Buying Commercial Premises: Who Pays the Municipal Capital Gains Tax, Property Tax, Transfer Tax and Stamp Duty

Buying commercial premises isn’t just about signing the deed and paying the agreed price. Several taxes come into play around the transaction, and they’re often confused with one another: property tax (IBI), the municipal capital gains tax (plusvalía municipal), transfer tax (ITP) and stamp duty (AJD). Each one has a different taxpayer, a different point at which it’s triggered, and its own accounting treatment. Understanding who pays what — and why the rules change depending on who the seller is — avoids surprises at the notary’s office and mismatches when you capitalise the premises on the buyer’s books.

Who pays what: buyer and seller

IBI (Impuesto sobre Bienes Inmuebles, the Spanish property tax) is an annual tax owed by whoever is registered as the owner of the property on 1 January each year. If the sale takes place partway through the year, the law doesn’t require the tax to be split, but it’s common practice to agree a pro-rata split between buyer and seller in the deed, based on the completion date. It’s worth putting this in writing, because the town council will always pursue the owner of record as of 1 January — any split is a private matter between the parties, not something enforceable against the tax authority.

The municipal capital gains tax (plusvalía municipal, formally the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana, or IIVTNU) taxes the increase in the land’s value between the last transfer and the current sale. By law, the seller is the taxpayer (unless the seller is a non-resident, in which case the buyer becomes liable as a substitute). It’s common, especially in business-to-business deals, to agree contractually that the buyer will bear this cost, but that doesn’t change the legal obligation towards the town council: if the seller doesn’t pay, the authority can still go after them.

Transfer tax (ITP, Impuesto sobre Transmisiones Patrimoniales) and stamp duty (AJD, Actos Jurídicos Documentados) are always paid by the buyer, since they tax the act of acquiring the asset or formalising it in a public deed.

Transfer tax or VAT + stamp duty: it all depends on who’s selling

This is where most mistakes happen. How the purchase is taxed depends on whether the seller is acting as a private individual or as a business/professional in the course of their activity:

If the seller is a private individual (or an entity not acting as a business in that particular transaction), the transfer is taxed under ITP (the “Onerous Property Transfer” category), at whatever rate the relevant autonomous region sets for urban property. No VAT applies.

If the seller is a business or professional and the premises qualify as a first transfer (new-build property that hasn’t been in effective use for a significant period), the transaction is subject to VAT at the standard rate, plus stamp duty (AJD) on the notarial document.

If it’s a second or later transfer (previously used premises), the law exempts the transaction from VAT, so it would in principle be taxed under ITP instead. However, if the buyer is also a business or professional entitled to deduct input VAT, both parties can agree to waive the exemption: the transaction then becomes subject to VAT instead of ITP, with stamp duty (AJD) added on top. This waiver is usually in the interest of a buyer with full trading activity, since it lets them recover the input VAT and avoid an ITP charge that isn’t deductible.

What cost gets capitalised in the accounts

The premises are recorded as a fixed asset at their acquisition cost, which includes not just the agreed price but every expense needed to get the property ready for use: notary fees, land registry fees, advisory or legal fees, and any non-recoverable taxes. This is the key accounting nuance: ITP and AJD are neither deductible nor recoverable for the company, so they’re added to the cost of the asset (increasing its book value, and therefore future depreciation). Input VAT on the purchase, if deductible, is not part of the asset’s cost: it’s recorded as input VAT and offset or reclaimed through form 303, leaving the premises valued at their price net of VAT. If the VAT weren’t deductible (for example, in an exempt activity), it would then form part of the capitalised cost. The municipal capital gains tax, when the buyer agrees to bear it, is also added to the cost of the fixed asset, as is any share of the current year’s IBI that the buyer has agreed to take on.

At Zythos Business we support self-employed professionals and SMEs through transactions like this from before the deed is even signed: we assess whether waiving the VAT exemption makes sense, calculate the real impact of each tax on the effective price of the premises, and make sure the purchase is correctly capitalised in the accounts from the very first entry — so depreciation and future taxation of the property hold no surprises.