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Buying A House
The best way to purchase property is by using a professional real estate company. There are many companies in Spain selling property, but you have to make sure you have a good one, as many people want to grab a piece of the action in this hot market.

Secondly you should get a good lawyer, who will check for any encumbrances, debts, mortgages, etc. He or she should inform you of their fees. Customary is 1% of the purchase price of the property. Do not try to do this yourself, as it will only lead to disappointment or even disaster. When you have found the property you want, a contract will be drawn up by your agent and you should pay a 10% deposit. The contract then needs to be signed by both parties. There should be a completion date on this contract and on this date the final payment should be made in front of a Spanish Notary.

The property is now yours and the title deed (Escritura Publica) needs to be registered in the Land Registry Office.

For information on buying property in the Canary Islands click on the banner at the top of the page

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Costs Of Buying
A House On top of the purchase price you should allow another 10% on top for transfer fees. These charges should be divided between buyer and vendor as follows:

Buyer Pays: Transfer Tax or IVA (VAT) of 7%. Registration fees to change the deed to your name € 120,-to € 300,- Notary charges for the first and any further copies of the title deed, which is on a sliding scale. Average on a property of € 360.000,- is € 360,-. If there is a mortgage on the property, you will need an extra deed and this will incur an extra charge.

Vendor Pays: Plus Valia Tax - A municipal tax based on the official increase in the value of the property since the last transfer. The town hall will assess the value. Agent Fees Annual Costs - Make sure you receive copies of all the bills, as they should have been paid up to date. The Real estate tax or IBI (Impuesto Sobre Bienes Inmuebles), Rubbish Collection (Basura), Community charges, etc should be checked by your lawyer, as any debts are attached to the property rather than the person.

As a non resident you are liable for 2 annual property taxes, but this is a very complex issue and therefore we recommend you to use a fiscal adviser.

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Building A House
More and more people are building their dream home in Spain as it is a cheaper alternative. When building a house all the same rules of buying a house apply and more. There are lots of rules and restrictions on land in Spain, such as the required size before you can build and green zones. The best way again is getting a good lawyer and using a professional real estate agency.

When choosing a builder it is advised to go and have a look at properties build by them, as this gives you a good indication of how good they are and what materials they use.

Make sure you do not pay the whole amount for the house in one go as it is best to pay in parts. First the Purchase of land, then foundation, walls and roof and the finally the finished house.

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Renting A House
There are thousands of apartments and villas for rent in Spain. If you are planning to live in Spain it might be a good idea to rent a property in the area where you want to live. This way you have the opportunity to make a good survey of the area.

There are long term (vivienda) and short term contracts (temporada). The short term contract should state the duration of the contract, specify the amount to be paid, manner of payment and the amount of the deposit, if any. The long term contract often contains provisions for the tenant to pay community charges, real estate tax (IBI) and even rubbish charges.

Be careful with these charges as they soon add up. Strictly legal you will find that these charges are the responsibility of the owner of the property and even after signing the contract you can contest it and you will surely win the case.

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Community Regulations

When you have purchased a property, you will become a voting member of a community of co-owners (communidad de propietarios), unless it is a freestanding villa on its own grounds and it is not part of a community.

Just by signing the purchase contract you become a member of this community, even when it has not been mentioned by the vendor. The Spanish Law of Horizontal Properties (Ley de Propiedad Horizontal), states that any cluster of attached houses or building of apartments, must have such a legal body to control its management.

Many urbanizations of detached villas have also used these facilities to control the upkeep of their properties, and the payments of the taxes. These bodies have the right to put a lien on your property, if you do not keep up your payments to the community. The statutes will state exactly what your percentage of the community is depending on the size of your house or flat (cuota de participacion). If, like many owners of holiday properties in Spain, you are not in Spain when there is an annual meeting held you can appoint a proxy to vote for you. This is called a 'poder', which is the same as a power of attorney.

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Car Matters
To answer the main question: No, officially you can not drive a foreign plated car in Spain forever. The maximum time of use per annum is 6 months and the other 6 months you need to park the car in a garage.

This however is rather hard to check when you are an European tourist. When you are from the EU you can drive in Spain on your foreign driving license without an international driving license. Non-EU members are the only ones who have real advantageous points when they purchase a car on tourist plates and stay as a non-resident. You do not have to pay the 16% IVA (VAT) and neither do you have to pay the Spanish special vehicle registration tax of 12 %. Nice saving of 28%.

Europeans can avoid paying the 12% special vehicle registration tax as Spain is the only country in Europe that has this tax. When buying your car all you have to do is request this and the car will be fitted with a tourist plate, rather then a full Spanish plate. You will have to renew this plate every year, which will cost you approximately 150€. You can repeat this as many years as you want.

Buying a car on Spanish plates can save a lot of complications and has certain advantages, such as easy to resell and payment in Spanish currency. The rules are that you have to have a residency or own a property or be able to present a certificado de empadronamiento (certificate to show that you are a registered inhabitant of the community).

If you are a non-resident driving through Spain, you may find that the Spanish police are empowered to demand payment on the spot for any traffic violation you commit. They will impound your vehicle, if you are not able to pay up. This is all legal as their orders are to ensure that the fine will be paid.

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Money Matters
The most important message here is that yes, you can take out all the money you have brought into Spain and more, if you have made money by selling a property or by investing. There are forms to fill out, taxes to pay and delays, but you can do it.

If you invest in the Spanish stock-market as a non-resident, you will not even be taxed on your profits in Spain. When you sell your property you can change the Euros to the currency you want and sent it to your home account without any restrictions. You will have to pay 35% capital gain tax, but you can get more info on that in the next chapter Tax Implications.

If you want to buy property and obtain a loan from abroad, you can do this without any restrictions up to € 1.500.000,-. The only condition is that the lender is not based in a tax-haven according to the Spanish government list. Transactions through banks are completely free up to € 600. Anything above this amount must be declared by filling in a form at the bank. This only takes a minute.

Both residents and non-residents may open accounts at Spanish banks. They are distinguished from each other as different regulations apply to transfers for the resident and the non-resident. If you are a resident, 25% of your interest earnings are withheld and paid to the Spanish taxman in your name, just the same as for the Spaniards. The interest on your account is only 0,1% of the average balance and the bank charges are one of the highest in Europe. It is recommended to check what the charges are, so as not to get any surprises. When you get your pension send to your Spanish account, make sure they do not charge you exchange commission for this as this is against European Union Banking regulations.

The easiest way to invest your money in Spain, is by putting it on deposit with your bank. The interest paid depends on the amount invested and the time the deposit is held by the bank. There are more intricate systems of investing money, for example by opening an offshore company and buying properties through that company. For this it is recommended to seek expert advise.

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Tax Implications
Spain has made a major design change in its income tax system to take the country into the new millennium. A lot of the rates have dropped, especially for low incomes. The Spanish tax ministry, which is known as the Agencia Estatal de Administracion Tributaria, but still called "Hacienda" by many, has been making the tax-payer's burden a lot easier, as it is now a lot more user-friendly, but this does not mean that Big Brother is not watching you.

Let's take a look at your possible tax obligations in Spain. When you stay in Spain for 183 days or more in one calendar year, you become legally liable for Spanish income tax, whether you are a formal resident or not. When you take out a residency, you become liable on your total world wide earnings, although regulations provide relief on double taxations. (Pensioners who have paid tax on their income in their home country do not have to pay again in Spain). Even if you are not a resident of Spain and spend less than 183 days in the country, you are still liable for income tax on any Spanish income you might have, such as letting out your flat. You can read all about these principles in a Spanish Ministry of the Treasury booklet, called Taxation Regulations for Foreigners. (Publication F-9).

If your world-wide income is more than € 7.225 per year you will have to make a tax declaration. It is best to consult a tax adviser, either a asesor fiscal or a gestor. They will charge you a fee from € 60 up, depending on the complexity of your tax return. If you are a resident and you have two homes in Spain you will have to pay the property owners imputed income tax, where 2% of the value of your 2nd home is added to your income. You will then have to pay income tax on the total. If you are not a resident you will have to pay this tax on your 1st home. On top of this there is the patrimonio tax, which is the wealth tax.

Residents and non-resident property owners are liable for this. Up to € 161.380, this is only 0,2 % of the value of the property. When you sell your property and you are a non-resident, you will have to pay 35% on the capital gains from the sale of the property. As a resident you are liable for this tax as well, but there are a couple of breaks. If you reinvest the money in another property as your principal residence, you will get relief from this tax up to the amount reinvested. The remainder of the profit will be taxed as an 'incremento de patrimonio', a capital gain, as part of your income. The maximum percentage, however, can not exceed 20%. In order to make sure that the non-resident property seller actually pays his capital gains tax, instead of taking the money and run, Spain has put into force a requirement that 5% of the declared purchase price must be deposited with Hacienda when property is sold by a non-resident.

As a last note: Use expert advise at all times, as to avoid disappointment and fines by the government.

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Business Matters
If you are a EU citizen, you can work and start a business in Spain under the same conditions as the Spaniards, since January 1, 1992. You still need to get the 'tarjeta comunitaria', the "community card", which is a work and residence document. The fees for this card range from € 150 to € 300 and it is € 180 for starting your own business.

When you are a EU worker, Spain cannot refuse a residence or work permit to any of your family members, even if they are non-EU. All of these rights are specified in EU Regulation 1612/68. Employees require a work permit called 'cuenta ajena', which means "on another person's account". Those starting on a self-employed basis need another sort of permit, called 'autonomo', or 'cuenta propia', "on your own account". It is best to use a 'gestoria' or a lawyer to do all the paperwork. This will cost you some more money, but it is worth it, especially when you are starting a business.

If your Spanish is reasonable, you can do it yourself. Obtain the forms from your local police station or 'Delegacion de Trabajo', fill them out and wait to see what happens. All in all the costs are quite high, as you have to pay your first month to the social security, the tax and the IAE, (Impuesto de Actividades Economicas) or business license. When you employ other people you will have to put them into the social security system and pay them at least the minimum wages (salario minimo interprofesional). The law also stipulates a 40-hour working week.

There are a lot of rules in regards to contracts, time off, extra payments, etc. It is best to ask your accountant to look into all these matters prior to employing somebody, as you could get fined by he government, or taken to court by a former employee, because he has been working under a indefinite contract. Do remember that the employee is extremely well protected in Spain.

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Family Matters
Let's start with birth. A baby born in Spain needs a Spanish birth certificate (Extracto de inscripcion de nacimiento), regardless of the nationality of its parents. You can register the baby at the 'Registro Civil', of the town where the birth took place and they will tell you what more you will have to do. With this certificate you can then go to the consulate of your home country in Spain and report the birth.

When a death occurs in the family, it is always a trying time, but it should not be more difficult in Spain than in your home country. It is always best to plan ahead by arranging your Spanish will, choosing a cemetery, contacting a funeral director, take out insurance and sharing all the arrangements with your partner and those close to you. The doctor in the hospital, or the physician at your home will prepare the death certificate, which must be officially issued by a Spanish judge. As in most other countries the funeral director will be aware that the family is distraught when a loved one has died. They will take over all the responsibilities including the paperwork. Often one phone call is enough to start the process.

It is perfectly possible to be married in Spain. There is quite a lot of paperwork, however. Some evidence must be provided that both parties are single, and birth certificates are also required. A divorced person must present a 'Certificado de Ley' prepared by a lawyer and legalized by a Spanish consul in the country of origin to the effect that there is a valid divorce. These documents must be officially translated into Spanish and accompanied by the certificate of apostille, which verifies them.

Since 1981 it is possible to get a divorce in Spain. Even foreigners who have been married in other countries can, if they are now residents in Spain, obtain a divorce here, which will be recognized in their home country. You will have to have been married for one full year, before a petition for divorce will be heard. You will need to formalise this before a notario, and you will need a lawyer who will help you with the financial arrangements.

If you want to change your nationality, you will find that a lot of complications will arise, as Spain does not recognize dual citizenship. He whole process takes up to a year, and you will do well to have a skilled gestor or abogado handle your application.

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Making a will
It's surprising how few people have made wills disposing of heir assets when they die. There are many foreigners of advanced age residing in Spain, and international complications can arise if you do not have a Spanish will. There are four important points to bear in mind in connection with Spanish wills:

1. You need to make a Spanish will disposing of your Spanish property in order to avoid time-consuming and expensive legal problems for your heirs. You can make a separate will disposing of assets outside of Spain.

2. As a foreigner, you will find that Spanish authorities do not oblige you to follow the Spanish law of compulsory heirs, in which you must leave two-thirds of your estate to your children. You can leave your estate to whomever you choose, but you will be subject to Spanish inheritance tax, which is high when property is left to non-relatives.

3. There are very few ways around Spanish inheritance taxes and these legal ways require careful advance planning. Spanish law provides no large exemption from inheritance tax, such as Britain's £ 215,000. The tax is due after the first € 15,060.

4. However, if you are an official resident of Spain leaving your property to a spouse, you may be eligible for a 95% reduction in the value of the property for inheritance tax calculation. This is not available to non-residents.

It is best to find a very good lawyer who will be able to explain the inheritance tax implications, as they are very intricate. Otherwise you might find that instead of leaving the majority of your assets to your loved ones, more than half will go to the Spanish tax department.

Legal representation
Who are the advisers we keep telling you to consult? What can they do for you? They will be able to save you from a lot of unforeseen pitfalls, as long as you get a recommended professional (ask a veteran resident for a good one, or click on one of the links to the right of this page).

We will explain what they are called in Spanish and what they can do for you.

Abogado (lawyer): The lawyers are all trained professionals whose job it is to serve their clients within the law. Many of them, especially on the Costas, will be able to speak English or German. If you are purchasing property in Spain, starting a business, attempting to get a work permit, investing in a Spanish business, or making a Spanish will, you will need a Spanish lawyer to advise you.

Gestoria (Spanish institution licensed by the government to deal with all the red tape): The gestor is the middleman between you and the bureaucracy. They do not have any official powers, but has to pass an exam and is licensed by the authorities as a professional. When you are standing in a line to hand in your paperwork for your 'residencia' and a man just passes you, goes behind the counter and is helped straight away, it is probably the gestor. They do not get this fast service because they pay bribes, but because they save the clerks a lot of time.

Asesor Fiscal (fiscal adviser or chartered accountant): If you have made any investments in Spain, need to pay Spanish income tax, or you are starting a business, you should consult an asesor fiscal. He can save you money and keep you on the right side of the ever-changing tax laws. You can also use him as your fiscal representative, if you are a non-resident property owner. It is no longer obligatory to name a representative, when you have one property, but if you have more than one, you must name a legal representative.

Notario (Notary or public official): Their mission is to make sure that certain matters are officially noted and registered, such as wills, purchase agreements and various other sorts of contracts. The notario receives fees for these services, but you cannot instruct him/her to act for you in the same manner as your lawyer or accountant. These fees are fixed by law, ranging from say € 60 for a will to € 300 for a property sales contract under € 60.250.

Administrador de Fincas (property administrator): This is a licensed professional who will do the administration of your property, such as seeing that the taxes are paid, managing rentals and presenting you at owners meetings.

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Local authorities
In your home country you are probably at ease with the various local authorities, such as the town hall, the police, the courts, the social security system, etc. Spain is organized in very much the same way, all you really need to know, is where to go to.

The 'Ayuntamiento' (town hall) is very important, as this is where you will pay the circulation tax (permiso de circulacion) for your car and where you have to apply for your building license if you want to build a house, register as an inhabitant of the town, pay your taxes for your property and many other important things.

When you are registered as an inhabitant of the town you will be able to exercise your right to vote and you can even be elected yourself. The people working in the town hall are generally very friendly and helpful and will assist you with any problems you might have.

If you need more specified information, we recommend that you buy one of the many books available on Spanish law and taxes.