Buy in Spain for more than €1M. Legal nuances for international clients

For international buyers—particularly from Northern Europe Spain remains a deeply compelling destination. A coastline bathed in light, a climate that invites outdoor living year-round, and a lifestyle rooted in simplicity and sensuality. But when the property in question exceeds €1 million, the path to ownership is less about dreams and more about diligent preparation.

With a purchase of this amount, buying a home in Spain is no longer a simple transaction—it’s a legal and financial migration. Here’s what you need to know.

A Spanish Legal Foundation Built on Precision

NIE: Your Legal Identity in Spain

Before a buyer can sign a contract or open a bank account, they must secure an NIE—Número de Identificación de Extranjero. It’s not just a formality. This number becomes your official identifier in all Spanish legal and tax matters. Without it, progress halts.

The process is straightforward but often requires local guidance, particularly if you're applying from outside the country. Many clients choose to grant power of attorney to their legal representative in Spain to handle this—and future steps—on their behalf.

Due Diligence, Spanish Style

In a market where old meets new, legal clarity is essential. A competent property lawyer—ideally one with local fluency and international experience—will verify:

• Ownership and title (Escritura)

• Urban planning compliance

• Building licenses and habitability certificates

• Encumbrances, debts, or easements

• Community fees and taxes

It’s this phase that reveals whether a beautifully restored finca is also legally watertight, or whether a minimalist villa perched on the Montgó skirts local building limits.

The Role of the Notary: Ceremony Meets Safeguard

In Spain, the notario is a neutral public official, not your personal legal advisor. Their job is to oversee and formalize the deed of sale (Escritura Pública), ensure proper identification, and confirm that taxes are declared and paid.

This act—quiet, procedural, often underappreciated—is what gives the transaction legal standing. And it’s non-negotiable.

Fiscal Realities: What €1M Actually Buys You

Many international clients are surprised to learn that a €1M purchase can easily grow to €1.1M or more once taxes and fees are accounted for. Here is how the numbers work:

Taxes on Purchase itself

Resale (a non new build) Property:

• Impuesto sobre Transmisiones Patrimoniales (ITP) applies, ranging from 6% to 10% depending on the region. On the Costa Blanca, it's typically 10%.

New Build:

• You’ll pay 10% VAT (IVA) plus Actos Jurídicos Documentados (AJD), a stamp duty that varies by region (typically 1.5%).

Legal and Administrative Purchase Costs

• Legal fees: ~1% of property price (be aware this can change upward but never downward)

• Notary: €500–€1,500 depending on complexity of the purchase

• Land registry: ~0.5%

• Additional costs: Bank fees, legalised translation, PoA if required

Altogether, the cost of purchasing can exceed 12–13% of the agreed price, so clarity from the outset is key.

Residency via Real Estate? A Changing Landscape

For years, Spain’s Golden Visa program allowed non-EU nationals to obtain residency by investing €500,000 or more in real estate. It was a magnet for capital, especially from China, Russia, and the Middle East.

But in a move that reflects growing concerns of the Spanish population around access to reasonably priced housing, the Spanish government announced in April 2025 that the program would be discontinued. Properties can still be acquired freely, but they no longer offer a direct pathway to residency.

For clients outside the EU—including British citizens living in a post-Brexit world—this requires a change in focus toward longer-term visas or structuring ownership through other legal channels.

Non-EU Buyers Face New Headwinds

In a move that made international headlines, Spain's Prime Minister recently proposed a 100% surcharge on real estate purchases by non-EU, non-resident buyers—effectively doubling the cost of acquisition. The goal? Curb speculative investment in overheated markets like Barcelona, Ibiza, and parts of the Costa del Sol.

While the proposal has not been implemented, it underscores the political momentum toward restricting foreign ownership in key regions. For now, it’s just that—a proposal. But it should prompt buyers to complete transactions under current rules, not future ones.

Regional Nuance Matters

Unlike more centralized systems, Spain’s autonomous communities have considerable discretion over tax rates, planning laws, and zoning. For buyers focused on the Costa Blanca—particularly areas like Moraira, Jávea, or Denia—this means:

• A 10% ITP rate on resale homes

• Stringent coastal building restrictions

• Active town planning departments that monitor renovations closely

Buyers accustomed to northern European transparency should expect a different rhythm here—slower, more bureaucratic, but ultimately manageable with the right team in place.

Capital Gains, Wealth Tax, and Ongoing Obligations

Capital Gains Tax (CGT)

For non-residents, CGT is applied at a flat 24% on net gains. Deductible expenses can include renovation costs, agent commissions, and legal fees, provided they are properly documented.

Wealth Tax

Spain applies an annual wealth tax on worldwide assets exceeding €700,000 (excluding a primary residence up to €300,000 for residents). Note that joint ownership can help alleviate this as the tax can be levied on a person by person basis. Non-residents are taxed only on Spanish assets.

Valencia, the region encompassing the Costa Blanca, applies this tax progressively, starting at 0.2% and rising to 3.5% for substantial holdings.

Other Considerations

• Inheritance Law: Spain has forced heirship rules. It's important to coordinate with advisors in both jurisdictions.

• Rental Income: Taxed at 24% for non-EU residents; EU residents benefit from deductions and lower rates.

Strategic Takeaways for the €1M+ Buyer

This is not a market to navigate casually. At this level, the property you purchase is more than a home—it’s part of your legacy, your portfolio, and potentially your family's future lifestyle base in Europe. A few guiding principles:

▸ Legal Readiness is Non-Negotiable

Even modern, architect-designed homes can carry hidden legal complexity. Request full urban planning certification and occupancy licenses.

▸ Structure Ownership Wisely

Consider whether personal ownership or a Spanish SL (limited company) offers better tax positioning. Coordination between Spanish and home-country advisors is essential.

▸ Stay Ahead of Regulatory Shifts

Legislation can change faster than perceptions. What's tax-efficient today may not be tomorrow. Follow both national and regional news closely—or work with those who do.

Closing Thought

Owning property in Spain at the €1M+ level is about more than sunshine and sea views. It’s about acquiring a tangible piece of the Mediterranean—through a process that values clarity, patience, and strategic foresight.

Handled properly, it’s a deeply rewarding move. But success depends not only on what you buy, but how you buy it.

At Grupo Garcia, we guide our clients through this journey with discretion, expertise, and an unwavering commitment to getting it right—legally, financially, and emotionally