When buying property in Spain, many foreign investors focus on the purchase price — but overlook the additional taxes and fees that significantly affect their total acquisition cost. Two of the most important are VAT (IVA) and stamp duty (Actos Jurídicos Documentados, or AJD).
These taxes vary depending on the type of property (new or resale), its use (residential, commercial, or land), and your status as a non-resident investor. Understanding when each tax applies — and how much you’ll need to pay — is essential for accurate budgeting and investment planning.
In this article, we break down how VAT and stamp duty work in Spain, what rates apply, and how these taxes impact buy-to-let investors.
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1. What Is VAT (IVA) in Spain?
VAT in Spain is known as IVA (Impuesto sobre el Valor Añadido), and it applies to:
- New-build residential properties
- Commercial properties
- Land purchased from a developer
- Off-plan purchases from a developer or builder
It does not apply to resale (second-hand) properties between private individuals.
Key distinction: VAT is paid only when buying from a developer or builder — not in private sales of previously owned properties.
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2. What Is Stamp Duty (AJD)?
Stamp duty in Spain — officially called Actos Jurídicos Documentados (AJD) — is a tax applied to notarized documents that record certain legal transactions. It is commonly charged on:
- New-build property purchases
- Commercial real estate transactions
- Mortgage registrations
AJD is calculated as a percentage of the declared purchase price or mortgage amount and is paid together with VAT on new properties.
It also applies (at lower rates) to resale properties when a mortgage is registered.
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3. VAT and Stamp Duty Rates in Spain (2024–2025)
| Property Type | VAT (IVA) | Stamp Duty (AJD) | Total Tax Load |
|---|---|---|---|
| New Residential Property (mainland & Balearics) | 10% | 1.0% – 1.5% (region dependent) | ~11% – 11.5% |
| New Residential Property (Canary Islands) | 7% (IGIC) | 0.75% – 1% | ~7.75% – 8% |
| Resale Residential Property | No VAT | No AJD (unless mortgage) | Subject to Transfer Tax (see below) |
| Commercial Property or Land | 21% | 1.5% – 2.0% | ~22.5% – 23% |
Note: AJD rates vary by autonomous region. For example:
- Madrid: 0.75% – 1%
- Catalonia: 1.5%
- Andalusia: 1.2%
- Valencia: 1.5%
Be sure to confirm the applicable rate with a local lawyer or notary before purchasing.
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4. What If You Buy a Resale Property?
Resale properties (used residential units sold by individuals) are not subject to VAT or AJD. Instead, they are subject to:
- Property Transfer Tax (Impuesto de Transmisiones Patrimoniales or ITP)
- Paid by the buyer at the time of acquisition
ITP rates vary by region and typically range from 6% to 10%, with some reduced rates available for large families, young buyers, or social housing.
Summary:
| New Property | VAT + AJD (~11%) |
| Resale Property | ITP (~6%–10%) |
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5. Special Cases for Commercial and Rental Investors
If you buy a commercial property or land:
- VAT is 21%
- AJD is typically 1.5% – 2.0%
- VAT may be reclaimable if you are registered for VAT in Spain and using the property for commercial purposes (e.g., operating a business or renting long-term)
For buy-to-let investors:
If you operate rentals as a business or through a Spanish SL (company), you may be able to deduct or reclaim VAT on certain qualifying expenses — but strict conditions apply, and professional tax guidance is essential.
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6. VAT and Stamp Duty on Mortgages
If you take out a mortgage to finance your property purchase:
- The bank pays the AJD on the mortgage principal — since a 2019 legal reform, lenders are responsible
- The borrower pays the notary, registration, and valuation fees (separate from taxes)
Mortgage-related AJD no longer increases the buyer’s tax burden, but it’s still factored into closing costs through associated fees.
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7. How and When Are These Taxes Paid?
- VAT is paid at the time of signing the public deed of sale (escritura)
- AJD is paid simultaneously, through the notary or gestoria
- Both must be declared and settled with the regional tax authority within 30 days of signing
Failure to pay on time may result in interest, surcharges, or registration delays.
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8. Can Non-Resident Investors Reclaim VAT?
Only if you:
- Operate a VAT-registered business in Spain
- Acquire the property for business or commercial use
- File for VAT registration and quarterly declarations
- Do not use the property for private or mixed purposes
In most buy-to-let scenarios (especially residential), VAT is not recoverable. However, corporate structures (e.g. Spanish SLs) used for long-term commercial rentals may qualify under certain conditions.
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9. Additional Closing Costs Beyond VAT and AJD
When budgeting your total acquisition cost, include:
- Notary fees: ~€600 – €1,200
- Land Registry fees: ~0.3% – 0.7% of the property price
- Legal fees: €1,000 – €2,000 (recommended for foreign buyers)
- Mortgage costs: bank fees, appraisal, documentation (~1.5% – 2% of loan amount, if applicable)
Total transaction costs can add 10% – 13% to the property price (new build), or 8% – 12% (resale).
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Need Help Budgeting Your Tax and Closing Costs?
Our Investment Strategy Session helps foreign buyers:
- Estimate total purchase costs based on property type and location
- Understand VAT vs. Transfer Tax vs. AJD based on your investment model
- Choose between personal or corporate ownership structures
- Identify where VAT recovery may be possible
- Avoid costly surprises when closing
Price: €500
Duration: 60 minutes
Outcome: Clear, comprehensive budget for your real estate acquisition
Book your Investment Strategy Session here
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Conclusion
VAT and stamp duty are crucial components of your total investment cost in Spain. Whether you’re buying a new-build property, resale unit, or commercial asset, understanding which taxes apply — and how much you’ll owe — will help you plan and execute your investment with confidence.
With rates that vary by region and property type, professional guidance is essential. The right structure can reduce your tax exposure and improve your investment’s long-term profitability.