SPAIN Law and Practice Contributed by: Marta González-Llera, Toni Barios, Jorge del Castillo and Rafael Baena, Cases & Lacambra
estate transfer will be subject to property trans - fer tax (“transfer tax”) borne by the purchaser. Applicable tax rates vary depending on the autonomous region where the asset is located (tax rates range from 6% to 11% on the “value of reference”). If the seller qualifies as an entrepreneur or pro - fessional for VAT purposes, the real estate trans - fer will be subject to VAT, which shall be charged by the seller and borne by the purchaser. The applicable VAT rate shall generally be 21% (10% in the case of transfers of dwellings). However, the transfer of real estate subject to VAT could benefit from a VAT exemption if cer - tain requirements are met. Nevertheless, should the transfer be exempt from VAT, it shall be sub - ject to transfer tax. Tax on the increase of the value of the urban land Where an asset deal concerning urban land is carried out, it is generally subject to tax on the increased value of the urban land (TIVUL). However, the transfer would not be subject to tax on the increased value of the urban land if the seller does not derive profit from the transfer of the relevant real estate. Stamp duty (actos jurídicos documentados) A transfer of a real estate asset that is subject to VAT shall also be subject to stamp duty, which shall be borne by the purchaser. The applica - ble tax rate would depend on the autonomous region within Spain where the real estate asset is located and range from 0.75% to 1.5% on the value consigned in the notarial deed by means of which the real estate asset is being transferred. Also, in the case of a waiver of the VAT exemp -
tion, an increased tax rate for stamp duty (up to 2.5%) shall apply. Share Deal Should the transfer of real estate be carried out by means of a share deal, the transaction would not be subject to VAT, transfer tax or TIVUL. However, Section 314 of the Spanish Securities Market Act set forth an anti-abuse rule to pre - vent circumvention of the taxation that would correspond to a regular direct transfer of real estate should the latter be directly transferred. In this context, this specific anti-abuse rule shall apply in those cases where: • the acquirer obtains the control over an entity in which at least 50% of its assets are com - prised of real estate assets located in Spain not used for business or professional activi - ties; • the acquirer obtains control over an entity in which some assets are shares in other entities whose asset is, in turn, comprised of at least 50% of real estate assets located in Spain not used for business or professional activities; or • the shares transferred have been previously received in consideration for in-kind contribu - tions materialised by means of a contribu - tion of real estate assets within a three-year clawback period. 2.11 Legal Restrictions on Foreign Investors In Spain, the system for foreign investment and exchange controls has been totally liberalised, in line with EU legislation. In this regard, only foreign direct investments to be made in critical sectors or in places consid - ered as defence zones of national interest, or carried out by specific categories of investors,
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