Spain’s Plusvalía Tax Explained

The one-time charge is like a capital gains tax and some rules around the levy changed in November

BY V.L. HENDRICKSON  |  ORIGINALLY PUBLISHED ON DECEMBER 2, 2021  | 

MANSION GLOBAL

The plusvalía tax is charged by local municipalities when urban land changes ownership.

1. What is Spain’s plusvalía tax?
2. The plusvalía tax is a one-time local duty paid on land that is sold or inherited in Spain There have been major overhauls to the levy in the past few months by Spanish authorities.  

The plusvalía tax is charged by local municipalities when urban land changes ownership, according to Michael Davies, a lawyer and founder of Davies Abogados-Solicitors & Barristers, which has offices throughout the country. It is charged on the value of the land alone, not the buildings on it. 

Rates for the tax are determined by municipalities and vary greatly between regions. The amount a homeowner pays is based on the increase to the official, or catastral, value of the property during their ownership. The final tax amount is determined using the catastral value and the amount of time the seller has lived there. 

The tax can range from from “€500 [US$566] for a small flat owned for a couple of years to €8,000 or €9,000 for a villa on a large plot of land that has been held for many years,” Mr. Davies said. 

When a property trades hands, the seller usually pays the tax, but if it is a gift or inherited property, the beneficiary will see the bill. The plusvalía tax is separate from capital gains tax, which is collected by the federal government. 

At the end of October, the way the amount of the plusvalía tax determined was deemed unconstitutional by the Tribunal Constitucional de España, or Spain’s constitutional court. Just a few weeks later, on Nov. 8, new rules around the duty were released by the country’s Council of Ministers. 

For starters, if there is no gain in the value of the land, no tax will be charged, according to a statement from the council. 

The tax can range from from “€500 [US$566] for a small flat owned for a couple of years to €8,000 or €9,000 for a villa on a large plot of land that has been held for many years,” Mr. Davies said. 

When a property trades hands, the seller usually pays the tax, but if it is a gift or inherited property, the beneficiary will see the bill. The plusvalía tax is separate from capital gains tax, which is collected by the federal government. 

At the end of October, the way the amount of the plusvalía tax determined was deemed unconstitutional by the Tribunal Constitucional de España, or Spain’s constitutional court. Just a few weeks later, on Nov. 8, new rules around the duty were released by the country’s Council of Ministers. 

For starters, if there is no gain in the value of the land, no tax will be charged, according to a statement from the council. 

When there is appreciation, property owners can choose one of two ways to calculate the tax. They can either pay duty on the difference between the purchase price and the sales price or use an equation based on the cadastral, or official, value of the property and a coefficient determined by the number of years they have lived there, the council said. 

For the latter, the tax can be determined by multiplying the cadastral by the coefficient, according to the council. Rates will still vary from region to region, but currently range from 0.08% to 0.45%. They will be reevaluated annually. 

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