In Spain, generally speaking, a tax on the ownership of real estate by foreign entities is charged. The following is a brief guide to some of the points to be borne in mind.
As of 2011, the tax rate on ownership of real estate by foreign entities is 3% which is levied annually on the "cadastral value" (official value of property according to the local government or council) as of December 31st of each year and payable within the following month of January. This tax may be deducted when determining the taxable base for corporate income tax purposes.
The following entities however are exempt from paying this tax:
• Foreign Governments and public institutions and international organizations (they are in fact exempt from filing a tax return for this purpose);
• Entities that have their tax residency in countries that have signed treaties to avoid double taxation with Spain and which include an exchange of information clause. These entities are exempt from paying the tax provided that the individuals who directly or indirectly own the share capital of the entity are Spanish residents or may qualify for the application of a double tax treaty including an exchange of information clause;
• Entities carrying out business activities on a habitual basis that can be distinguished from the possession holding of real estate;
• Companies that are listed in an officially recognized Stock Exchange. This is also the case even when ownership is held indirectly through a corporation with the right to apply an international double-tax agreement containing a clause on the exchange of information.
• Charitable or cultural entities duly recognized as such by the legislation of a foreign country which has signed a double taxation treaty with Spain and which includes an exchange of information clause, provided that the real estate in question is used in accordance with these charitable or cultural purposes.
Regarding the filing procedure itself, the tax must be filed using the 213 form for this purpose. The return itself should be filed before the end of January corresponding to the previous calendar year ending on December 31. If there is a payment to be made, the form must be taken to a bank or other financial entity authorized by the tax authority to process the payment. If no payment is due, the form needs to be filed personally in the local tax office. It can also be sent by registered post.