Sometimes, owners of properties who have recently completed their acquistions in Soain, receive communications from the regional tax office askeing for additional tax due on the purchase of their properties. The concept is easy to explain: under Spanish law, the tax office has got the capacity to override the declared values of transactions in order to ask for additional tax on the basis that the declared price was “under the market value”.

 These letters are currently called “complementarias”.

We will explain to you how it works with an example:

Imaging the value of the price paid to the vendor was 245.000 EUR for a resale property, and this property was placed in Valencia region (where the Transfer Tax for resales is 10 %).

 That price paid is called REAL VALUE (or “Commercial Value”) and is the value used to calculate the taxes derived from the purchase and the ones for the sale. So, taking into account the 10%  tax on this price, the result is 24.500 EUR. 

This was the amount paid in taxes by the owner when completing the purchase transaction. 

However, although the value of the purchase was 245.000 EUR (REAL VALUE), the Spanish administration has up to 5 years to inspect  and to reconsider the price used as base of the tax and being paid to this property (the REAL VALUE). So, during this period of 5 years the administration may inspect the transaction and may consider in their criteria that the value to be used to calculate the tax on this sale,  instead of the price paid (REAL VALUE), being  245.000 EUR must be higher, for example, 300.000 EUR (FISCAL VALUE). 

 If this will be the case, the Spanish administration might require you to pay the difference, the REAL VALUE (245.000 EUR) and the FISCAL VALUE (the one calculated by the administration: 300.000 EUR). So, then, the administration may require you to pay taxes with respect to 300.000 EUR, rather than 245.000 EUR.

The way in which the Spanish administration calculates the FISCAL VALUE is not revealed, but it can be obtained from the Catastro office. 

You always  may contestate the Spanish fiscal revision (“complementarias”), but it is difficult to do it if you do not have a Valuation report made at the time of the property acquisition.

Another option is that you ACCEPT that valuation and pay the extra tax. But, sometimes the difference is high, and there are big surprises to the owners

So, in order to prevent these kind of inspections from the Tax office, it is recommendable: 

– To have a property VALUATION made by a specialist –ARCHITECT – on the date of purchase. This VALUATION will help to demonstrate to the Spanish administration the REAL VALUE of the property, and you would have more arguments to make opposition to future eventual inspections of these values in the future. 

– To insist your Lawyer to obtain and calculate the Fiscal Value of the property BEFORE the transaction is completed