Taxes in the Autonomous Community of Galicia for Foreign Property Owners

Galicia's tax system: overview for foreigners

Galicia, as an autonomous community, has its own tax powers that directly affect property owners. Understanding these specifics is essential to optimize your tax situation. Unlike what many foreigners believe, Spanish regions have regulatory power over key taxes like ITP, inheritance tax, and IBI.

The Galician Tax Agency (ATG) is responsible for managing the community's taxes. As a foreign property owner, you'll deal with two administrations: the state tax agency (AEAT) for taxes like the non-resident income tax, and the ATG for transferred regional taxes.

ITP: Property Transfer Tax

ITP is the tax you pay when buying a second-hand property or land. In Galicia, the rates are:

As you can see, Galicia is more expensive than Madrid in ITP but similar to Andalusia. For a €200,000 purchase, you'd pay €16,000 ITP in Galicia vs €12,000 in Madrid. However, property prices in Galicia are notably lower, so the taxable base will be smaller.

IBI: Property Tax

IBI is a municipal tax on property ownership. Each town hall sets the rate within limits established by the autonomous community. In Galicia, rates range from 0.3% to 0.8% of the cadastral value.

Smaller municipalities on the Costa da Morte have lower IBI rates than large cities, representing significant savings for second-home owners.

Plusvalía municipal (Land Value Increase Tax)

The plusvalía is paid when you sell a property. It taxes the increase in land value during your ownership period. In Galicia, municipalities apply rates between 26% and 30% on the taxable base. Since the 2021 reform, taxpayers can choose between the objective and real calculation methods, which usually benefits the seller in areas where prices haven't risen much.

For a property in Corcubión bought 10 years ago at €80,000 and sold at €120,000, the estimated plusvalía would be approximately €1,500-3,000, significantly less than in Madrid or Barcelona.

Inheritance and Gift Tax in Galicia: a key advantage

This is probably Galicia's biggest tax advantage. Galicia applies a 99% reduction on inheritance tax for groups I and II (descendants, spouses, and ascendants). This means inheriting a property in Galicia generates virtually no significant tax cost.

Non-Resident Income Tax (IRNR)

If you own property in Galicia but are not a tax resident in Spain, you must pay the IRNR. Two situations:

1. Unrented property (income imputation)

The tax authority assigns a deemed income. The rate is 19% for EU/EEA residents and 24% for third-country residents. The taxable base is generally 1.1% of the cadastral value.

Example: For an apartment in Cee with a cadastral value of €90,000, the taxable base would be €990/year. Annual tax: €188 (EU) or €238 (third countries).

2. Rented property

You pay 19% (EU/EEA) or 24% (third countries) on net rental income (income minus deductible expenses like community fees, IBI, insurance, repairs).

Double taxation treaties

Spain has double taxation treaties with over 90 countries. The most relevant for foreign property owners in Galicia include: UK (Spanish property income can be deducted in the UK), Germany (rental income taxed in Spain with German credit), France (similar with French credit), USA (Spanish property income taxed in Spain with US credit), and Nordic countries (Norway, Sweden, Denmark, Finland with similar credits).

Tax advantages of Galicia vs other regions

The conclusion is clear: although Galicia's ITP is higher than Madrid's, property prices are 55-70% lower, which more than compensates. A €150,000 property in Galicia pays €12,000 ITP, while an equivalent property in Madrid would cost €340,000 and pay €20,400 ITP (even at the 6% rate).

Tax calendar for foreign owners

How to file your taxes in Galicia

1. Specialized agency (gestoría): Hire a Galician gestoría experienced with international clients. Cost: €150-400/year. Most recommended option.
2. Online filing: Through AEAT (aeat.gob.es) for IRNR and ATG (atiga.xunta.gal) for regional taxes.
3. International tax advisor: For significant assets, an advisor with international tax experience can optimize your structure.

Tax residency: when Galicia becomes your tax home

If you spend more than 183 days per year in Spain or your center of economic interests is in Galicia, you become a Spanish tax resident. This means you'll pay Galician IRPF with progressive rates from 19% to 47%. For middle incomes (up to €60,000), the effective rate is usually between 19% and 30%.

Useful contacts

• Galician Tax Agency (ATG): atiga.xunta.gal
• AEAT: aeat.gob.es
• Cadastre: sedecatastro.gob.es

Conclusion

Galicia offers a competitive tax framework for foreign property owners, especially thanks to the 99% inheritance tax reduction and low cadastral values that reduce both IBI and IRNR imputation. Although ITP is somewhat higher than Madrid's, significantly lower property prices more than compensate. Professional local advice is key to optimizing your tax position.