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The taxes and implications you need to be aware of are as follows :
TAXES PAYABLE ON THE TRANSFER OF PROPERTY
- Impuesto sobre Transmisiones Patrimoniales (I.T.P.)
This is a tax payable when you purchase either agricultural land or a house/apartment/building plot from a private owner. It is generally 6% of the declared value of the property as expressed in the Escritura de Compraventa (Deed of Conveyance). This has led people to be tempted to under-declare the value of the property. Though this practice was and is widespread, IT IS A SERIOUS MISTAKE. Severe penalties are payable in respect of under declarations which, in addition, can lead to monumental Capital Gains Tax headaches at a later date, as the declared value on your purchase is the base line used by Authorities when assessing the Capital Gain you make on the disposal of the property. - Impuesto sobre el valor anadido (I.V.A.)
This is the Spanish equivalent of VAT. It is paid instead of I.T.P. when you buy from a Promoter rather than the private individual. At present, the tax is charged at the rate of 12% on building plots and on additions carried out subsequent to the construction of properties. It is charged at the rate of 7% on the construction of a house and any associated buildings. It is also charged at the rate of 7% on both the plot and the house if you purchase both at the same time. In addition to IVA you will also have to pay a document tax or stamp duty (IAJD) at 0.5% of the purchase price on your purchase from a developer. - Land Registry Fees
These vary according to the locality, type and value of the property. They are not strictly taxes but rather administrative fees but, for the sake of completeness, are referred to in this document.
PROPERTY TAXES
- Contribucion Territorial Urbana (now Impuesto Sobre Bienes Inmuebles)
This is the main local property tax affecting owners of properties in Spain. The amount of the tax is calculated by reference to the "valor catastral" (official value of the property) registered in respect of all properties in Spain. The percentage of that valor catastral charged as tax varies from area to area. The official values were, until recently, very very low. They are now rapidly rising, pursuant to a policy of the Spanish Government that will result in the official values approaching the real value of the property. In general terms, Contribucion Urbana will cost broadly speaking the same as would rates (up to 5th April 1990) on a similar property in the UK. - Contribucion Territorial Rustica
This is the same as Contribucion Urbana but for properties located in rural areas. - Tasas y Cargas
Some Municipalities raise additional taxation in relation to the services that they supply to people in the area. These may include rubbish collection, cleaning of the streets and beaches etc. Municipalities also have the right to raise a charge for the use of a vehicle in their area. Not all do so. The amounts of these tasas y cargas are not generally high.
PERSONAL TAXES
- Impuesto sobre Patrimonio (Wealth Tax)
A person not resident in Spain for tax purposes must, every year, submit a wealth tax return. This must show the value of all of that person's assets located in Spain. This will normally be the person's house, car and the balance on his bank account. The value to be used when declaring the value of the house is the official valor catastral (see property taxes above). The amount of the bank balance is the average cleared balance over the previous year. This information is supplied by your bank. For the first twenty million pesetas (£100,000.00 approximately) of assets the wealth tax is 0.2%. Above this level the rates of tax increase slowly. The wealth tax return must be paid to the Authorities in June of each year. - Impuesto sobre la renta de las Personas Fisicas (Income Tax)
A person not resident in Spain for tax purposes must still make an annual declaration for income tax. The Spanish Authorities are only concerned with the income you derive from activities in Spain, not your world-wide income. Typical examples of this will be interest on any money you have on deposit with a Spanish bank or income you derive from letting your apartment or house. (See also "Tax on the Notional Letting Value of Your Property" below). As this income is part of your world wide income it will have to be declared to the British Tax Authorities but double taxation relief does exist as a result of a Treaty between the two countries. You do not need to file a tax declaration if your earnings in Spain amount to less than 840.000 ptas. in the year. If you do have to make a return it must be made during the period from the 1st of May to the 20th of June in each tax year. - Capital Gain Taxes
The Spanish do not have a separate system of assessing Capital Gains Tax. For people resident in Spain for tax purposes, Capital Gains are treated as part of their taxable income for the year in which the gain occurs. For people not resident in Spain for tax purposes, Capital Gains Tax is payable at a flat rate of (for tax residents) 20% or (for non tax residents) 35% on the difference between the price for which the article was sold and the price paid for it. There is a type of indexation for inflation and the transaction is tax free (in most cases) if the property has been owned for more than 10 years. In the typical example of the sale of property, the prices used to calculate the tax liability are those declared in the Title Deed. If you have under declared the value in your Title Deed on purchasing property you can, therefore, build up a large and entirely artificial Capital Gain which will be taxable unless you now take action to remedy the situation. - Tax on the Notional Letting Value of Your Property
In addition to the ordinary income tax return, which you must submit in appropriate cases, you will in all cases be required to make a tax return in respect of the notional letting value of your property. This tax return has to be made whether you have actually let the property to anybody or not. If you have actually let the property and received money for it, then the money you have received will have been declared in your ordinary income tax return. The return in respect of your national income from your property is made on a form called form 210, which is not obtainable from a tobacconist but only from your local Tax Office. The amount of the tax is calculated by reference to the valor catastral (see above) of your property. The amount to be declared in the form is 2% of the valor catastral. You will then have to pay tax at 25% of that 2%. Thus, if you have a property worth in reality £100,000 but which has a valor catastral of £75,000 the taxable notional rent of the property will be £1,500.00 (2% of the £75,000), and you will have to pay £375 (25% of the taxable amount). - Taxes Payable on Death
As in most countries, in Spain the State likes to take a chunk of your assets when you die. How much they will receive depends largely on how well you plan your affairs. In Spain there is no automatic inheritance by a wife or other joint owner of the deceased joint owner's share in any property. If it is left by will or on intestacy to the other joint owner, the gift will be taxable. The amount of tax paid is determined not by the size of the whole estate - as in this country - but by the size of each individual inheritance. The tax is progressive - the more you inherit, the higher the rate of tax you will have to pay. Near relatives pay tax at a lower rate than more distant relatives who in turn pay less tax than total strangers. Near relatives are also entitled to receive a sum tax-free. More distant relatives and strangers are not. An estate of, say, £100,000 can therefore produce a large tax bill if it is all left to one person - especially a non relative - and little or no tax bill if it is divided amongst a number of beneficiaries who are close relatives. Those who are already wealthy when they inherit pay more tax than those beneficiaries who are poor - although, as in the case of foreigners the only wealth taken into account is their Spanish wealth, this seldom produces difficulties in practice. Putting all of these things together, there is great scope for minimising tax payable on death. In general terms, dividing your assets between your husband/wife and children tends to produce the lowest tax bills. Take as an example a typical case where the estate comprises a villa and a small bank account - a total estate valued at, say, £50,000. If the estate was left to a stranger - including, for this purpose, a non-related executor and trustee - tax of about £5,000 would be payable. If the same estate was to be left in equal shares to a wife and 3 children no tax at all would be payable. Those who don't have spouses or children can use the same principles to make savings using other classes of beneficiary. Penalties are imposed if the tax due is not paid within 6 months of the date of death. In many cases where sizeable tax payments are going to be a problem it is possible to dispose of the assets during the owners lifetime much more cheaply than in his death. - VAT
Most transactions in Spain involve the payment of VAT. The normal rate is 16%. Transactions involving basic necessities carry VAT at a rate of 7% and transactions involving luxury items can carry a rate of 33%. Certain items are VAT exempt. - N.I.Es (Numero de identificacion de Extranjeros)
This is an identification number for use by foreigners in Spain. If you have dealings within Spain - even if you are not full time or tax resident - you are required to have a number. This is obtained from your local Police Station at the foreigners' department. However tempting it may be not to bother obtaining this number you will find that it will cause you great inconvenience in the future if you do not have one.
Please Note : It is impossible to give tax advice without detailed knowledge of your personal circumstances. You should, therefore, treat this document as no more than background reading designed to give you some idea of the structure of the tax system in Spain. The Spanish tax system is complex and taxes in Spain do change and are subject to a wide range of interpretation! You will need to seek up to date advice.
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Bulgaria 
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Panama 
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