This is the blog of ESCOBEDO - SPANISH LAWYERS. A LAW FIRM of Independent English Speaking SPANISH LAWYERS based in Tenerife, Canary Islands, Spain.
We provide comprehensive Spanish legal & litigation services to all our English speaking clients. Leading this service is Jose Escobedo a licensed Spanish lawyer with 19 years practice in the Canary Islands, Spain. He provides these services in association Victor Maldonado, Lawyer.
In our our blog you will find free legal information about many subjects that might affect your life, investments in Spain i.e. (conveyance & business laws, taxes, NIE, residencia, permits, spanish wills, inheritance laws, debt recovery, claims, law enforcement and much more).
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Tenerife - Law Society num. 1685 - JOSE ESCOBEDO
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New Law 14/2007 - 27th December - From 1st January 2008 parents may gift any property in the Canary Islands to their children and benefit from a 99,9% tax exemption. The said exemption is applicable to all donations (gifts) of real estate property situated in Canary Islands.
The Spanish cadastre is an administrative register with a fiscal origin, created as a data bank to be accessed both by Public Administrations (national, regional, local) and citizens. As an inventory of real estate, it contains physical information (surfaces, location, use, shape, boundaries, cartographic representation, crops and forest use, type and quality of constructions, etc.), legal information (identification of holders or owners: name, national identification number, address, etc.) and economic information (cadastral values of land and buildings, valuation criteria). This cadastral bank includes detailed information of more than 32 million urban properties, more than 40 million rural properties and more than 27 million cadastral owners. https://ovc.catastro.meh.es/CYCBienInmueble/OVCConsultaBI.htm
The Virtual Office of Cadastre started up in May 2003 with the main goal of providing other Administrations with information which, up to that moment, citizens were requested to present in the suitable office after collecting it themselves from the cadastral office. At the moment, the Virtual Office of Cadastre provides the following services:
Request for cadastral information, both alphanumeric and graphic (maps). This service allows to look up the physical and economic features of properties as well as their owner. The data can be obtained from the location (address) of a building, from its cadastral reference or code, or from a list of the properties owned by a person.
Massive request service. Instead of making individual queries, it is possible to send a file in a predefined format with necessary data and this service replies with all the requested information in a file.
Certificate of the cadastral data (official document with the data obtained from a previous request). This document is obtained immediately and at no cost. The validity of this document is based on a code of 16 characters printed in the document itself, which, once typed in one of the options of the application, allows to recover the document as it was originally issued.
Exchange of information: It allows to exchange files, with a predefined format, between Cadastre and the different Administrations as well as with other collaborating organizations, with different purposes: coordination of the contents of data bases, updating of Cadastral information, legal effects, taxation, etc.
It is important to emphasize that all these services are provided at no cost, and have a universal nature. Nevertheless, as both the European Union and Spanish laws consider part of the cadastral data as protected data, access to these protected data of real estate is legally accessible only by certain institutions and administrations and, of course, by the owners of each particular property. Therefore the identification of the applicants is a most important subject . For that reason, involved administrations have to be registered off-line in the application and, once registered, they are obliged to use X509 digital certificates in order to authenticate the users. Owners of a particular property can access protected data of their own properties by authenticating themselves with a X509 digital certificate.
The General Directorate of the Cadastre has reached agreements with different Certification Authorities to admit the X509 certificates issued by them as mechanisms of authentication in the application (the list can be seen in
http://www.catastro.minhac.es/formulario_alta_ovc2/certificados_admitidos.htm )
Description of services
Basically, two kind of services are provided:
Request and certification of cadastral data.
Massive exchange of information.
Services of request and certification of cadastral data:
They allow locating a specific property in three different ways:
Typing province, municipality, street name and number in case of urban buildings; province, municipality, polygon and parcel in the case of rural properties.
Selecting it in the cadastral cartography.
Typing the holder’s National Identification Number (NIF), and selecting a property from the list of properties owned by that person.
Once located or selected the property, the information provided by the program is as follows:
Previously registered users, as owners of a particular property (legally authorized, with a personalized access), can obtain thorough information of this property: physical characteristics, cartography, bordering properties (ownership) and economic data (cadastral values). This information can be certified by obtaining a code of 16 characters which guarantees this document is valid, since at any time the original document issued by the OVC can be recovered just by typing this code in the OVC form.
Free access users (not authenticated), can obtain all the cadastral information except economic values and ownership of the property.
It is important to emphasize that any particular citizen who identifies by a X509 certificate issued by one of the CA’s recognized by the General Directorate of the Cadastre, can view all the accesses made on their properties by all administrations and institutions as registered users in the OVC.
Massive exchange of information Services
Cadastre exchanges a huge amount of information with collaborating agents in order to coordinate the contents of their respective data bases. These OVC services allow the exchange of data files between collaborating agents and the Cadastre via Internet. The users have the following competence:
To send files to other users, via Internet, generating warnings to the receiver. - To obtain immediate information about the syntactic validity of data of the sent files, giving the possibility, in case of errors, to provoke a reverse gear in the process of information shipment.
To download received files sent by other users, being able to recognize the sender previously, type of file and dates of shipment.
To view statistics about sent and received files.
Project values and results
The basic functions of the cadastral Information are the following:
It provides the different Public Administrations with information for the tributary management of different taxes based on the real estate property.
It provides security to the real estate sale procedure. It is compulsory to include the cadastral code of the properties in deeds and registry inscriptions, in order to complement the legal information of the registry of the property, with physical and economic data of the cadastre.
It is a data bank at the service of citizens and Public Administrations, that use cadastral information for management of their policies of territorial planning (such as town planning or infrastructures), for the control of public aids and subsidies (such as scholarships, social aids, Common Agriculture Policy, etc.), or for planning services of utility companies (networks of telephony, gas, electricity, cable, etc.).
Finally, cadastre is usually requested to provide evidence in court.
When gathering all this information in an accessible Internet service, always taking into account security and data protecting policies the following values are achieved:
It enables to issue cadastral information, avoids inconveniences of citizens going to the Cadastre offices to obtain the needed data. In addition, this information is obtained at no cost.
It enables to fulfill legal obligations of the citizens, eliminating unnecessary proceedings and streamlining procedures.
It eliminates most routine and tedious work in the departments of public attention of the cadastre offices.
It reinforces the exchange of information with administrations and institutions collaborating with Cadastre.
It reinforces and improves the opinion of the citizens on Public Administration.
It promotes the electronic administration, the e-government.
The main results of the Virtual Office of the Cadastre at October 2006 are the following:
• REGISTERED USERS: 40.500
• DATA DIFFUSION
Started in May 2003 with only descriptive information (not cartography)
Carthography in October 2004
3.3 Mill. Certifications (50% CDG)
8.1 Mill. Protected data requests
58 Mill. Non-protected data requests
112 Mill. Cartography requests
• DATA EXCHANGE
Started in September 2003
125.000 files received from notaries and land registers (15.5 Mill. Records)
36.000 files interchanged with authorities of municipalities and state and regional government
The OVC is adapted to the EU Directives.
The Virtual Office of Cadastre is fully adapted to the 2003//98/EC Directive, on the re-use of public sector information. Presently, it even includes numerous elements which will be regulated in the Proposal for a Directive establishing an infrastructure for spatial information in the Community (INSPIRE).
Since the publication of Law 7/1995 of 6th April, this matter has aroused a great deal of controversy among apartment owners in tourist areas throughout the Canary Isles.
1. Can I rent out my apartment in the Canary Isles to tourists?
Since the publication of Law 7/1995 of 6th April, this matter has aroused a great deal of controversy among apartment owners in tourist areas throughout the Canary Isles.
There is no law in our legal system that expressly prohibits the letting of property in the Canary Isles. However, we should bear in mind that given the special strategic situation of the Canaries as a tourist destination, certain types of rentals and particularly those destined for tourists are protected by our Autonomous legislation.
In view of this, Law 7/1995 of 6th April for the regulation of tourism in the Canary Isles distinguishes between two types of rentals (art. 42 section b):
a) Private rentals regulated by state legislation (Law 29/1994 of 24th November for Urban Rentals and Civil Law): house rentals and rentals for non-residential uses (second home, short-term stays, and business premises)
b) Holiday rentals for tourist accommodation regulated by Law 7/1995 of 6th April for the Regulation of Tourism in the Canary Isles.
Given the vital importance of tourism in the Canary Isles, this second group enjoys special administrative protection.
Because of legal requirements, holiday rentals to tourists are subject to the principle of unity of exploitation and to stringent fines when properties are rented secretly or illegally without the compulsory administrative permits which allow holiday rentals.
2. What does the principle of unity of exploitation refer to?
This is defined in Article 38 of Law 7/1995.
According to this Law, unity of exploitation is understood to be the requirement that a sole corporate entity be responsible for the holiday rentals in each residential complex or group of constructions, buildings or part of these, corresponding to any of the accommodation possibilities envisaged in this Law.
Only those “companies” who are registered with the Canarian Government and who hold the compulsory permits may let holiday apartments for tourist accommodation in the Canary Isles.
Private owners may only offer their own apartments through registered tourist companies. This does not mean that private owners are not allowed to let their properties in accordance with national legislation, merely that they may only do so for “non-touristic” purposes.
3. What is the definition of a tourist?
Article 15 of the law defines a tourist as anyone who uses tourist establishments or goods or who receives or contracts the services offered by this type of company as a client.
Therefore, if we consider a tourist to be someone who travels for pleasure to a tourist destination and who stays in an establishment where they receive certain services (accommodation, food, excursions, etc.) for a short holiday period, we must logically exclude those people who stay in our apartment without paying either because they are family or friends.
Consequently, although their property is located in a tourist complex, nothing prevents the owner using it for whatever purpose, as long as it is not used offered to potential clients/tourists in any way (agencies, Internet, media, etc.).
Evidently if we want to rent our property as holiday accommodation for tourists, we must offer it to the company who holds the exploitation licence in the complex, community or building where the apartment is located.
4. What are the fines for renting holiday apartments to tourists illegally?
The following scale of fines is imposed for the illegal renting of holiday apartments:
a) For minor offences, up to 1,500€.
b) For serious offences: between 1,500 and 30,000€.
b) For very serious offences: between 30,000 and 300,000€.
Very serious offences for tourist activity are those where:
holiday apartments are being let to tourists by anyone who has not registered with the General Registry of tourist companies, activities and establishments or who does not hold the compulsory licences and permits for the undertaking of tourist activities as regulated by the Law for the Regulation of Tourism.
Jose Escobedo
Abogado - Lawyer
jose@escobedo.net
C.C San Eugenio local 81
Playa de las Américas, Tenerife
España (Spain).
http://www.escobedo.net
http://www.spanishlaw.info
ALL CANARY ISLANDS LAWS REF. TOURISM
1. Ley 19/2003, de 14 de abril, por la que se aprueban las Directrices de Ordenación General y las Directrices de Ordenación del Turismo de Canarias.[PDF]
2. Ley 2/2002, de 27 de marzo , de establecimiento de normas tributarias y de medidas en materia de organización administrativa, de gestión, relativas al personal de la Comunidad Autónoma de Canarias y de carácter sancionador.
3. Ley 6/2001, de 23 de julio , de medidas urgentes en materia de ordenación del territorio y del turismo de Canarias.
4. Ley 2/2000, de 17 de julio , de medidas económicas, en materia de organización administrativa y gestión relativas al personal de la Comunidad Autónoma de Canarias y de establecimiento de normas tributarias.
5. Ley 5/1999, de 15 de marzo , de modificación de la Ley 7/1995, de 6 de abril, de Ordenación del Turismo de Canarias.
6. Ley 7/1997, de 4 de julio , de modificación de la Ley 7/1995, de 6 de abril , de Ordenación del Turismo de Canarias.
7. Ley 2/1996, de 8 de julio de creación del Colegio Profesional de Diplomados y Técnicos de Empresas y Actividades Turísticas de Canarias. (Ver Normativa estatal B.O.E. de 2 de agosto de 1996)
8. Ley 7/1995, de 6 de abril , de Ordenación del Turismo de Canarias.
Decretos
1. DECRETO 75/2005, de 17 de mayo , por el que se regula el Registro General de Empresas, Actividades y Establecimientos Turísticos, así como el sistema de información turística y se aprueba el sistema informático que les da soporte. [ PDF ]
2. DECRETO 11/2005, de 15 de febrero , por el que se crea la Red Canaria de Senderos y se regulan las condiciones para la ordenación, homologación y conservación de los senderos en la Comunidad Autónoma de Canarias. [PDF]
3. DECRETO 84/2004, de 29 de junio , por el que se aprueba el Reglamento Orgánico de la Consejería de Turismo. [PDF]
4. DECRETO 289/2003, de 9 de diciembre , por el que se suspende la entrada en vigor del Decreto 98/2003, de 21 de mayo, regulador de las medidas mínimas de seguridad y protección que han de cumplir las playas de la Comunidad Autónoma de Canarias.
5. Decreto 98/2003, de 21 de mayo , regulador de las medidas mínimas de seguridad y protección que han de cumplir las playas de la Comunidad Autónoma de Canarias.
6. Decreto 20/2003, de 10 de febrero , por el que se modifica el Decreto 305/1996, de 23 de diciembre, sobre dedidas de seguridad y protección contra incendios en establecimientos turísticos alojativos.
7. Decreto 187/2001, de 3 de octubre , por el que se regulan las condiciones especiales que han de cumplir los hoteles de cinco estrellas para entenderse comprendidos en el supuesto previsto en el artículo 2.4.e).2) de la Ley 6/2001, de 23 de julio.
Derogado
8. Decreto 127/2001, de 5 de junio , por el que se regulan las Directrices de Ordenación.
9. Decreto 126/2001, de 28 de mayo , por el que se suspende la vigencia de las determinaciones turísticas de los Planes Insulares de Ordenación y de los Instrumentos de Planeamiento Urbanístico.
10. Decreto 10/2001, de 22 de enero , por el que se regulan los estándares turísticos.
11. Decreto 4/2001, de 12 de enero , por el que se acuerda la formulación de las Directrices de Ordenación General y del Turismo de Canarias.
12. Decreto 178/2000, de 6 de septiembre , por el que se regulan las actividades de observación de cetáceos.
13. Decreto 168/2000, de 24 de julio , por el que se regula la concesión de la distinción “Importantes del Turismo” de la Comunidad Autónoma de Canarias.
14. Decreto 135/2000, de 10 de julio , por el que se regulan las agencias de viajes
15. Decreto 95/2000, de 22 de mayo , por el que se aprueba definitivamente la revisón parcial del Plan Insular de Ordenación de Lanzarote (P. I. O. L.)
16. Decreto 39/2000, de 15 de marzo, por el que se modifica el anexo I, letra c, apartado g), del Decreto 18/1998, de 5 de marzo, de regulación y ordenación de los establecimientos de alojamiento de turismo rural.
17. Decreto 42/2000, de 20 de marzo, por el que se modifica el Decreto 80/1999 de 6 de mayo, que regula los Centros que impartan enseñanzas de navegación de recreo.
18. Decreto 121/1999, de 17 de Junio, por el que se regulan las Conferencias Sectoriales canarias de competencias y funciones transferidas y delegadas a los Cabildos Insulares.
19. Decreto 116/1999, de 25 de mayo, por el que se autoriza la adscripción de la Escuela de Turismo del Cabildo Insular de Lanzarote a la Universidad de Las Palmas de Gran Canaria, como Escuela Universitaria para la impartición de la diplomatura en turismo.
20. Decreto 108/1999, de 25 de mayo, por el que se suspende el otorgamiento de licencias de obras que supongan la creación de nueva oferta turística alojativa en Lanzarote.
21. Decreto 109/1999, de 25 de mayo, por el que se regula el régimen de creación y funcionamiento de los Colectivos de Escuelas Rurales.
22. Decreto 18/1998, de 5 de marzo, de regulación y ordenación de los establecimientos de alojamiento de turismo rural.
23. Decreto 93/1998, de 11 de junio, por el que se establecen los criterios y el procedimiento para declarar la no sujeción a la Ley 7/1995, de 6 de abril, de Ordenación del Turismo de Canarias, de empresas, actividades o establecimientos que no tengan carácter turístico.
24. Decreto 176/1997, de 24 de julio, por el que se regulan las agencias de viajes.
Derogado
25. Decreto 272/1997, de 27 de noviembre, sobre regulación de los alojamientos en régimen de uso a tiempo compartido.
26. Decreto 59/1997, de 30 de abril, por el que se regulan las actividades turístico-informativas.
27. Decreto 100/1997, de 26 de junio, de modificación del Decreto 256/1996, de 26 de septiembre, por el que se regula el Consejo Canario de Turismo.
28. Decreto 305/1996, de 23 de diciembre, sobre medidas de seguridad y protección contra incendios en establecimientos turísticos alojativos.
29. Decreto 39/1997, de 20 de marzo, por el que se modifica el Decreto 305/1996, de 23 de diciembre, sobre medidas de seguridad y protección contra incendios en establecimientos turísticos alojativos, y se corrigen los errores materiales.
30. Decreto 282/1996, de 22 de noviembre, por el que se regulan las conferencias sectoriales de responsables turísticos.
31. Decreto 256/1996, de 26 de septiembre, por el que se regula el Consejo Canario de Turismo.
32. Decreto 190/1996, de 1 de agosto, regulador del procedimiento para el ejercicio de la potestad sancionadora en materia turística y de la inspección de turismo.
33. Decreto 168/1996, de 4 de julio, por el que se regulan las características de las hojas de reclamaciones y el procedimiento de tramitación de las quejas y reclamaciones.
34. Decreto 281/1995, de 11 de septiembre, del Reglamento Orgánico de la Consejería de Turismo y Transportes.
35. Decreto 4/1996, de 12 de enero, por el que se autoriza a la Universidad de La Laguna y a la Universidad de Las Palmas de Gran Canaria a impartir enseñanzas conducentes a la obtención de nuevas titulaciones oficiales.
36. Decreto 216/1990, de 18 de octubre, por el que se crea la Escuela Oficial de Turismo de Canarias.
37. Decreto 67/1996, de 18 de abril, del Reglamento Regulador del Registro General de Empresas, Actividades y Establecimientos Turísticos.
Derogado
38. Decreto 23/1989, de 15 de febrero, sobre Ordenación de Apartamentos Turísticos, y corrección de errores, de fecha 28 de Abril de 1989.
39. Decreto 165/1989, de 17 de julio, sobre requisitos mínimos de infraestructura en alojamientos turísticos.
Derogado
40. Decreto 149/1986, de 9 de octubre, de Ordenación de Establecimientos Hoteleros y corrección de errores, de fecha 17 de Noviembre de 1986.
Questions and answers for the most common queries.
1. Do we have to pay Income Tax in Spain when we sell our property?
The answer is yes.
If you owned a property which was sold in Spain and also live abroad, you will be considered a tax payer by the Spanish authorities despite being a non-resident.
In the eyes of the Spanish Tax Office, any non-resident person or company earning income in Spain is a tax payer. The sale of a property in Spain is considered to be taxable.
2. How can non-residency be proved?
Non-resident status can be proved by means of a certificate providing proof of residence in another country issued by the tax authorities of that country. These certificates are valid for one year.
3. What type of income is taxable in Spain?
In relation to the properties of non-residents situated in Spain, all income deriving either directly or indirectly from these properties or the rights relating to them (territoriality criterion) are taxable.
Let us look at some examples:
a) Simple ownership of property is subject to non-resident income tax (we shall examine this in another article).
b) Private or holiday rentals are subject to non-resident income tax (we shall examine this in another article).
c) The sale of any non-resident property situated in Spain is subject to non-resident income tax (we shall look at this below).
4. What tax rate or percentage of gains is taxable in Spain?
In the case of gains obtained by a UK resident as a result of the sale of property located in Spain, the Spanish Tax Office has the legal authority to tax the capital gains. (For example, a UK resident earns money for the sale of a property located in Spain. The gains will be taxed in Spain at the rate of 18%, after 1/1/2007; and at 35% for sales carried out before 31/12/2006).
5. How is capital gains calculated for the sale of a property in Spain?
The gains will always be determined by the difference between transfer and purchase price.
A) The purchase price will comprise the price which the property being transferred was purchased for, adding any expenses and taxes paid when it was purchased. Depending on the year when it was purchased, this price will be corrected by applying certain actualisation coefficients which are established annually by the National General Budgetary Law.
B) The transfer price will be the real price paid for the property and this means that the tax office can on inspection verify and correct a price declared in a deed of sale. Any expenses (agency commissions, lawyers’ and accountant’s fees, etc.) and any taxes relating to the transfer which the seller has paid (municipal capital gain) must be discounted from this transfer price.
If the property was purchased before 31st December 1994 and improvements made, the calculations need to be corrected and in this case it is advisable to consult a qualified professional as the capital gain calculation becomes complicated.
6. Non-resident tax retention
The person purchasing the property, whether resident or not, must deduct and pay 3% of the agreed price to the tax office (for purchases made before 31st December 2006 the rate was 5%). For the seller, this retention is an advance payment of the corresponding tax for the gain resulting from the sale. The purchaser will therefore give the non-resident seller a copy of form 211 (with which the retention was made) so that the seller can deduct the retention of the amount to be paid resulting from the declaration from the gain. If the amount retained is higher than the amount to be paid, the difference may be refunded.
If the retention is not paid, the property will be subject to payment of the tax.
IMPORTANT OBSERVATION: It is important to remember that fiscal residence in Spain for declaring the inadmissibility of the retention before a notary must be proved by means of the corresponding certificate issued by the tax office. It is necessary to prove more than just residency: the seller must prove that they pay tax in Spain like any other resident.
7. What form must we complete?
Form 212
When the property being transferred belongs to a married couple both of whom are non-residents, it is not possible to present a joint tax declaration.
8. How long do we have to present the tax declaration?
Three months from the end of the period in which the person purchasing the property has to pay the retention (this period is, in turn, one month from the date of sale).
9. Where must we present this form?
At the Tax Office (Delegación or Aministración de la Agencia Tributaria) corresponding to the place where the property is located.
10. What is the procedure for the return of the 3% retention?
In the case of capital loss or when the retention is higher than the amount to be paid, you are entitled to a refund of the excess amount retained. The refund procedure begins with the presentation of declaration form 212 at the appropriate Tax Office. The amount is refunded by bank transfer to the account indicated on the declaration. The account holder will be the non-resident taxpayer concerned or their representative (the representative must have been granted express powers in the document certifying their status as a representative to receive the refund and in this case, it is advisable to grant power of attorney with special authorities). If the non-resident taxpayer does not hold a bank account in Spain, they can submit a document to the Tax Office Director requesting the refund by cheque. The copy for the non-resident transferee of form 211 with which the retention was paid will be attached to the declaration (form 212).
The Tax Office can make a provisional settlement within six months from the end of the period established for the presentation of the declaration. When the declaration is presented late, the six months will be counted from the date of presentation. If the provisional settlement is not made in this period, the Tax Office will proceed on their own initiative to refund the excess on the self-assessed amount without affecting subsequent settlements which may be deemed legitimate. If the amount has not been refunded after six months for reasons attributable to the Administration, the corresponding interest will be added to the amount due to be refunded.
LAW 32/2006 - article 3 of the said act clearly defines the different roles of the persons or companies in the building process
such as builders, contractors, suppliers, developers, technical architects and security coordinator. More restrictions on subcontracting works and services will be implemented....
Ley 32/2006 reguladora de la Subcontratación en el sector de la Construcción( 02-04-2007 )?
The party acquiring the real-estate property, regardless of whether or not said party is a resident of Spain, is obliged to withhold 3% of the agreed sales price and pay it to the tax office. For the seller, said withholding shall be deemed payment at source of the capital-gains tax corresponding to the conveyance of the property.
The purchaser shall therefore provide the non- resident seller with a copy of Form 211 (by means of which the withholding is paid to the tax office) so the seller can deduct said withholding from the tax liability resulting from the capital-gains tax return. If the amount withheld is higher than the tax amount to be paid, refund for the excess may be applied for. However, in the case of individuals, if more than 10 years elapsed between the date the property was originally purchased or the latest reforms were made to it and 31 December 1996, no capital gains shall be payable and there shall be no obligation to file a capital-gains tax return. In this case, there shall consequently be no obligation to withhold and pay the 3% withholding tax.
This witholding tax is not applicable to incorporation of Spanih limited companies when the property is part of the share capital or when increasing the share capital via issuing new shares for the value of the property being transferred to the company.
Capital gains tax goes now from 35% to 18% tax rate.
A NEW LAW has been enacted in November 2006 - Law 36/2006 dated 29th November. From 1st December no property purchase can be registered in the land Registry office without the NIE of all the parties concerned in a property transaction.
A NEW LAW has been enacted in November 2006 - Law 36/2006 dated 29th November. From 1st December no property purchase can be registered in the land Registry office without the NIE of all the parties concerned in a property transaction.
In Spain everybody is assigned a Tax Identification Number, which must appear on all tax returns and in all communications with the Tax Authorities. In general, for people with Spanish nationality, the NIF is the number of their National Identity Card (DNI); for people without Spanish nationality, the NIF is their Foreign National’s Identity Number (NIE), which is obtained from the Dirección General de la Policía (Police General Directorate). However, foreign nationals who are not obliged to have an identification number may request a NIF from the Tax Authorities.
As stated above this new requirement it does not mean that you cannot buy property without an NIE number BUT, it is essential to get your Title Deed registred in The Land Registry Office.
The situation may be more complicated if you are planning to finace the purchase ith a mortgage
You must keep in mind that from December 2006, all major Spanish BANKS are reluctant to sign mortgage deeds without NIE numbers. If you are planning to buy property you must carry out all the necessary arrangements to lodge your NIE application before agreeing an specific date for completion.
A new swift debt recovery procedure was approved by the European Parliament on 12th December 2006
A new swift debt recovery procedure was approved by the European Parliament on 12th December 2006, and it will be enforced in the United Kingdom and Ireland from 12th December 2008. The procedure will only require a petition to be presented to the courts in compliance with the official European legal form, and local courts will then be able to issue an international summons giving the debtor 30 days to repay the debt. If the debt is not paid and no appeal made then the debt can be enforced in any EU country.
This new law is likely to affect property transactions and particularly off-plan property purchases. Any abusive clause in a contract will be invalid regardless of the law applicable to the contract if the consumer (or purchaser) is resident in Spain and the object covered in the contract is situated on Spanish territory. All ambiguous, unclear or inexact clauses will also be interpreted in the consumer’s favour.
This new law is likely to affect property transactions and particularly off-plan property purchases. Any abusive clause in a contract will be invalid regardless of the law applicable to the contract if the consumer (or purchaser) is resident in Spain and the object covered in the contract is situated on Spanish territory. All ambiguous, unclear or inexact clauses will also be interpreted in the consumer’s favour.
1. A clause will be considered to be abusive if it contains stipulations that have not been individually negotiated or practices not expressly agreed which, to the detriment of the consumer, cause a significant imbalance regarding the rights and obligations of the two parties established in the contract. The examples of stipulations that are included in the additional provision to this Law will be considered to be abusive clauses.
2. Abusive clauses shall be null and void under the law and shall not be considered applicable. The part of the contract affected by the nullification shall form part of the contract in conformance with Art. 1258 of the Civil Code and the good faith principle. The judge declaring nullification of these clauses shall integrate the contract and shall be granted the authority to arbitrate with respect to the rights of the consumer or user in the event that the contract remains in force and with respect to the consequences of its ineffectiveness in the event of appreciable damages suffered by the consumers or users. Only when subsisting clauses give rise to a situation of imbalance between the two parties can the contract be declared ineffective.
3. Regulations protecting consumers from abusive clauses shall be applicable regardless of the Law chosen by the parties to govern the contract when closely linked to the territory of a member state of the European Economic Space. In particular, there is understood to be a close link when the professional pursues activities in one or several member states of the European Economic Space, or by any means of advertising or communication such activities are directed towards one or several member states and the contract falls within the scope of these activities. In property contracts, there is understood to be a close link when the property is located in the territory of a member state.
This law was finally passed by Spanish Parliament on 10th May 2007 and aims to unify the legal system of land development throughout Spain. Some of the aspects envisaged are: formal regulations establishing the rights and duties of land owners, citizens and politicians in terms of property development, urban town planning and protected land; greater restrictions on declassifying protected spaces; and new requirements such as compulsory environmental reports for the development of urban areas.
This law was finally passed by Spanish Parliament on 10th May 2007 and aims to unify the legal system of land development throughout Spain. Some of the aspects envisaged are: formal regulations establishing the rights and duties of land owners, citizens and politicians in terms of property development, urban town planning and protected land; greater restrictions on declassifying protected spaces; and new requirements such as compulsory environmental reports for the development of urban areas.
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The main purpose of this law is to guarantee land for social housing, to make territorial and urban development more sustainable, to boost the efficiency of land markets and to fight speculation, increasing accountability and citizen involvement in urban decision-making. This new land law, which was passed in Parliament by majority vote, has the following objectives:
• To regulate the rights and duties of citizens (not just land owners) – it establishes a true basic citizenship statute in terms of land and urban and rural areas to recover the idea of a city being a common space for its inhabitants to use and enjoy
• To guarantee land for social housing - for the first time ever, 30% of new residential land is to be reserved for social housing in a bid to control property prices and to enable low-income earners (who until now have been excluded from the property market) to purchase their first home. The Ley de Suelo, in accordance with Article 47 of the Spanish Constitution, envisages a greater community share of generated capital gains (with the establishment of a 5% minimum and 15% maximum) with subsequent benefits for society. The law enforces the creation of separate public land-based assets which are not to be subject to the corresponding development costs and which are to be used mainly for the construction of social housing. The new law prohibits the sale or auction of these public spaces designated for social housing for more than the land’s maximum recoverable value. The limitations, obligations, terms or conditions of these public land-based assets must be recorded in the Land Registry so as to avoid fraud.
• To increase accountability, community involvement and town-planning legislation – before any plan or agreement is passed it must be submitted to public opinion. Town councils must publish the plans on their websites and have copies available for their citizens. Planning agreements and land exchanges must be approved by the entire corporation. It will no longer be possible for councils to make direct and powerful decisions about citizens’ properties, homes and where they live without their knowledge. Town councillors and leaders will have to publicly declare all their private assets and any activities or business interests that they may have, and if they hold executive positions, they must refrain from engaging in any private planning or construction activity in this municipality for two years after they resign. Any re-qualification involving capital gains must identify all previous owners of the properties in question over the last 5 years, so that we all know exactly who has benefitted from the decisions taken by those who represent us.
• To increase the efficiency of land markets and discourage speculation – the law proposes a new form of assessment whereby land will be valued based on its current state rather than its future prospects so as to discourage speculative classification and retention practices.
• To encourage a more sustainable territorial and urban development by considering land to be a non-renewable, limited natural resource. Land for development will no longer be “leftover” or residual land and it will only be possible to build on the land necessary for town planning - the remainder must be protected. The growth of town and cities will be limited – their development will not be stopped but it will be controlled. To avoid the undesired impacts of new urban developments, town planning will be reviewed as a whole when this new development (either by itself or in conjunction with any other development work passed in the last two years) involves an increase of more than 20% of the population or of the developed land in the municipality or territorial area. When any urban development is being considered, the environmental implications must be assessed beforehand (for new developments, reports covering water supplies, coasts and roads will be form an integral part of the environmental report and will be considered when any decision is made rather than merely being included in the file) and a report on the economic sustainability of the impact that infrastructure construction and maintenance will have for public administrations must be presented. Finally, natural risk maps must be referred to and possibly modified. Protected natural spaces or Red Natura 2000 land may only be declassified for scientifically proven reasons which are inherent to its natural value once the public has been informed and following authorisation from the European Commission.
Here you may find usefull advice, hints, tips and lots of info. regarding wills
1. Who can make a will in Spain?
As a general rule, the testator must be, at least 14 years of age, and legally capable to make a valid will.
2. Types of wills
2.1. Holographic will
Anyone who had come of age can make this type of will.
It shall be written entirely in the handwriting of the testator and shall be dated and signed by him.
It must be verified as genuine before a judge. It is required that the handwriting of the decedent be authenticated by witnesses, who must be the decedent’s closest relatives.
Once it is verified, the judge will enforce the will’s contents. The estate shall be distributed in accordance with the provisions of the will.
2.2. Open will
This is the usual form of will for most people in Spain. It is made before a Notary, who shall keep the original document in his files. The Notary will send a notification of the will to the Central Registry of Spanish Wills (Registro Central de Última Voluntad) located in Madrid.
The Notary may request the presence of 2 witnesses, who can also be required in case the testator is blind or illiterate.
It must be shown that a minor, a person who is blind, deaf, dumb, and the spouse and closer relatives of the testator cannot act as witnesses.
2.3. Closed will
Executing this will you will keep secret your provisions putting them in an envelope.
You shall declare before the notary that your provisions are contained in the envelope and declare whether you have written them by yourself or it has been written by a third person, also you shall declare whether you have signed it or it has been signed by a third person for you.
The notary then seals the envelope and signs it, then he files it and send a notification of the will to the Central Registry of Spanish Wills (Registro Central de Última Voluntad) located in Madrid.
This will cannot be made neither by blind nor by illiterate persons.
3. The Central Registry of Spanish wills
Every will has got a certification number in Spain which is kept on file to the Central Registry of Spanish wills (Registro Central de Última Voluntad) located in Madrid. The certification numbers of all Spanish wills are kept in this place in order to ensure that the estate neither be sold nor transferred illegally.
A legal copy of a will can always be found there. In case you don’t know whether the decedent made a Spanish will or not, or if the will is lost, you can request a certificate to the central registry under the deceased person’s name. If the will exists, the registry will provide you with the number and the name of the notary who made it in the first place,this will enable you to get a copy of the will from the notary.
The certificate can only be applied within15 days after the testator’s death.
4. Revocation of the will
To revoke a will the testator must have the same mental capacity as it is required in making one.
The provisions made in a will can be revoked even when the testator had previously declared his intention of not revoking these.
A will may be revoked by the execution of a new will, which may amend, replace or make ineffective all prior wills. It can also be revoked when the testator declares before a notary his intention to cancel or keep any of the provisions of the will. The alterations shall be made under the same conditions as in making the previous will.
If there is more than one will, only the last one made is legally valid. You can be informed about the number of wills the decedent made by requesting for a certificate to the Central Registry of Spanish Wills.
5. Nullity of will
A will is null and void in any of the following cases:
The “joint will” with provisions agreed upon by two or more persons.
If the testator had no legal capacity to make it.
The will made by a testator who is subject to domination, fraud or duress.
When the testator designates as beneficiary a person who is unknown and cannot be identified.
When the testator designates as beneficiary a person who is not legally capable.
If the testator had revoked the will.
An olographic will is null if it is not filed before the Judge within 5 years after the testator’s death.
A closed will is null if its covers or the envelope containing it are damaged, or if the signatures are deleted… unless it can be proved that the testator damaged his will during a state of mental derangement.
Essential advice on buying property in Spain. The article that you cannot miss.
Once you have chosen a property, you should request a Copy of the Seller’s Title Deed or Deed of Sale. It is possible that the Seller (owner) acquired the property by Sale, Inheritance, Sale by Judicial Auction, Dation in Payment, Exchange, Donation, Marriage Settlement, etc. so it is necessary to make sure that the seller’s title deed is a Public Record, i.e. a Notarial Deed. In Spain, only those documents signed before a Notary may be registered in the Land Register.
If the seller gives you a Private Document you should be particularly careful as it is possible that the person who is offering the property for sale is not the same as the one in whose name the property is registered in the Land Registry. Furthermore, as long as the seller does not register the property in his/her name in the Land Registry it remains open for the enforcement of any type of charges, embargoes, mortgages and even in favour of other people.
Having said that, if you don’t know Spanish you should take the Public Title Deed to a lawyer so that he/she can study it in detail and check the current legal situation of the the property being sold in the Land Registry, i.e. if there are any Charges, Attachments, Mortgages or anything which affects either the value of the property or the ownership of the person who is offering the property for sale.
If the seller gives you a copy of his/her public title deed, you should check whether this title deed has been submitted for registration in the Land Registry. Make sure that the corresponding Capital Transfer Tax (Impuesto de Trasmisiones Patrimoniales) has been paid. Look through the last page of the title deed and see if it has been signed by the Registrar and read any comments.
You should also ask the Seller for a photocopy of the Property Tax (Impuesto sobre Bienes Inmuebles) receipt. Remember that you must provide a copy of this receipt at the Notary’s Office when you go to sign your Public Deed of Sale. The Property Tax is a small Municipal Tax that is paid each year to the Town Hall where the Property is located. The quantity of this Tax varies according to the Rateable Value of the Property which appears on the receipt. The Rateable Reference or Number is also very important. The Notary who authorises the Public Deed of Sale and also later the Town Hall once the public title deed has been signed at the Notary’s Office must both be informed of this reference.
You should also ask the Seller for the last electricity bill, water bill and the Municipal Refuse Collection Tax. If you are buying a house rather than an apartment, you should also ask the Seller for a copy of the First Occupation Licence and the Certificate of Fitness for Habitation for the property.
When the dwelling is located in a building, it is also a good idea to ask the seller or even the administrator of the Owners’ Association for the official building documents, i.e. the Municipal First Occupation Licence (Licencia Municipal de Primera Ocupación), the Architect’s Certificate for Termination of Work (Certificado de Terminación de Obras del Arquitecto) and the Certificate of Fitness for Habitation (Cédula de Habitabilidad).
FOREIGNER’S IDENTITY NUMBER (N.I.E.):
The N.I.E. is a document issued by the Spanish Home Office, and should be applied for at the “Oficinas de Extranjeros” of any National Police Station.
The N.I.E only identifies those foreigners who pay taxes in Spain. For this reason, obtaining the Foreigner’s Identification Number does not mean that you have been granted Legal Residence in Spain; nor does it prove your identity to the National Police. Only the residence card and the work permit prove legal residence in Spain.
To obtain the Foreigner’s Identity Number you must go to the nearest National Police Station and ask for the Oficina de Extranjeros where you will be given a very simple form to fill in. Once you have completed it, you must take your passport, a photocopy of your passport to the Police Station.
You will need to submit your application and you will normally be asked to return within a month to collect the original document. Once you have been given the original document, i.e. the Foreigner’s Identity Number Certificate issued by the Home Office, you will have to go to your local Tax Office to register your Foreigner’s Identity Number so that you can be given your Fiscal Identity Card.
Useful advice: when you go to the National Police Station for the first time, you should take a photocopy of your Passport, your Original passport, . This way, you won’t have to go back and you can fill in the form on the spot and hand it in immediately.
The NIE must either be collected by the applicant in person or by a duly authorised representative. If you want to appoint someone to collect the NIE for you, this should be recorded on your official application when you submit it at the police station. If you want someone else to process your application for you, you can confer Power of Attorney before a Notary or a Spanish Consul abroad. The person who goes to collect your Identity Number for you must show this Authorisation or Power to the staff at the police station.
THE LAND REGISTRY:
In order to be able to buy a property safely and to avoid any type of risk there are certain things which you should understand:
How Land Registries operate in Spain.
First of all, they are open from 9.00am to 2.00pm for the presentation of any public document so that it may be registered.
In the Registries, there is a book called the daybook (libro diario) in which a note is made of the date, the time, the person presenting the document and the type of document, and it is given a number. This book is very important since it establishes the order of priority for those presenting documents at the Land Registry according to chronological order.
Time and Date. If the seller’s creditor presents an attachment order before you present your Title Deed or Public Deed when you go to register the property in your name, the Land Registrar will make a note that the property has been purchased with an attachment order although there is no mention of any attachment in your title deed.
In which case, you should be extremely careful and ask for information about the property you wish to purchase before making any payment. In general, there are three ways to get information from the Land Registry:
a) Simple Information Note (Nota Simple Informativa).
b) Certification of Ownership and Charges.
c) Access to Books.
a) The most common of these is the Information Note, although as it is not very expensive and is given to anyone interested in purchasing a property, the information contained in the Simple Information Note is not complete since it might not mention documents which have since been included in the register or which are waiting to be registered.
b) The safest system is to request a CERTIFICATE OF FREEEHOLD OWNERSHIP AND CHARGES. The Certificates of Ownership and Charges are signed by the Land Registrar and they state who is the owner, if there are any charges on the property and in whose name these charges appear and finally, if any documents have been submitted to the Land Registry from the date of issue of the Certificate which could affect the ownership or the charges on the Property.
c) EXHIBITION OF THE LAND REGISTRY BOOKS is not possible in all the Registries. It is necessary to submit an official application beforehand, and the person in charge of the Land Registry at the time will then show you the book where the property is registered so that you can examine it and take any notes you consider relevant from the page where the registered property appears.
In order to access the information services of the Land Registries in Spain you must fill in an official application with the REGISTER DETAILS OF THE PROPERTY. If the Property does not have any Register Details or if you do not know them, you can request a Certificate of Ownership and Charges specifying the name of the person claiming to be the owner of the Property and National Identity Document or NIF, or in the case of foreigners the Foreigner’s Identity Number or NIE.
Official applications for the Certificates are available for anyone who wishes to request information at the Land Registry. The staff at the Land Registry will help you to fill in the official application if they can, time permitting. Interpreting the information from the Land Register can be extremely complicated and we therefore advise you to consult a lawyer whenever you obtain information since the legal terminology used is quite complicated for anyone who is not an expert in Spanish Law.
If you have decided to purchase a property in the country, a plot of land to build a house on or even an apartment in a building, it is always a good idea, although not essential, to consult the technicians at the Town Hall where the Property is located. In general, the Certification or the consultation at the Town Hall is essential when buying Plots and Pieces of Land to build on, and also when you are buying apartments, flats or houses under construction. This consultation is not necessary for old buildings in urban areas which have already been developed although it is advisable. The consultation is also essential for those houses which are very close to the coast as there may be regulations which affect or restrict the purchasers’ rights. There are two ways to request information at the Town Hall:
- The first is to ask for an Urban Development Certificate (Certificado Urbanístico) to see if there are any problems or charges which might affect the property.
- The second is to meet the technicians from the Town Hall (Architect) in person.
OWNERS’ ASSOCIATION:
In Spain, under the Regime of Owners’ Associations, an association is created for any building consisting of more than two dwellings with different owners. The Owners’ Association exists when there are common areas or elements within a Building which are shared by the Owners living there. Common expenses arising from these Common areas must be shared on the basis of a percentage quota which appears in the Property Deed between all the members of the association.
Law 8/1999 recently altered the Legal Regime of Owners’ Associations and established important new features. One of these makes it necessary, when signing the Deed of Sale, to provide a Certificate signed by the Administrator Secretary of the Owners’ Association which has been approved by the President to prove that the property is up to date with all the common expenses mentioned above.
Without this document, the Notary will not authorise the Public Deed of Sale except in the case of the purchaser relinquishing his right to be informed of the debts weighing on the property.
You must bear in mind that if you purchase the property without checking with the Owners’ Association, you will be responsible for the previous owner’s debts until the end of the current year and for the one immediately prior to the purchase date .
For his/her part, the Seller is obliged to inform the owners’ association of the sale of the Property and failure to do so may lead to joint responsibility for the quotas of the Owners’ Association which have been accrued after the transfer of the property, in such a way that the Owners’ Association can judicially claim these expenses both from the new purchaser as well as from the previous owner who did not inform the Owners’ Association of the sale of the property.
It is also advisable to ask for a copy of the Statutes of the Owners’ Association and to read them very carefully to see if there are any regulations which restrict your rights as an owner or which may negatively affect you in any way. You should also make sure that the property which you are purchasing and all its elements or annexes (terraces, courtyards) are exclusive areas which belong to the property and which do not have any type of restrictions or belong to the Owners’ Association. You should also examine the Deed of the Horizontal Division of the Complex.
PRIVATE CONTRACT OF SALE OR PUBLIC DEED
When you have decided to purchase a property, you need to ask yourself how long will it take to raise the money necessary to pay the purchase price in full.
Once you have thought about this and if you consider that you may need one or two months or even more, it may be necessary to draw up and sign a Private Contract of Sale in order to Reserve the Property and avoid it being offered to others. This document will fix a definitive price for the property which cannot be changed by the Seller at a later date. In general, there are three ways to purchase a property by means of a Private Document:
a) The Precontract or Promise of Sale/Purchase
b) The Call Option
c) The Private Contract of Sale/Purchase
It is important to understand the differences between these three ways so that you can choose the one which best suits you. In order to avoid confusing technical explanations, we will provide a simple definition of each of the types of contract, together with the advantages and disadvantages of each one when compared with the others.
A) The Precontract or Promise of Sale/Purchase. In this contract, the parties have agreed on the essential elements of the sale such as the object (house, garage, etc.), the purchase price and the date on which the Public Deed of Sale will be signed. In order to reserve the property, a quantity of money is handed over and this is called the deposit or down payment, and the signing of the Deed of Sale is postponed until a later date. The Contract or Operation of Sale will only be complete once the Purchase Price has been paid in full and this normally takes place when the corresponding Public Deed of Sale is signed before a Notary. You should remember that the Spanish Civil Code establishes that once the deposit or down payment for the contract has been handed over, the parties are bound in the following way: if the Seller sells to a third person or refuses to sign the Public Deed of Sale, he/she must return the deposit plus compensation for damages which is the same as the amount which the Purchaser handed over as the deposit or down payment If on the other hand, the Purchaser decides not to go ahead with the Purchase, he/she will lose the sum handed over which will be kept by the Seller as compensation for damages.
B) The Call Option. In the call option, a sum of money is handed over. However this is not considered as payment towards the price of the purchase nor as a deposit. In the Call Option the payment is called the Call Option Premium and establishes a preferential right of purchase before any other person for a certain period of time. The parties are completely free to agree the quantity of the premium to be paid and this document can even be signed before a Notary Public and registered in the Land Registry, which is advisable when the Premium is high and the time period for the Call Option is quite long. In this way, when someone is interested in purchasing the property, if they request a Simple Information Note from the Land Registry they will see that someone has a preemptive right to purchase. In practice, people who sign a Call Option never submit it as a Public Document nor register it with the Land Registry since this requires a considerable sum to be paid for the Capital Transfer Tax. In general, the Call Option can be an interesting option when fairly large property operations are carried out on plots of land or in buildings and some time is needed to raise the necessary money to complete the Contract of Sale. The Call Option Contract should establish very clearly how the notification is to be made by the optant of his/her of his preemptive right to purchase since once the Seller has been notified of the Purchaser’s Call Option, the Contract becomes a Contract of Sale, since there is full agreement between the parties.
C) Private Contract of Sale. By means of this contract the parties have reached full agreement about the object, the price and the method of payment. There are no further discussions or promises since there is a strong intention to buy the property. In this case, if the money is available, the most advisable thing is to sign the Public Deed of Sale before a Notary without delay so that it can be submitted to the Land Registry. However, in certain circumstances, it may be necessary or convenient for it to remain as a Private Document for a certain period of time. The Contract of Sale must be perfectly drawn up placing special emphasis on how the Contract of Sale can be rescinded in the case of nonpayment, sale to a third party, charges or encumbrances existing on the property which prevent it being freely purchased. It is a good idea for the subsequent conditions of the Contracts of Sale to be drawn up by legal professionals who should consider the circumstances of this operation. The Private Deed of Sale must always be settled of the Capital Transfer Tax although most people prefer not to do this until they have signed the Public Deed of Sale. However, you should be aware that nonpayment of the Capital Transfer Tax and keeping a sale as a Private Document for too long a period of time can lead to problems which in certain cases may be irremediable since as long as the Land Register continues to be open and the property registered in the name of the Seller, charges and encumbrances may be registered which could affect the Property. If any problems arise during the sale and the Capital Transfer Tax has not been paid, it will be very difficult to prove both that the date of the private document is as it states in this document and also the authenticity of the signatures of the intervening parties, and it will be necessary to resort to the Courts and Judicial System of this country requiring additional proof as to the identity of the parties, the signatures, the payment of the price and the date of the contract. The advantage of the Private Contract of Sale between two parties over the two previous ways is that any dispute will be resolved in a Court of Justice whereas this is not necessary in the other two cases.
Lawyers are the only qualified professionals in our country who can defend the interests of others in Courts of Law.
However, the Lawyer’s ability to defend his/her clients in a Court of Law does not restrict him/her to solely offering advice services but of no lesser importance are his/her powers to prevent risks; this is one of the lawyer’s main jobs. When you contact the lawyer, you should value this professional’s experience, your ability to communicate with your lawyer in your own language is essential.
Before asking the lawyer to do anything, you should agree to the price for the lawyer’s professional services. Once you have reached an agreement with the lawyer, you will be asked to provide a certain sum of money to cover the fees and charges which the lawyer will have to pay as a result of the professional job which you have asked the lawyer to undertake.
Once you have paid the lawyer this sum of money and so formally contracted the lawyer’s professional services, your lawyer will deal with all the formalities relating to the sale thereby ensuring that as a result of the lawyer’s professional experience and ability the sale will go through as satisfactorily as possible for the purchaser and without any risk. Lawyers who badly advise clients or who do not foresee any risk which is obvious or evident in any Public Register are liable for any damages which the client may encumber.
Your lawyer will be responsible for drawing up the Private Contracts of Sale, obtaining Certificates and Information Notes from the Land Registries, checking the Seller’s documentation and giving advice when it comes to signing the Public Deed of Sale. They can even intervene on your behalf with Power of Attorney.
Jose Escobedo
Abogado - Lawyer
jose@escobedo.net
C.C San Eugenio local 81
Playa de las Américas, Tenerife
Foreign property owners often do not realize that they haven´t got all the right documents for their property until they come to sell ... so why wait until the last minute to check through your papers.
If you are a home owner, take a minute to check through our checklist below and avoid problems and delays when it comes to selling your property. These are the property documents and information that you must have when you legally purchase a property:
1. TITLE DEEDS (COPIA AUTORIZADA DE LA ESCRITURA): many foreign owners confuse the hard copy of the deeds (ESCRITURA) with the authenticated photocopy (COPIA SIMPLE). You must have the original title deeds which have been stamped and signed by the Property Ownership Registry (Registro de la Propiedad) and the Tax Office (Hacienda)
2. CEDULA DE HABITABILIDAD (certificate of occupancy): you need this document to contract electricity, water and gas supplies, and it proves that the property is legal and habitable
3. CATASTRO registration (Spanish fiscal land registry)
4. NIE (identity number for foreigners)
5. Proof of payment of taxes: FORM 600, FORM 211, FORM 214 and Plusvalia (capital gains local tax)
6. NEW DEVELOPMENTS: insurance policy for major defects on new constructions (10 year cover)
7. Architect´s certificate of completion of building works
8. Complex statutes
9. Payment of local taxes: refuse collection and IBI (annual Spanish property tax)
10. Annual taxes (form 214). Wealth and Income tax
Finally, it is a good idea to do a search for your property on the Property Ownership Registry to make sure that there are no outstanding taxes or debts to be paid. You should remember that any tax liabilities must be cancelled within 4 years of purchase so that your property has a clean record.
Jose Escobedo
Abogado - Lawyer
jose@escobedo.net
C.C San Eugenio local 81
Playa de las Américas, Tenerife
Some of the situations described below may seem pretty obvious for you but you would be surprised of how many foreign investors fall into these common pitfalls
1.-Paying a deposit for a “Traspaso” of an established business without a proper legal and binding contract. A receipt it is not enough.
2.-Paying a deposit without a thorough search on the business: Taxes, Social Security, trading licenses
3.- Asking for a copy of the rental contract or Title Deed of the commercial premises
4.-Contact details of the vendor (owner or landlord) must be requested to the agent.
5.-Setting up a Spanish limited company from day one (50/50 owned and joint administration - 2 signatures required) may not be a good idea
6.-In Tourist areas certain activities require special administrative permissions (i.e. pubs, excursions, diving and sea activities, holiday lets, timeshare etc).
7.- Long term rentals may require registration in the land registry office to protect your business for bank repossession on unpaid mortgages (foreclose on an landlord´s mortgage).
9.- Your partners non resident beneficiaries own the deceased partners´ shares on a Spanish limited company by law. They may not be interested or involved in running the business and difficulties may arise to make important decisions that affect the business.
10.- The first dispute in a 50/50 owned company may paralyze the same. This situation may lead the partners to the dissolution and liquidation of the company. The procedure to wind up a company is complicated and very expensive under the Spanish law.
There are many other economic and fast solutions to start a business than a Spanish limited company. Ask first and pay later.
Jose Escobedo
Abogado - Lawyer
jose@escobedo.net
C.C San Eugenio local 81
Playa de las Américas, Tenerife
10 simple steps to avoid legal problems in Spain.
A) DOCUMENTATION REQUIRED
I will now try summarize the necessary documents and precautions to be taken in case of sudden decease of a non resident owner of a property in Spain:
1) Submit an inventory of assets to the Spanish tax office. You have to pay the death duties in Spain (inheritance tax) within six months after the decease date otherwise a surcharge will be imposed consequently prepare yourself to lodge an inventory of properties and assets to the Spanish tax office within the said time scale.
2) Get a Death certificate – legalized and translated officially with the Apostille of Foreign Office in London is a requirement in Spain
3) Get an authenticated photocopy of the Spanish Will if available
4) Alternatively an authenticated and legalized copy of UK Probate will be required.
5) A Copy of the Title Deed is also required
6) Last receipt for Rates (Impuesto sobre bienes inmuebles)
7) With all the above docs you will have to sign an Inheritance Deed in Spain consequently, this is the moment to contact a local solicitor.
8) Power of attorney to the solicitor will be required if you are not coming to Spain to sign the abve mentioned document
9) NIE numbers (Spanish Tax payer- identification numbers) of all beneficiaries of th estate of the deceased.
10) Your solicitor will take care of getting a Spanish Certificate of Last Will
ADVICE: It is not convenient to sign any purchase/sale undertaking contracts untill all the above documents are secured and made available to the Spanish authorities. This will prevent many legal problems with potentil buyers.
B) INHERITANCE TAX
I.- APPLICABLE LEGISLATION.
Law 29/1987 (Law 29/1987), of 18 November on Inheritance and Donations Tax.
Royal Decree 1629/1991 (Real Decreto 1629/1991), of 8 November, approving the regulations on Inheritance and Donations Tax.
Law 21/2001 (Ley 21/2001) of 27 December, regulating the tax and administrative measures of the new system of finance for Autonomous Communities under the Common System and Cities with Autonomy Statutes.
II.- TAXPAYERS.
All heirs, legatees and beneficiaries who do not have their usual residence in Spain are liable to this tax; residents in Spain are also liable for this tax when the person making the bequest (deceased person) did not have their habitual residence in Spain.
Usual residence is determined in accordance with the Income Tax Regulations (Legislative Royal Decree 3/2004 (Real Decreto Legislativo 3/2004).
III.- SELF-ASSESSMENT FORM.
As a general rule, the form to be used is Form 652 “Inheritance Tax. Simplified Return”, which can be obtained from the Tax Agency Branch in Madrid, Sale of Forms section (Venta de Impresos) at C /. Guzmán el Bueno, 139, or can be downloaded directly from the Tax Agency website (http://www.agenciatributaria.es / templates and forms / returns / other taxes).
IV.- WHERE TO PAY.
When tax is payable, the self-assessment deposit document should be taken only to one of the financial institutions that accept tax payments (Banks, Building Societies and Credit Co-operatives), where you can pay in cash or by debiting your account.
The tax identification labels provided by the Tax Agency must be attached to the self-assessment form.
If a taxpayer who is required to make payment does not have a Tax Identification Number (NIF), they must take the following steps before requesting the labels.
Non-resident foreign national taxpayers:
They must apply for a Foreign National’s Identity Number (N.I.E.), either from the Police General Directorate or a Police station that processes foreign nationals or from one of the authorised Tax Agency offices.
The documents required to apply for an N.I.E. are:
An authenticated photocopy of the passport of the taxpayer (the heir).
A photocopy of the Deeds of Acceptance of the Inheritance.
A N.I.E application form.
In the event of a taxpayer acting through a representative, the authorisation or power of attorney.
V.- WHERE TO FILE THE RETURN:
Once the tax has been paid, in cases where there is tax to pay, or even where the tax due is negative, Form 652 for self-assessment should be sent with the relevant documents as shown in the next section to the Special Branch of the Tax Authority of Madrid, Document Reception (Recepción de Documentos). Guzmán el Bueno,139, 28071, Madrid).
VI.- DOCUMENTATION TO PRESENT.
Compulsory documentation:
The original and a certified copy of the Deeds of Acceptance of the Inheritance.
In the absence of this, the Inventory of Assets and Heirs, in duplicate, showing the identifying details of the person making the bequest and the heirs, an address for correspondence, a detailed list of the assets and rights included in the inheritance with the value of each at the date of death, together with any charges, debts or costs, the deduction of which is being sought.
A copy of the Death Certificate.
A copy of the Certificate from the General Registry of Wills and Testaments.
A copy of the Will or the Declaration of Heirs.
Other documentation to provide, if relevant:
A copy of the IBI (Property Tax) bill and of the deeds of acquisition of the property, or in the absence of this the Property Register Certificate.
A copy of the insurance contract or a certificate from the insurance agency.
A bank certificate showing the balances in all accounts and deposits and/or securities deposited at the date of death.
Documentary evidence of the costs, debts, taxes and charges that might be deductible, together with the age of the heirs.
A copy of the passport, identity card or certificate of Foreign National’s Identity Number (NIE) of the heirs.
Copy of the documentation of the vehicles that are the object of the inheritance (technical specifications, driving licence).
IMPORTANT NOTICE
If the documents were issued by civil servants or authorities in other countries, they must be accompanied by the Hague apostille and a sworn translation of the documents.
VII.- FILING DEADLINE.
In the case of acquisitions resulting from death, including those of beneficiaries of life insurance policies, the filing deadline is 6 months from the date of death.
VIII.- APPLICATION FOR THE ADMINISTRATION TO CALCULATE THE TAX PAYABLE.
If the taxpayer does not choose the option of self-assessment, they may opt, in the period indicated in the previous section, to request that the Administration calculates the tax for them.
In this case, they should send the form requesting that the tax be calculated, accompanied by the documentation detailed in section VI, to the following address: Delegación Especial de Madrid de la Agencia Estatal de Administración Tributaria. Oficina Nacional de Gestión Tributaria. Sucesiones no Residentes. C/ Guzmán el Bueno, 139. 28071 Madrid.
Jose Escobedo
Abogado - Lawyer
jose@escobedo.net
C.C San Eugenio local 81
Playa de las Américas, Tenerife
Information available at http://www.aeat.es (translated and summarized by http://www.escobedo.net)
New legislation has been passed in the Canary Isles (Decree 13/2006 dated 8th February - B.O.C. 43, 2.3.2006) regarding living wills (testamento vital).
This law will allow all individuals in the Canary Islands to prepare a letter which will be given to doctors and hospitals with instructions regarding their medical treatment and care that they wish to receive in the case of illness or injury. This document will be especially useful in situations where it is not possible for you to express your wishes. There is now a registry of living wills in the Canary Islands. If you decide to write a living will, you can appoint representatives to carry out your wishes and these instructions will become an essential guide for your doctors. The procedure is quite simple but it is always a good idea to consult a lawyer. It is not essential to have a living will as normally your relatives and doctors make any necessary decisions for you, but it can be a good idea because of the language barrier and because of legal and cultural differences which make communication difficult. All foreigners staying in Spain should at least consider the possibility of making one.
Jose Escobedo
Abogado - Lawyer
jose@escobedo.net
C.C San Eugenio local 81
Playa de las Américas, Tenerife
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