The Spanish income tax is regulated according to Law 35/2006 (Income Tax Law LIRPF) and Regulation RDR439/2000 (Income Tax Regulation RIRPF)
It is a dual taxation system as it applies to two different types of income, each having its own tax rates:
- The general tax base, which is taxed progressively
The real estate transfer tax in the Balearic Islands has a variable rate, from 8% to 10%. Amongst Spanish regions the maximum tax bracket vary between 6% to 11%.
Up to 400.000 Euros the tax rate is 8%. From 400.000,01 to 600.000 Euros it is 9%. From 600.000,01 Euros onwards the rate of 10% is applied.
Detached parking spaces, which are not connected to the apartment, are taxed with 8% but this only up to a value of 30.000 Euros. What exceeds this amount is taxed with 9%. Attached parking places are admitted in the unique tax base till 2 units per apartment.
The tax rate is applied to the total value of the property and not individually on the parts of it. This is the case if more than one individual purchases the property.
A couple jointly buys a house in Mallorca, therefore each acquires the same part (50% – 50%). The purchase price is 1.000.000 Euros. The tax base would theoretically be 500.000 Euros for each of them, but it is not. The calculation of the 3 tax brackets is applied on the total value of 1.000.000 Euros.
The real estate transfer tax that would be payable for each individual in the Balearics would be as follows:
For the first 200.000 Euros the tax rate to be applied is 8%. The next 100.000 Euros are taxed at 9%, and the remaining 200.000 Euros with 10%. (€16.000 + €9.000 + €20.000 = € 45.000 payable by each spouse).
Payment is due within 30 days after the signing of the notarial deed.