Taxes on Spanish property: IBI, plusvalía and wealth tax explained

As a Dutch investor in Spanish property you deal not only with Dutch taxation (such as box 3) but also with Spanish taxes. What you do not know, you tend to avoid: anyone unfamiliar with Spanish taxes often misjudges the net return. In this article we set out the main taxes, without jargon and with concrete percentages.

IBI: annual property tax

The Impuesto sobre Bienes Inmuebles (IBI) is the Spanish property tax. Every owner pays it annually to the municipality. The rate varies by municipality, usually between 0.4% and 1.1% of the valor catastral (cadastral value). That cadastral value is usually 30 to 60% below market value, so in practice count on €300 to €1,500 per year for an apartment of €300,000 on the Costa del Sol.

Tip: when buying, always ask for the IBI receipts of recent years. Unpaid IBI follows the property, not the former owner.

Plusvalía: municipal capital gains tax

On a sale the municipality levies plusvalía municipal: a tax on the increase in value of the land (not the building) during your period of ownership. Since 2021 you may choose between a fixed calculation on the cadastral land value or proving the actual gain, whichever is more favourable.

The plusvalía is almost always borne by the seller, but the parties may agree otherwise. Watch for that clause at the notary.

Wealth tax (Impuesto sobre el Patrimonio)

Spain taxes wealth above a threshold: for non-residents there is a €700,000 allowance; above that it is progressive from 0.2% to 3.5%. Andalusia applies a 100% bonificación, in effect no wealth tax for those who own property there. That partly explains why the Costa del Sol remains so popular with wealthy Dutch investors.

Please note: since 2023 there is also a parallel solidarity tax on large fortunes (above €3 million), which partly neutralises the regional bonificación.

IRPF on rental income

Letting the property? Then you are liable to tax in Spain on the net rent:

• EU residents (including the Dutch): 19% on the rent, after deduction of costs (interest, IBI, maintenance, insurance, depreciation).
• Non-EU: 24% with no deductions.

A quarterly return (Modelo 210) is compulsory, even at a loss. Many investors outsource this to a Spanish gestor.

What does this mean for you?

Spanish taxes do not simply stack on top of the Dutch box 3 levy. Under the Netherlands-Spain tax treaty, Spanish property is exempt in the Netherlands through the credit method, but it does count towards the progressive effect in box 3. The Spanish levies are therefore the “real” burden.

For an apartment of €400,000 on the Costa del Sol in Andalusia, the annual tax burden looks roughly like this:

• IBI: €600 to €1,200
• Wealth tax: €0 (Andalucía bonificación)
• Income tax on rent (with €18,000 rent and €5,000 costs): around €2,470

Include that in your return calculation, so there are no surprises afterwards.

Jansen & Brouwer Property Capital guides Dutch investors through the entire process, including tax optimisation together with Spanish and Dutch tax advisers. Would you like to know which region suits your situation best from a tax perspective? Schedule a no-obligation consultation.