

In addition, in Welex we work without rest to provide you the best legal advice in Costa del Sol, so don’t hesitate in contact us about any legal spanish issue.

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