The 7/2019 Royal Decree amends, among others, the Law on Urban Rentals.
The most significant changes are the following:
- The minimum term of a contract has been extended from three to five years for individuals and seven for companies; consequently, if the agreed term is less than the aforementioned periods, the tenant will be entitled to extend it for annual terms until it reaches the five or seven year term.
Non-European tax residents will no longer be forced to adhere to Inheritance tax State regulations and will be entitled to the relevant Autonomous Communities’ tax breaks according to the latest Tax office binding consultations and Supreme Court rulings.
For the past years one of the main aspects which have driven our economy’s growth has been investments in real estate assets across Spain and to a large extent, such came from foreign investors. Many were intended on a buy-to-let basis.
Clearly one of the main aspects prior to taking the decision is how will my income be taxed, especially that coming from rentals, since depending on how the investment is made it will be taxed at a rate or another.
The Supreme Court in a recent ruling dated 23 May 2018, has determined that property valuations for Transfer Tax purposes can not be calculated by simply applying a multiplier to its Cadastral value, shifting the burden of proof to the taxpayer who would have to prove (if the property presents singularity) that the value differs from the one quoted by the authorities.
Great news for Andalusian residents (Spanish and foreigners), from 1 January 2018, inheritance and donations tax, with several limitations, will be exempt when the estate received by each heir is valued in a million euros or less. Until now and the rest of 2017, such exemption only reached €250,000.
With the entry into force of the EU Regulation 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction, the recognition and the enforcement of decision in civil and commercial matters, in force since 10 January 2015, will mark a before and a after in our legal system. Undoubtedly the Spanish legislature will have to adapt a number of rules for the full effectiveness of the referred regulation.
Regarding fiscal reform to support for families and for economic recovery the final step by the Spanish government is to obtain in advance, as a payment on account, the 3 new deductions from personal income tax. Therefore, this is not a support or a benefit to families or to the economy in a narrow sense, but just an advance of negative taxes. And those who prefer to obtain it in advance, then they will have to compensate their income tax return to avoid “unpleasant surprises”.
On the eve of the local elections for 2015, the Andalusian Parliament continues with the parliamentary approval of the law (LOUA.- The new Law on Urban Planning of Andalusia)which would allow the legalization of thousands of illegal houses scattered across Andalusia. The interest in the approval of this law with some electoral opportunism by the way it is a necessary social reality given that there cannot continue being so many properties in a commonly named “legal limbo” situation. It is used this denomination because they are impossible to regulate and it is also impossible to exercise a power to impose penalties by the Administration neither to return to a legal order for these houses.
Our Law Firm assists to Andalusian companies for its internationalization in Morocco (Rabat and Casablanca)Written by Administrador
Photo: The Gardens from the Hotel "Jardin des Roses" in Rabat and the Mosque of Casablanca
Technological and service sector companies from Andalucia trusted our firm to boost bilateral agreements for the internationalization of products and services and also to promote synergies with local companies to the development of new projects.
The reason for this article is mainly to solve in a formulaic way the doubts rose to many of our clients when deciding whether to become a resident for tax purposes or not.
We will give an answer to the main questions they ask:
Do I have to include my entire wealth outside Spain if I am living in Spain?
Yes, you must include all assets in the declaration from the moment you become a resident in Spain.
Is the value from my main home part of Assets?
Your first home is part of your heritage, even though many Autonomous regions do not take this into account when calculating the tax base of the wealth tax for residents, i.e., it is deducted or there is a significant amount up to a certain limit. It is convenient to be registered in your first house to avoid that tax authorities incorporate the value from the property to the tax base.
At the invitation of the CEM (Conference of Entrepreneurs of Malaga) some members from our firm participated in the table of sectoral experts about the future of the Costa del Sol, which served as a basis for diagnosis, analysis, study of opportunities, proposals and processing of results regarding the vision from the Costa del Sol business network for the future of the Costa del Sol.