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Plusvalía municipal (IIVTNU): who pays and how it is worked out

The plusvalía municipal (IIVTNU) is a town-hall tax on the increase in the value of urban land that shows up when a home is sold, inherited or given away.

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How plusvalía municipal works and who pays it

It is governed by articles 104 to 110 of the Local Finance Act (TRLRHL), reformed by Royal Decree-Law 26/2021. It taxes the rise in value of urban land over a maximum of twenty years (article 107.1). In a sale the taxpayer is the seller (article 106.1.b); in an inheritance or gift, the person who receives (article 106.1.a).

The exception that matters most to foreign buyers: if the seller is an individual not resident in Spain, the buyer becomes the substitute taxpayer and pays the tax in the seller's place (article 106.2). The General Tax Act lets the buyer claim that amount from the seller (LGT article 36.3), so it is usually held back from the price at signing. It is the second withholding when buying from a non-resident, alongside the 3% for IRNR.

No gain means no tax, but the sale must still be declared with the purchase and sale deeds (article 104.5). If there is a gain, the base is the objective method (cadastral land value times a coefficient for the years of ownership) or the actual gain, if lower and the person liable, including a substitute, asks for it (article 107.5). Each town hall's rate applies to that base, at most 30% (article 108.1). A sale must be declared within thirty working days of the transfer (article 110.2.a), and many town halls require self-assessment (article 110.4). When it becomes your bill as an owner is covered in the owner's tax guide.

Plusvalía municipal step by step when you buy as a non-resident

  1. Find out whether the seller is resident in Spain and whether it is an individual or a company: that decides who pays.
  2. If it is a non-resident individual, get an estimate of the tax before signing the deposit contract (arras).
  3. Agree in the contract that this amount is held back from the price at the notary, together with the IRNR withholding.
  4. Within thirty working days of the escritura, file the return or self-assessment with the town hall and pay (TRLRHL article 110).
  5. If the seller is resident, you do not pay, but you must still notify the town hall of the purchase within the same period (article 110.6.b).
  6. Keep the receipt: without the return, the self-assessment or that notice, the Land Registry will not register the purchase (Mortgage Act article 254.5).

Common plusvalía municipal mistakes

  • Buying from a non-resident without holding back the plusvalía: the town hall will claim it from you as substitute.
  • Believing a contract clause moves the debt: private agreements do not change who is liable before the tax authority (LGT article 17.5); they only share the cost between the parties.
  • Assuming that selling at a loss is automatically exempt: you must declare the sale and prove there was no gain with both deeds.
  • Missing the thirty working days: a late return carries a surcharge (LGT article 27).

Plusvalía municipal on new builds and resale homes

If you buy a new build directly from the developer, the seller is a company and the plusvalía on that sale is its own: the substitution in article 106.2 applies only to non-resident individual sellers. In home sales, a clause making the consumer pay taxes for which the business is the taxpayer is also unfair (TRLGDCU article 89.3.c), so check the contract. You still have to notify the town hall of the purchase (article 110.6.b); sometimes the notary or a gestoría files it for you, so confirm who does.

With a resale home, it all depends on the seller: with a non-resident individual, the plusvalía passes to you as substitute and should be deducted from the price. In both cases, when you sell later, the plusvalía will be yours and the years of ownership will count from your purchase. Developments in the new-build catalogue avoid the non-resident-seller case; the other checks for a resale purchase are in the risks guide.

Sources and legal basis

Glossary of buying property in Spain

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