Power of attorney

A power general or general power of attorney is frequently used in Spain. The power comes in a standard form, which lists all the actions that can be carried out by the holder.

These include buying and selling property, handling bank accounts, and just about anything that the person himself can do with his assets.

This document contains a clause declaring that all of these actions shall be taken for the benefit of the granter of the power.

There are also other forms of power of attorney, limited to carrying out certain specific actions in the name of the granter, such as signing a contract for the sale of a specified property at a given price, during a given time period, after which the power elapses.

But the general power of attorney is the one most used, simply because situations change and unforeseen complexities arise in any transaction. This can mean that the holder of the power is unable to act because the power does not mention a specific circumstance that has arisen, such as signing at the bank to obtain the money transfer from abroad.

The wide powers of the general power of attorney avoid these problems. In an international property market, you often find that a seller or buyer cannot be physically present at the moment of signing a purchase deal at the notary, so he gives his lawyer or some other trusted person a general power of attorney to sign for him.

Once the deed is accomplished, the granter revokes the power of attorney, again at the notary.

What are the taxes and legal implications?

You should allow approx. 10% of the purchase price to cover these costs. They are broken down as follows:

The Spanish authority responsible for the collection of taxes is the Agencia Tributaria (Hacienda).

Taxes payable on the transfer of property

Impuesto sobre actividades patrimoniales (I.T.P.)

All sales of second hand dwelling houses (i.e. re-sales) carry Transfer Taxes. It is generally 7% of the declared value of the property as expressed in the Escritura de Compraventa (Title Deed).

Impuesto sobre el valor anadido (I.V.A.)
This is the Spanish equivalent of V.A.T. It is paid instead of Impuesto sobre actividades patrimoniales in the case of a new building (when you buy from a promoter rather than the private individual). It is charged at the rate of 7%.

Impuesto sobre actos juridicos documentados (A.J.D.)
In addition to I.T.P. you will also have to pay a document tax or stamp duty at 0,5% (in some cases 1% depending on the province you buy) of the purchase price.