If you’re buying property in Spain, there’s one key concept you need to understand before signing: the Reference Value.
Law 11/2021, passed on July 9th, introduced measures to regulate, prevent, and combat tax fraud. It had been common practice in Spain’s real estate market to underreport property prices to reduce tax obligations.
Since January 2022, the Spanish government assigns every property a minimum official value (called the reference value) for tax purposes. Even if you pay less for the property, taxes will be calculated based on this official value—not the actual purchase price.
This affects:
- Property Transfer Tax (ITP)
- Stamp Duty (AJD)
- Inheritance and Gift Tax (ISD)
The Cadastre Office determines this value using data from notaries and property registries. However, beware: this is not the actual market value. In many cases, the reference value is higher than the price agreed upon by buyer and seller—sometimes by a significant amount.
Knowing this in advance is crucial. Otherwise, you may find yourself at the notary unexpectedly facing a much higher tax bill when buying, selling, donating, or inheriting a property.
You can claim for a refund. Based on my experience assisting foreign buyers:
- A certified property valuation can help reduce the assessed tax.
- Refunds are usually processed within a few months.
- Occasionally, the government may recalculate and issue a smaller additional tax demand—this is often preferable to going to court.
Our Advice:
- Always check the reference value before committing to a purchase.
- Be prepared to appeal if the value seems inflated—it’s usually worth the effort.
Buying property in Spain is a fantastic opportunity—but understanding the tax system can help you avoid costly surprises.
