Property tax · Spain & the Balearics
Mallorca property tax, in plain terms
What a seller pays, what a buyer pays, and how a company-owned home is taxed — the full picture, clear enough to explain to a client. Written for owners, buyers, and the agents who guide them.
The straight sale — the baseline
In a normal sale, who pays what
Before any structure, this is a standard Balearic sale: the buyer carries the purchase tax, the seller carries the tax on the gain. If you advise buyers, know both sides cold — it’s the first thing a serious client asks.
The seller pays
Plusvalía municipal — the town-hall tax on the rise in land value over the years of ownership. Paid by the seller.
Capital gains — 19% on the profit for non-residents (flat, EU or not), or under the seller’s home-country rules by treaty.
3% retention — on a non-resident sale the buyer withholds 3% of the price and pays it to the tax office as an advance on that gain. Any excess is refunded.
The buyer pays
Resale — ITP, the tiered transfer tax of 8% to 13%, on the higher of price or reference value (full scale below).
New-build — 10% IVA plus AJD (~1.2%) instead of ITP.
Notary, land registry and legal — a few percent on top, the buyer’s cost either way.
These are the Spanish, transaction-level taxes. What each party then pays at home depends on their own residence — covered at the end of the page.
At purchase
One tax, paid once at the door
When the company buys a resale home in the Balearics, it pays property transfer tax (ITP) one time, on the purchase. It’s a tiered tax — calculated on the higher of the price or the official reference value — and it’s baked into the cost of the home, not charged again later.
| Portion of the price | ITP rate |
|---|---|
| Up to €400,000 | 8% |
| €400,000 – €600,000 | 9% |
| €600,000 – €1,000,000 | 10% |
| €1,000,000 – €3,000,000 | 12% |
| Over €3,000,000 | 13% |
Marginal brackets — each rate applies only to its portion, so the effective rate is lower than the top band. A new-build instead carries 10% VAT (IVA) plus stamp duty (AJD, about 1.2%). Notary, registry and municipal plusvalía are added on top.
If you already own the home
Three ways a home enters the structure
Whether the property is privately owned or already sits in a company, the home can enter the structure three ways — each taxed differently. An SPV is simply a single-purpose company — here a Spanish S.L. — set up only to own this one home.
Sell to a new SPV
- Homebase assembles the investors first.
- A new S.L. is formed; investors subscribe shares, conditional on all eight selling.
- The SPV buys your home — a normal sale. You take the proceeds; the SPV pays ITP once. No three-year trap.
Contribute a private home, then sell shares
- You put your property into a new S.L. for shares — ~1% capital duty, and the contribution can trigger your own capital-gains.
- You then sell the eight shares.
- Sold within three years of the contribution, the sales are taxed as a property transfer — ITP applies. Workable only past three years.
Restructure the existing company into eight shares
- If the home already sits in a company — say a development vehicle — no new purchase is needed.
- The company is restructured to eight shares; you sell shares to investors, by agreement with any existing financing partners.
- Share sales are ITP-free as a rule — unless a buyer crosses 50% control, or the home was contributed to that company within the last three years.
Which route is cleanest depends on how — and how long ago — the home entered the company, and whether its assets are tied to a business activity. We check that first, with your advisor.
While you own it
Run as an investment company
The S.L. owns the home and operates it — with Homebase Property Management servicing the property and guests. The recurring Spanish taxes are straightforward:
Corporate tax on income
Rental income — including any paid owner or company use — is taxed inside the S.L. at the Spanish corporate rate (around 25%), after deductible running costs.
IBI — annual property tax
A municipal tax on the home’s cadastral value, paid each year by the company that owns it.
Tourist tax on stays
The Balearic sustainable-tourism tax (ecotasa) applies per guest, per night — collected and remitted through the booking system.
ETV licence for short stays
Short holiday letting needs a tourist licence (ETV). Without one, the home lets mid-term only — 30 nights or more to a single tenant.
When shares change hands
Shares move freely — the tax stays at the door
A share in the S.L. is a security, and transferring shares in a Spanish company is, as a rule, free of transfer tax and VAT. The home is taxed once when the company buys it — not again each time a share moves.
Capped below control
Transfer tax only triggers if a buyer crosses 50% control. The shareholders’ agreement caps any single holding below that line — so a secondary sale never crosses it, and stays ITP-free for every owner.
The seller’s gain
A selling owner pays tax on the gain — for non-residents, 19% flat on the profit, or under their own country’s rules by treaty.
No one need show up
The S.L. administrator executes transfers through the digital cap table under a standing power of attorney — buyer and seller never travel. Cross-border ownership becomes routine, and the market far larger.
Owners from anywhere
Shareholders can be private or corporate, from any country. The Spanish, property-level tax is the same for all of them.
One more thing
This is the Spanish layer. Your home country is separate
Everything above is the Spanish, property-level tax — identical for every owner of the home. What you pay at home on dividends, gains or private use depends on where you’re tax-resident, and whether you hold privately or through a company. We map that layer with you separately, per nationality.
This is general information, not tax advice. Rates and rules change and depend on your situation — we structure every deal with you and your own advisor.
For our agent network
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Balearic property tax, answered
The questions buyers, sellers and their agents ask
What does a seller pay when selling a Mallorca property?
In a standard sale the seller pays the plusvalía municipal — the town-hall tax on the rise in land value over the years owned — plus tax on the gain. For non-residents the gain is taxed at 19% flat, and the buyer withholds 3% of the price at sale as an advance on it, refundable if it exceeds the final bill.
What does a buyer pay on a normal purchase?
On a resale, ITP — the tiered transfer tax from 8% to 13%, on the higher of price or official reference value. On a new-build, 10% IVA plus stamp duty (AJD, about 1.2%) instead. Notary, land registry and legal costs sit on top in either case.
Who pays the transfer tax, and when?
The buyer — here, the company that acquires the home — pays ITP once, within 30 days of the notarial deed. It’s calculated on the higher of the agreed price or the official reference value, on a tiered scale from 8% to 13%.
Is transfer tax charged again when shares are sold?
No. Transferring shares in a Spanish company is, as a rule, free of transfer tax and VAT. It’s only triggered if a buyer crosses 50% control of a property-rich company — which a 1/8 sale doesn’t approach.
What if the current owner puts their property into the company first?
Then there’s a three-year trap. Contributing real estate for shares carries ~1% capital duty, and if those shares are sold within three years, Spanish law treats the sale as a property transfer and ITP applies. The clean route is a new SPV buying directly from the seller.
What is a conditional purchase?
Investors subscribe shares in a new S.L. conditional on all eight selling. Once they do, the SPV buys the home from the seller, pays ITP once, and the shares then trade freely. It’s how a real secondary market becomes possible.
How is rental income taxed?
Inside the company, at the Spanish corporate rate (around 25%), after deductible running costs. Paid owner or company use is treated the same way — booked at market rate through the system.
What ongoing taxes apply while the company owns the home?
Corporate tax on income, the annual municipal property tax (IBI) on cadastral value, and the Balearic tourist tax (ecotasa) on guest stays. Short holiday letting also requires an ETV licence.
Does it matter which country the owners are from?
Not for the Spanish, property-level tax — that’s the same for everyone. What differs is each owner’s home-country tax on dividends, gains and use, which depends on residence and whether they hold privately or through a company.
What does a non-resident pay when selling a share at a gain?
19% flat on the gain, under Spanish non-resident rules — or under their own country’s rules where a tax treaty applies.