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Mortgage Law ( Ley Hipotecaria ): Ensures legal security in transactions involving mortgages. Foreign investors must be aware of the implications of mortgage registration, especially regarding priority of claims and the enforcement of mortgage rights. Urban Planning Laws ( Leyes de Ordenación Urbanística ): Regulate land use and development. Foreign investors must conduct due diligence on whether a property complies with local planning laws, as non-compliance can lead to significant financial penalties or limitations on property use. Tax Laws: Foreign investors must also consider potential double taxation issues, depending on their country of residence. • Property Transfer Tax (ITP): Typically, between 6% and 10% of the purchase price, depending on the region of Spain. • Capital Gains Tax ( Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana ): Applies to the profit made on the sale of a property. Also, there are two requirements that it is important to highlight: Número de Identificación de Extranjeros (N.I.E.) is a unique identification number assigned to foreign individuals who engage in activities of tax, social, or economic significance in Spain. Regulated by Ley 36/2006, it serves as a tax identification number for foreigners. To obtain an N.I.E., individuals must provide an apostilled copy of their passport, an apostilled notarized power of attorney authorizing the application, and proof of the necessity for the N.I.E. In urgent cases, a temporary N.I.E. may be issued, and the
N.I.E. does not entail any ongoing obligations. The Número de Identificación Fiscal (N.I.F.) is required for foreign legal entities involved in economic activities or with fiscal relevance in Spain, as per Ley 58/2003 (Ley General Tributaria) . This number is crucial for fulfilling tax obligations. To secure an N.I.F., entities must present an apostilled document proving their existence, the N.I.E. of their representative, an apostilled notarized power of attorney, and proof of the necessity for the N.I.F. A temporary N.I.F. can be issued in urgent situations to commence activities. Why is it a good time to invest in Spain? - directly in real estate: during the last two years, prices have gone down 30% on average so far and analysts believe they will stabilise by the end of 2023. It is an excellent time to invest directly in real estate. Even more, Spanish Banks provide mortgage financing at reasonable rates. - through other clear and secure financial products? Current economic situation seems to have understood that Spain does not offer this kind of products at the moment. However, large multinational corporations based in Spain but with great activity overseas are having an excellent performance and keep growing each year (banking, telecommunications, energy). - In commercial real estate or in residential property? The current situation invites us to invest in real estate transactions in many different ways (Sale-and-leasebacks, leasing, and sub-leasing, etc.).
ILN Real Estate Group – Buying and Selling Real Estate Series
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