Spain remains one of Europe’s most attractive destinations for international property buyers, offering an enviable lifestyle, strong investment opportunities and a diverse real estate market. However, purchasing property in Spain involves a complex legal and tax framework that can be challenging for foreign buyers to navigate. To better understand the process and the most common pitfalls to avoid, we spoke with the team at Albir Abogados, specialists in international property law and tax planning for non-residents. In this interview, they share their expert insights on everything from legal due diligence and contracts to taxation and post-completion obligations.
Could you briefly introduce yourselves and tell us what Albir Abogados specialises in?
At Albir Abogados, we specialise in international property law and tax optimisation for non-residents. We are not a general practice; our sole focus is safeguarding property transactions in Spain for foreign buyers. Our role is to identify and eliminate the legal, planning, registration and tax risks associated with purchasing property in a market governed by complex local regulations, ensuring that our clients’ assets are fully protected from the outset.
What type of international clients usually contact your firm when they are interested in buying property in Spain?
We advise a very specific client profile, including private investors, families purchasing high-end second homes, and individuals relocating to Spain for retirement or lifestyle reasons. While we naturally practise Spanish law, English is our principal language of communication for international clients. In addition, we offer native and professional support in Polish and French. This enables us to manage complex transactions for buyers from the United Kingdom, Germany, the Netherlands, Belgium, Scandinavia and Eastern Europe without language barriers that could lead to misunderstandings in contractual matters.
What are the first legal steps foreign buyers should take before beginning the purchase process?
The most common and costly mistake is to begin negotiations or transfer funds without the support of an independent solicitor. The first essential step is to appoint legal representation to review and assess all documentation before any signature is made. At the same time, buyers should arrange their NIE (Foreigner Identification Number), open a compliant Spanish bank account and undertake a tax assessment to understand the true costs of the transaction in the relevant autonomous region.
Why is the NIE essential for property buyers?
The NIE is not simply an administrative formality; it is the key legal and tax identification number required for any financial transaction in Spain. Without it, the notarial and registration system will prevent the transaction from proceeding. It is legally impossible to complete the purchase deed, pay the associated taxes, arrange utility contracts or register the property in the buyer’s name without an NIE.
Do buyers need to be physically present in Spain during the purchase process, or can everything be handled remotely?
There is absolutely no requirement for buyers to be physically present. More than ninety per cent of our international transactions are completed remotely through a specific Power of Attorney. This legal instrument allows us to act on behalf of the client before notaries, banks, public authorities and property registries. It offers considerable convenience and efficiency while maintaining exactly the same legal security as if the client were present in person.
Why is it particularly important to hire an independent solicitor when purchasing property in Spain?
Because there is an inherent conflict of interest within the Spanish property market. Estate agents, intermediaries and developers are primarily focused on completing the sale in order to earn their commission; they are neither qualified nor contractually obliged to protect the buyer’s interests. An independent solicitor acts solely for the client. Our role is not to facilitate a sale, but to scrutinise it thoroughly and, where necessary, strongly advise against proceeding if significant legal risks are identified.
What legal checks do you carry out before your client signs any contract?
Before a client signs anything, we conduct a comprehensive legal due diligence process covering three critical areas. Firstly, we carry out Land Registry investigations to verify ownership and identify any charges, mortgages, embargoes or restrictive conditions affecting the property. Secondly, we review planning and administrative records with the local council to confirm the legality of the construction, the absence of enforcement or demolition proceedings and the validity of the relevant occupancy licences. Finally, we examine the property’s tax and community status to ensure there are no outstanding debts relating to council tax (IBI), refuse collection charges or community fees, as these liabilities may transfer to the new owner if not settled before completion.
Is it safe to sign a reservation agreement before consulting a solicitor?
Quite simply, no. Estate agents often encourage buyers to sign reservation agreements in order to remove the property from the market. However, these standard documents frequently lack adequate protection clauses and can legally bind the buyer before any checks have been carried out. Signing such an agreement without legal advice may result in the loss of the deposit if problems are later discovered.
What is the difference between a reservation agreement and a private purchase contract in Spain?
A reservation agreement is a preliminary arrangement, usually involving a relatively small payment to reserve the property and suspend marketing activities. A private purchase contract, often structured as an arras agreement, is a much more substantial and legally binding document. It sets out the agreed purchase price, deadlines for completion, allocation of transaction costs and, most importantly, the financial consequences of default by either party.
Can buyers lose their deposit? In which circumstances might this happen?
Yes, and it is a genuine risk where contracts are not drafted correctly. Under Spanish law, if the type of arras is not expressly specified, the courts may interpret the arrangement in a way that allows the innocent party to demand completion of the contract rather than simply retain the deposit. To protect our clients, we generally structure agreements as arras penitenciales under Article 1454 of the Spanish Civil Code. This ensures that if the buyer withdraws, they forfeit the deposit, whereas if the seller withdraws, they must return double the amount received.
Apart from the purchase price, what additional costs should buyers budget for when purchasing a property in Spain?
Buyers should generally allow an additional twelve to fifteen per cent of the purchase price to cover taxes and associated costs, depending on the nature and value of the property. In the Valencian Community, transfer tax for resale properties is currently nine per cent on properties valued up to one million euros and eleven per cent above that threshold. For new-build properties, buyers must pay ten per cent VAT together with Stamp Duty (AJD), currently charged at 1.4 per cent. In addition, there are notarial fees, Land Registry fees and professional legal costs.
Are there any specific taxes that non-resident property owners must pay after the purchase?
Yes. Tax obligations do not end once the purchase has been completed. Non-resident property owners are required to pay local council tax (IBI) and Non-Resident Income Tax. Where the property is used privately, tax is payable on a deemed rental income basis. If the property is rented out, whether for holiday or residential purposes, the rental income must be declared and taxed accordingly through the relevant tax returns.
What happens on the day of completion before the notary?
Completion takes place through the execution of the Public Deed of Sale before a notary. The notary certifies the legality of the transaction, verifies the payment method and authorises the formal handover of the property. Our role is particularly important at this stage, as we review the final draft deed immediately before signing to ensure it accurately reflects everything agreed during the private contractual phase.
What services does your firm provide after completion of the purchase?
Completion before the notary is only part of the process. We manage the entire post-completion stage, including collecting the authorised copies of the deed, paying the relevant taxes within the statutory deadlines, registering ownership at the Land Registry and arranging the transfer of utility contracts and community charges into the new owner’s name.
What is the most important advice you would give to someone planning to buy property in Spain this year?
Replace enthusiasm with legal diligence. The Spanish property market offers excellent opportunities, but it operates on the principle that buyers assume the risk if they fail to carry out proper investigations. Never allow yourself to be pressured by artificial deadlines imposed by agents or sellers. Any investment should be capable of withstanding a rigorous legal audit before a single euro is transferred.