You are onInternational Banking Switch
You are on International Banking
Please note that if you tap on any of the links below you will be leaving this site to explore other sites for UK customers.
Spain remains one of the leading choices in the UK for buying property abroad despite its much publicised problems with overbuilding and illegal land grabs. It's accessible, has great weather, an impressive EU-funded infrastructure and combines long sun-soaked costas with historic vibrant cities. (
Although prices have generally dropped by 30 per cent from a peak in 2007, prime holiday hotspots on the Balearic Islands of Majorca, Ibiza and Menorca have fared better than other Spanish regions, driven by international buyers looking for second homes, according to realtor Engel & Völkers. "This positive development indicates that buyers still have confidence in the property market on the Balearics," says David Scheffler, MD of Engel & Volkers Spain. "The islands rank amongst the most popular holiday regions and most sought-after locations for second homes in the world. With growing turbulence in the Eurozone and fears for the stability of the common currency, the prospect of buying a house on any of the three islands is increasingly seen as an attractive asset investment." (
Prices peak in the main cities - Barcelona and Madrid - and in the traditional second home markets of Mallorca and Ibiza. Data from the Spanish property portal Kyero suggests average prices in Barcelona are approximately €600,000. Meanwhile, according to Engel & Volkers, average sale prices in Mallorca South are approximately €900,000 and up to €1 million in Mallorca Central. (
Prospective buyers must obtain a NIE - a fiscal number for foreigners or an NIF for Spanish residents. These can be obtained from a police station by presenting your passport. Employ a bilingual lawyer experienced in Spanish property law. They should check there are no outstanding charges on your property and that it has full title - Escritura Publica - by checking the Registro de Propiedad.
Both buyer and seller sign the preliminary contract - Contrato Privado de Compravento. A deposit of 10% is normal.
The final contract - Escritura de Compravento - is signed in front of the notary when the buyer pays the full amount including all taxes and costs. The notary then deposits the deeds with the Land Registry.
In 2010 the Spanish government introduced new measures to further tighten the legal framework for property purchases.
Buying costs are higher in Spain than in the UK, typically around 10 per cent of the total purchase price. The main charges are:
A local property tax, the IBI is issued by the local municipality, generally between 0.4% and 1.3% of the rateable value.
Income tax rates range from 24.75% to 52% for those earning more than €300,000.
Capital Gains Tax is 21% to 27%. Main residences are exempt from CGT if the funds are reinvested in another property.
Spain has a double taxation treaty with the UK but Inheritance tax is not included. Specialist advice is vital.
If you earn rental income on a Spanish property you are liable to pay tax on this income regardless of where you are resident. This means you are also required to file a Spanish tax return. In the Balearic Islands it is illegal to rent your property for short holiday lets without an official licence.
It is common practise in Spain for vendors to make the declared purchase price lower than the actual price paid to avoid paying as much CGT. Buyers should not agree to this because when they come to sell they could bear the vendor's CGT liability.
There is a wide range of international schools available throughout Spain, reviewed each year by Spanish newspaper, El Mundo, as part of a supplement on the best schools in the country.
Local schools are also worth considering and many ex-pats choose state schools for their children, which allows them to fully participate in the custom and culture of the country and region in which they reside.
International schools in Spain, or 'colegios internacionales' as they are known, have a different curriculum from Spanish schools, but all teach a minimum level of Spanish language, literature, geography and history.
Spain has a number of international schools for parents to choose from, across the country, based in well known islands, provinces and cities such as Alicante, Barcelona, Madrid, Malaga, Marbella, Murcia, Sotogrande, Tenerife and Valencia.
Education at local schools is free up to the age of 16 for all children resident in Spain, although parents do have to pay for schoolbooks, unless in exceptional circumstances. The system is also adapted to children with special needs.
Some schools based in areas with a high ex-pat population also assist children to make the transition to the Spanish education system by offering additional Spanish classes, or by pairing them with a Spanish child.
If choosing a local school for your child, bear in mind that enrolment may take some time. For information about when to start the process and what paperwork will be required, parents should enquire at the local town hall.
It is also worth noting for holiday and childcare arrangements, that local school holidays are extensive in Spain. They tend to begin at the end of June, when the hot weather starts and continue until September.
As noted above, Spain has generally high income tax rates and quite low untaxed personal allowances (only the first €5,151 of income is tax-free). In 2012, for example, the combined national and provincial income tax rate was 40% for quite modest salaries in a band that stretched approximately from €33,000 to €53,000. Above that, the combined rate was 47% up to €120,000.20, 49% up to €175,000.20 , 51% up to €300,000.20 and 52% beyond that.
However, since Royal Decree 687 of 2005, some expatriates working in Spain can avoid these upper tax bands if they fulfil certain conditions, notably if they have a contract of employment with or have a secondment letter/agreement to work for a Spanish company or foreign company present in Spain by means of a permanent presence (such as a PE or branch) in Spain. This can make them eligible for a flat tax rate of 24,75%.
The information displayed here is correct as of 18/07/2013 and is for general information purposes only. If a customer requires tax advice they should consult their own professional advisers, and not rely on the information contained herein. The greatest care has been taken to ensure accuracy but the Bank cannot take responsibility for omissions or errors. Tax levels or relief are those currently applicable and may change. The value of any tax relief depends on the individual circumstances of the investor/customer.
The information contained in this guide is based on our understanding of current law and tax authority practice and may be liable to change, which could be with retrospective effect. No liability can be accepted for the effect of any subsequent legislation of change of official practice.
Account Holders, depending upon their individual circumstances, may be liable to income tax in respect of interest earned offshore.
It is your responsibility to ensure that any tax liability in relation to funds deposited is accounted for by you to your appropriate tax authorities.
Find your way
Products and services
Ways to bank
Our services are offered by Lloyds Bank International Limited, Lloyds Bank (Gibraltar) Limited & Lloyds Investment Fund Managers Limited.
See Company Information
Important notice: From 31st January 2014, reference to the registered office address for Lloyds Bank (Gibraltar) Limited on our website, online system or literature should read as follows: Royal Ocean Plaza, Ocean Village, Gibraltar, GX11 1AA
Get in touch
Internet banking helpdesk
Open 24/7. Calls may be monitored/recorded.
Lost and stolen debit cards
Open a new account
Mon-Fri 8am-6pm & Sat 9.30am-1.30pm UK time. Calls may be monitored/recorded.