It is almost impossible to cover all the legal implications of purchasing property in this short booklet and we strongly recommend checking with a professional regarding your particular case before making any decision to buy.
Due to the fact that the property is located in Spain, most of the legal conflicts would be dealt with according to Spanish Law. Most of the contracts would usually state that Spanish Law would govern the transaction and establish that any claim must be brought to the Spanish Court where the property is located.
When requesting professional advice from a Spanish Abogado or tax specialist it is important to check that the professional is properly registered and insured to provide this advice according to the standards of the Bodies regulating their professions. All the disputes in relation to the services provided by the professionals or any problems will be dealt with according to the rules of the professional body in the jurisdiction where the services were provided. In respect of legal, financial or tax Spanish implications, overseas purchasers should be familiar with the different requirements involved in the conveyance and should proceed with the same care as when purchasing property in the UK and Ireland. If this is not the case, it is strongly recommended to seek professional advice in the following areas.

- Financial advice regarding financing the acquisition.

- Legal advice to make sure that legal and planning enquiries are conducted and a proper private contract is negotiated

- Tax advice to find out the most tax efficient way to acquire the property, considering the tax position in the UK and Ireland and Spain for all the different taxes involved, including Capital and Inheritance tax potential liabilities.

Under Spanish domestic law and the Double Tax Treaty with the UK and Ireland, individuals are deemed resident in Spain for tax purposes according to the following criteria:
183 days rule: An individual will be treated as resident for income tax purposes if he spends in Spain 183 or more days during the Spanish tax year, ending 31 December, whereas for Spanish Inheritance tax an individual will be treated as resident if 183 days have elapsed since they took residence.
Spain is the centre of economic interest or the principal place of professional activity.
There are other elements being used by the Spanish Tax Agency to determine the residence, such as the location of the family home, and more stringent rules are applied regarding residence in territories considered Tax Havens by the Spanish Government.

The Non Resident Taxation Regime

According to the Non Residents Income Tax Act, non residents receiving income or owning any assets in Spain must file a return every year.

Income Tax According to the Non Residents Income Tax Act

Owning property in Spain is deemed to produce a taxable income, notional in nature, based upon the town council rateable values (Catastral Value) and which is taxed at the standard rate of 24%.
Non resident companies and shareholders will be taxed annually at 3% of the town council rateable value of the property (Catastral Value), albeit there are exceptions for companies registered in a Country with a Double Tax Treaty with an exchange of information clause.
The taxation on rental income is slightly different and a Spanish Withholding Tax of 24% on the gross rent is always requested for the non resident individual letting his Spanish property and VAT in Spain must be accounted for when renting to commercial entities.