Do You Pay VAT on New Builds in Spain? Quick Answer
If you’re planning to buy a brand-new property in Spain, one of the first questions that arises is: “Do I have to pay VAT?” The short answer is: Yes. Unlike resale homes, which are subject to transfer tax (ITP), new build properties in Spain are subject to VAT (IVA).
As a property professional who works daily with international buyers, I always clarify this point early in the process. It’s essential to avoid confusion and to make sure clients are budgeting realistically — no hidden surprises.
Understanding the VAT Rate on New Properties
In most cases, the standard VAT rate on new residential properties is 10%. This applies when the property is sold directly by the developer for the first time. For example, if you buy a new-build apartment in Marbella for €300,000, the VAT payable will be €30,000.
In addition to VAT, buyers must also pay a stamp duty (AJD), which ranges from 0.5% to 1.5%, depending on the region. In Andalusia, the current rate is 1.2%.
From my experience managing new developments along the Costa del Sol — from Benahavís to Sotogrande — I always include these taxes clearly in the initial cost breakdown. Transparency is a key part of the way I work.
What’s the Difference Between VAT and Transfer Tax (ITP)?
Many first-time buyers in Spain get confused between VAT and ITP. Here’s a simple rule:
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VAT (IVA) applies to new builds.
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ITP (Impuesto de Transmisiones Patrimoniales) applies to resale properties.
While VAT is charged at 10%, ITP typically ranges from 6% to 10%, depending on the region and property value. It’s important not to assume that new builds are tax-free — in fact, they come with a different tax structure that must be accounted for from the start.
Additional Costs: AJD and Legal Fees Explained
On top of VAT, buyers of new builds must pay the AJD (Actos Jurídicos Documentados). This is a one-time tax applied to notarial acts, property deeds and mortgage registration.
Typical new build costs also include:
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Notary fees
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Land registry fees
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Legal services
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Bank charges (if using a mortgage)
These are all costs I walk through with my clients before any deposit is made. My goal is to make sure every buyer is fully informed and financially prepared.
Exceptions: Reduced VAT or Exempt Cases
There are rare cases where a reduced VAT rate applies. For example:
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4% VAT for protected housing (VPO) or subsidised housing
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VAT exemption in some property swaps or inheritance scenarios
These cases are very specific and usually involve special legal qualifications. I always advise my clients to consult with a lawyer or tax advisor, and I connect them with the right experts from my network.
VAT on Commercial vs. Residential New Builds
It’s worth noting that VAT is higher on commercial properties. If you’re buying a new office, shop, or parking space, the VAT can be 21% instead of 10%.
This is especially relevant for investors or business owners. I’ve helped several clients navigate this, ensuring they understood not only the higher VAT but also their potential for deductions if purchasing through a registered business.
Deductions and Recovering VAT: What Expats Should Know
In some situations, non-resident buyers who purchase via a company structure can reclaim part of the VAT, especially if the property is used for business or rental purposes. However, this requires correct structuring, registration for VAT in Spain, and proper accounting.
For many of my international clients, this strategy can be advantageous — but only if set up correctly. I always ensure buyers are aware of these options and refer them to reliable tax consultants within my network.
Real Examples from My Clients Buying New Builds
I remember a British client who assumed that buying off-plan meant they could avoid taxes altogether. Luckily, we caught this early during our consultation. I provided a full tax breakdown — including VAT, AJD, and legal costs — and helped them restructure their budget to match reality.
It’s just one of many examples where trusted real estate guidance on the Costa del Sol can prevent costly mistakes.
Why Clarity on VAT Is Crucial When Buying Property in Spain
Buying property in a foreign country can be overwhelming. That’s why clarity around taxes like VAT is not optional — it’s essential.
At The Property Agent, I take pride in offering expert property services in Spain that go beyond listings. I equip clients with everything they need to make informed, confident decisions — legally, financially, and logistically.
Whether you’re buying a luxurious apartment in Marbella or exploring property for sale in Sotogrande, the right guidance can make all the difference.
Your Trusted Guide to Buying New Developments Stress-Free
To sum it up:
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New builds in Spain are not VAT exempt
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You’ll typically pay 10% VAT + AJD (1.2%)
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There may be exceptions or deductions, but they’re rare
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Clarity on costs = peace of mind
If you’re considering a move to Spain, or just looking to invest in a holiday home or rental property, I’d love to help. With my hands-on approach and trusted network, I’ll ensure your experience is smooth, transparent, and enjoyable.
🔗 Ready to explore your options? Reach out today and let’s make your Spanish property journey effortless.
