What is a sales agreement?

A private document signed between the buyer and seller.
It must state the following points;

• Details of the buyer and seller.
• A legal description of the property
• The purchase price
• The form of payment and currency to be used in the transaction (banker’s draft, cash, etc.)
• The completion dates and penalty clauses if these dates are not met (usually, if the buyer withdraws after signing the contract he is liable to lose the deposit. If the seller withdraws he is liable to refund double the amount of deposit).

What if there’s still a mortgage on the property?

If there is a mortgage on the property it can be cancelled on the same day that you sign at the Notary. Before the signing date at the notary, we will inform the holding bank to prepare the cancellation costs, and the amount that the seller still owes.
On the day of the signing a banker’s draft will be made out for this outstanding figure, including the costs, and paid to the bank. This figure will then be deducted from the purchase price when paying the seller. The bank will then register the cancellation of the mortgage.

Is it easy for a foreigner to obtain a mortgage?

Yes. So long as you can submit basic financial information getting a mortgage in The Canary Islands is much easier than in most other European countries. Often builders will offer you a mortgage if you purchase a new property. But don’t worry, we at Horizon will handle the whole process for you.

What does a foreigner need in order to buy property in The Canary Islands?

The first thing is to apply for an N.I.E. (Number of Identification for Foreigners), which anybody with a financial interest in the Canary Islands is required to have. You’ll also need to set up a non-resident bank account, which is a simple process, but again, we will handle all these administrative procedures for you.

Will we have to pay tax when selling a property?

Yes, as a non-resident you’ll have to pay 5% of the new declared value as a retention to the Spanish Tax Office, but provided your accounts are in order you should get most of this back within five or six months.
You will also have to pay 18% of the capital gains as Income Tax, i.e. 18% of the difference between the price you paid for the property and the price you’re selling it for. This was brought down from 35% in January 2007

Special incentives for companies investing in the Canaries

As more and more people each year are discovering the appeal of the Canary Islands, the tourismeEconomy is shooting up at an unprecedented rate – great news for the financial stability of the region, and good news for the visitor as more money is consequently put back into improving the region’s infrastructure and facilities.

However, as if the prospect of a booming population wasn’t enough enticement to encourage new business to the archipelago, the Special Canary Islands Zone (ZEC) was established in the year 2000 to promote even further development by offering unique tax advantages to new companies establishing themselves within this zone.
There are certain criteria to be met before registering for ZEC status (ask us for more details) but ZEC companies will enjoy the following tax advantages:

• Rather than the 30 to 35% corporation tax levied on companies in Spain, those sheltered under the ZEC regime will only be charged between one and five percent on profits derived from ZEC activities
• Exemption from IGIC on delivery of goods and provision of service from one ZEC company to another, and also on the importation of goods.
• Exemption from Capital Transfer Tax and Stamp Duty in business activities and company operations within the geographical area of the ZEC.

As ZEC businesses are considered Spanish resident companies, EU tax treaties are fully applicable to avoid double taxation.