With British people being one of the main groups of foreign owners of properties in Spain it is hardly surprising that occasionally a British person sells his or her Spanish property to another British person. Typically, we see the buyer initially converting their Sterling to Euros, paying the seller the purchase price of the property in Euros and the seller then converting the Euros back into Sterling.
Obviously, this does not make much sense and at a time when the sterling value against the Euro is at an all-time low, this transaction would see both the buyer and the seller losing out financially based on the current exchange rates.
Contrary to popular belief there is no requirement for the purchase price for a property in Spain to be paid in Euros. In fact the price doesn’t even have to be advertised in Euros. If both buyer and seller are the same nationality then the purchase price can be made in the local currency of their own country. Historically, many Spanish lawyers are not used to structuring the transaction in this way and would proceed on the basis of their Spanish clients without necessarily thinking about different ways of doing things which may benefit their foreign clients.
In the case set out above where, for example, a British client buys a property in Spain from a British seller. The contract of sale can be drafted in such a way as the purchase price can be set in Sterling rather than Euros and can also be paid in the UK rather than Spain.
There are several things that would need to be taken into consideration however;
- The Notary in Spain will need proof that the purchase price has been paid. In past years it was enough for the seller to confirm that they had received this but recently for Anti-Money Laundering purposes Notaries in Spain have started asking for copies of proof of payment.
- The transfer tax that is payable on the sale (the Spanish equivalent of Stamp duty – Impuesto de Transmisiones Patrimoniales) still has to be paid in Euros. Therefore in the purchase contract and title deed it will be necessary to have a Euro equivalent so that the taxes can be based on that.
- If the seller is non-resident in Spain then part of the price has to be paid in Spain in Euros.
If you would like to know more about buying property abroad in Sterling then you can contact our international property legal team.
Disclaimer – International legal issues are a complex area of law and this information is no substitute for independent legal advice on an individual basis taking into consideration your personal circumstances and legal requirements. This information is provided to provide general information only and was correct at the time of publishing. The legal position in relation to international transactions can change frequently and this page may not have been updated following any changes in the law. You should therefore not rely on this information and should seek legal advice in relation to your personal circumstances.