The complexity of indirect taxation of real estate transactions and the urban planning process lies, in a first approach, in the potential incidence of several taxes:

• those levied on consumption, such as VAT in mainland Spain and in the Balearic Islands, IGIC in the Canary Islands or IPSI in Ceuta and Melilla;

• and those levied on property transfers and on acts or contracts registrable in public registries, i.e. Property transfer tax and Stamp duties (ITPAJD) in its various modalities.

Some of these taxes may result in higher transaction costs.

For a proper analysis and planning of the taxation of these operations it is relevant to understand:

• the tax status of the owners (whether or not they carry out business activities and, if so, for what purpose they intervene in the operations)

• the particularities of the property

• the existence of debts, levies and other charges (real or not)

• the intention of the buyers (for example, to develop the construction, refurbishment or renovation of a building for commercial, industrial, residential use, etc. for lease, for sale, etc.)

• whether or not third party financing will be used and, if so, what kind of guarantees will be granted

• the stage of the urban development process of the plots of land

• and some other equally important aspects.

From the knowledge of all these circumstances it will be possible to determine the taxation and the feasibility of proposing alternatives that reduce the fiscal cost.

At Tax in Context | TiCEXT we have extensive experience in advising on real estate transactions and land development processes.

For more than 25 years, our team advises local and foreign corporate clients (companies, investment funds and management entities), public administrations, wealth managers, individuals as well as sectorial associations and those who structure and grant financing for these operations in a wide variety of cases.