Are you considering buying property in Spain? If so, there are a host of aspects to consider. Besides location, price, and amenities, you should also be aware of the tax rules, especially if you live in the Netherlands. In this blog we take a closer look at the rules around taxes when buying property in Spain as Dutch resident . In addition, we compare tax rules with buying a second home in the Netherlands.
A second home is defined in the Netherlands as a house both in the Netherlands or abroad. These can be houses but also vacation homes or recreational homes. In the Netherlands, you pay tax on your income derived from various sources. The Dutch tax authorities (belastingdienst) have defined a number of boxes for this purpose. In box 1 you pay tax on income from work and home, such as salary, benefits, pension, annuity, mortgage, etc. In box 2 you pay tax on income from substantial interests such as shares, options or profits of a company. In box 3 you pay tax on your own assets such as savings, shares or possessions. In the Netherlands your first house falls in box 1 but a second home in the Netherlands or abroad falls under the capital gains tax in box 3.
If you choose to buy a second home in the Netherlands, it will be included in the box 3 tax. In the Netherlands, the return on a second home is standardly calculated at 6.17% of the WOZ value (Real Estate Valuation) of the home. So, it is important to know that in the Netherlands the actual return is not considered, but a fictitious return is taken based on the WOZ value of the property. On this percentage of the WOZ-value you then have to pay 32% taxes in 2023. In 2024 this percentage will increase to 33% and in 2025 even to 34%. In the Netherlands you do not pay taxes on the income you receive from renting out the vacation home.
Buying property in Spain has the advantage of not looking at returns but at the sales value of your home. In Spain you pay a one-time 10% VAT on the purchase of a new house or 10% transfer tax on an existing house. Would you like to rent out your house in Spain? Then as an EU resident you will pay 19% tax on the rental income. The advantage here is that you only pay this percentage over the time you actually rent out the house. This is calculated in a ratio.
Another advantage of having a property in Spain is that the Netherlands has a tax agreement with Spain to avoid double taxation. This allows you to get an exemption from the capital gains tax in the Netherlands on the value of your Spanish home because it is already taxed in Spain. However, it is very important to understand the specific provisions of the tax treaty and possibly seek advice.
With our partner, a law firm in Alicante, we can help you identify all the tax advantages. Are you curious about the difference between buying a house in the Netherlands and Spain? Or would you like to have a calculation of what it will save you financially? Fill in our contact form and ask your question.
