This tax is levied on a limited number of transactions, including most notably:

(*) Law 4/2008 eliminated the cases in which tax is levied on mergers, spin-offs, asset contributions and exchanges of securities, these transactions being defined in accordance with Aricles 83 and 94 of the Corporate Income Tax Law (Neutral tax regime).

(**) The regional governments are entitled to apply different rates in certain cases. Indeed, many of them have set the transfer tax rate applicable to transfers of real estate at 7%, and the stamp tax rate for certain transactions at 1.5%. Nevertheless, some regions apply 2%.

Transfers of shares in Spanish companies do not usually attract indirect taxation, unless more than 50% of the capital stock is transferred (or shares increasing the stake in certain entity when the acquirer already has more than 50%) and more than 50% of the assets, (as defined in the applicable law) of the company consist of real estate in Spain. In this case, the transaction will be treated, for indirect taxation purposes, as a transfer of real estate subject to the transfer tax rate determined by the regional government where the asset in question is placed.

If the seller is a company or a private real estate developer, transfers of buildable land lots or first supplies of buildings are subject to VAT. In the case of second and subsequent supplies of buildings by companies, traders or professionals in the course of their usual activities, they can elect to make such supplies subject to transfer tax or VAT, so long as certain requirements are met.

Starting on December 3, 2010, the formation of companies, the increase in their capital, the contributions made by shareholders which do not entail a capital increase, and the relocation to Spain of the company’s place of effective management or of the registered office where neither one nor the other had previously been located in an EU Member State, are exempt from transfer tax under the “corporate transactions” heading¹.

1 Modification made by Law 13/2010, of December 3, 2010, on procedures in the area of tax, labor and deregulation to promote investment and job creation.

For further information, visit the extended version of our online Guide to Business:

Tax system

Prepared by Garrigues

Last updated: 27|06|2011