La Complementaria or ‘Bargain Hunter Tax’

El Cabañal District, Valencia, property

El Cabañal District, Valencia, where bargain hunters have paid the price.

If after buying property you receive a letter from the Tax Office demanding payment of extra tax under the heading ‘Propuesta de Valoración y de Liquidación Provisionalyou have received what is known as a ‘complementaria’. Regular legal-contributor Raymundo Larraín Nesbitt explains how to avoid one, and how to appeal if you have already received it.

By Raymundo Larraín Nesbitt

Lawyer – Abogado
8th of May 2015


Spain’s unending appeal continues to attract buyers from all over the world. 2015 consolidates last year’s trend as a buyer’s market. Besides the traditional reasons to buy property in Spain, bargain hunters are smartly taking advantage of three one-time goldies:

  • Rock-bottom prices; on average 50% depreciation across the board after a prolonged eight-year property slump.
  • Historical ultra-low interest rates; the lowest on record on a fifty-year period due to the ECB’s Quantitative Easing monetary policy that’s shelling 60 billion euros a month in the money markets.
  • Sterling pound on a seven-year high against the euro. A strong currency empowers pound-holders to buy overseas at intrinsic ‘discounts’.

It is doubtful we will witness again such a propitious combination to buy real estate in Spain for the remainder of our lifetime.

British buyers in particular are in for a treat. Osborne’s bold pension reform allows unprecedented freedom to citizens (over the age of 55) to cash in on their pension pots as a lump sum, tax-free (only for the first quarter; income tax at marginal rates still applies on the remaining three-quarters).

For all these reasons buyers are flocking to Spain again to buy property at cracking prices. You can read the full list of taxes and associated buying costs in my article Taxes on Buying Spanish Property.

But it’s not all rosy for bargain hunters on the prowl as I explain below.

La Complementaria – Definition

Is a supplementary tax the Spanish Tax Office levies on buying property as a result of today’s low real estate values.

Knockdown prices are unwittingly drawing the attention of the Tax Office. So much so that over the last years many buyers have received a letter from Spain’s Inland Revenue normally one year after completion (at times even longer) demanding supplementary tax is paid plus delay interests on the property on having (allegedly) ‘underpaid’ ITP or Property Transfer Tax. This is known as “liquidación complementaria por comprobación de valores” in Spanish legal jargon or simply “la complementaria”.

La Complementaria – Root Cause

The spike in complementarias we are witnessing as a sign of the times does not relate to buyers under-declaring (to pay in ‘B-money’), rather it is the disjointedness between the Tax Office’s outdated valuations and today’s low property prices as a result of a prolonged eight-year property slump.

This can be explained because Regional Tax Authorities use standard value tables (bases de comprobación de valores) to determine the valuation of properties; each property has assigned a fiscal value in Hacienda’s books. Property Transfer Tax is a devolved competency and Spain’s seventeen Autonomous Communities, following article 46 of the Property Transfer Tax Law (ITPAJD), are empowered to review the declared sales price recorded in the Title deed before a Notary Public. Regional Tax Offices draw a comparison between the fiscal value of the property and the declared sales price at completion. Any meaningful deviation is taxed.

These rateable values are static and are reviewed from time to time (every decade on average). This was fine so long as there was a continuous capital appreciation but when the market grinded to a halt eight years ago these tables froze in time and do not reflect accurately in most cases the overall 50% depreciation real estate assets have undergone (speaking in broad terms). So basically these rateable values the tax authorities zealously use are, at best, outdated showing in most cases top-of-the-range pre-crash valuations which are logically not in line with today’s low market values. That is why bargain hunters are receiving these letters.

If the Tax Authority detects a statistical meaningful deviation they will exact the difference in what they deemed a buyer has under-declared. In most instances this is simply not the case. Buyers have only shrewdly taken advantage of the opportunities a crashed real estate market has to offer. Albeit unbeknownst to them this draws the attention of Regional Tax Authorities which will do their best to recoup what they (wrongly) see as an under-declared sales price.

Take note that the complementaria I describe is the exclusive making of the 17 Regional Tax Offices as a result of devolved competencies; Spain’s Hacienda in Madrid (AEAT) or Centralised Tax Office abhors of this regional practice and is unrelated. And if anyone is wondering why this foul practice is done it’s because money is tight and some regions are cash-strapped. When the market picks up again it will cease to exist.

It is explained more clearly with an example:

A two-bedroom property overlooking an 18-hole golf course that used to fetch €200,000 is now selling at a bargain price of €100,000. A couple seize the opportunity and buy it signing at a Notary Public. One year later they receive from their local Tax Office a letter titled Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados (Property Transfer Tax) under the heading Propuesta de Liquidación (Payment Proposal). The letter goes on to explain that the value of the property, according to the Tax Office’s books, is €150,000. The Tax Office believes the couple have under-declared the shortfall of €50,000 and so demands the tax on the difference plus delay interests.

You can read further on this widespread phenomenon in the article: As house prices crash the “bargain hunter” tax becomes an issue for buyers.

Complementarias – The Positive Side

I may be alone on this, but I believe the perception on them ought to change as they are not intrinsically negative; and of course they can be challenged as I explain in the section below.

I find complementarias useful for the following two reasons:

  • From an individual perspective: the fact you have received one is an iron-cast guarantee you have purchased at a bargain price.
  • From a broader market perspective: they can be used as an investment indicator to pick up on an undervalued property market.

No one likes to be slapped with extra taxes – granted – but on the bright side you would not be receiving this letter if the taxman did not think you had bagged yourself a great bargain. Moreover receiving one is a surefire tell-tale sign you have done well for yourself on buying a below the market value property (BMV).

Additionally a surge on complementarias bears the hallmark of a market’s trough – a clear sign to buy. Complementarias may be used as an investment indicator signalling an undervalued market; with overvalued real estate assets complementarias simply cannot exist, by definition. It is precisely because bargains abound in a buyer’s market that complementarias have soared over the previous two years. They did not exist in the heyday of the property bubble.

I had already warned profusely about the complementaria in my articles How to Buy Property in Spain Safely and Buying Resale Property in Spain. And just to clarify, so there are no misunderstandings, I am not advocating them in any manner whatsoever as it is blatant; merely pointing out two aspects which I find positive on digging further.

Challenging La Complementaria

There are two ways to tackle this problem:

  • The first one is to take pre-emptive action to mitigate the chances of it happening or negating it altogether.
  • The second involves appealing a proposed payment once received.

I. Pre-emptive Measures

A lawyer may request from the Tax Authorities the book value of the property (valoración previa vinculante). This is the value a lawyer knows that if sold below will necessarily draw the attention of the Tax Office by way of extra taxes. It binds the Regional Tax Office on calculating Property Transfer Tax (ITP) on resales and may be attached to the Title Deed on completion in avoidance of ‘discrepancies’.

The Tax Office calculates property taxes using the cadastral value (which is below the market’s value). The cadastral value appears on your annual IBI tax receipt (akin to the United Kingdom’s Council tax bands and rateable values).

A cadastral value is static and is revised from time to time (every ten years on average). The way it works, in the majority of Autonomous Communities, is that Tax Authorities apply a coefficient that is published annually in the Official Law Gazette of each Autonomous Community. This is called Coeficiente Multiplicador del Valor Catastral (or CMVC, for short). I won’t go into detail on how this coefficient is obtained. A vendor needs to multiply the cadastral value by the CMVC and this will give the updated ‘real’ cadastral value of the property for tax purposes. The CMVC is different for every municipality (town or city) and is updated from year to year. Unfortunately this procedure is not followed by every Autonomous Community in Spain as they have devolved competencies.

The buyer now knows that, on submitting the tax information for the sale, he must pay Transfer Tax on or above said updated real value. Only then is he ensured the Tax Office will not demand any additional tax (article 134 of Spain’s General Tax Law or LGT). This is the minimum market value for tax purposes.

Following on my above example, the two-bedroom property located in the municipality of Marbella has a cadastral value of €115,000. The coefficient to be applied is 1.31 for 2014. This gives a ‘real’ price of €150,650. Transfer Tax should be calculated on this figure to avoid attracting the Tax Office’s additional tax request despite the property being sold for €100,000; that is irrelevant and beside the point.

You can check for yourself the assessed valuation given by the Regional Tax Offices. Each Autonomous Community has different procedures in place; in some valuations can be requested online, whilst others require a written form is submitted. I will only list those where non-residents frequently buy, not the seventeen that exist:








II. Appealing the Payment Proposal

A buyer has two options on receiving a complementaria letter:

1. Passive. No lawyer is hired, no appeal is filed; proposed tax plus delay interests are paid lump sum.

2. Pro-active. Lawyer is hired and appeal is filed; revised (lower) tax is paid besides lawyer’s fees.

To file an appeal a lawyer may require the support of an external chartered surveyor (normally a technical arquitect known as aparejador) to draft a detailed report of the propertie’s value (tasación pericial contradictoria). The price for this report is in the region of €1,000. Hiring a lawyer to lodge an appeal is in the region of €1,500 to €2,500, dependent on the matter’s complexity.

So basically a buyer must run the Maths. Hiring a lawyer and a chartered surveyor has combined fixed fees in the region of €2,000 to €3,500. The combined fixed fees are the breaking point upon which a client starts to save money in taxes.

It stands to logic that if the Tax Office is demanding for example €1,000 as a Property Transfer Tax shortfall hiring a lawyer and a surveyor is out of the question. It’s put up or pay up, period.

Now if what’s being discussed exceeds the €2,000 to €3,500 threshold (as is normally the case) then it is reasonable to hire a lawyer (and surveyor) as their fees are offset with what a buyer stands to gain in saving themselves the supplementary tax (plus interests).

In practice these differences are larger and translate into much higher figures (as Regional Tax Offices takes their sweet time in sending these letters and meanwhile delay interests are accrued which are added on top and rolled over to what is owed by the taxpayer). A lawyer’s fixed fees are a bargain compared to what one stands to save in taxes. Particularly on buying high-end property lodging an appeal on a complementaria is a no-brainer. It is worth every penny in my professional experience.

Profile on the Appeals Procedure

If no pre-emptive action was taken, normally one year post-completion (but may take longer, years) the buyer, or his legal representative in Spain, will receive a Payment Proposal for Transfer Tax on the sales price shortfall. This payment proposal also includes delay interests for late payment on the lapsed time between completion and the day the letter is officially notified. The outline of the appeals procedure is as follows:

1. A buyer receives from their local Tax Office a letter titled Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados (Property Transfer Tax) under the heading Propuesta de Liquidación Provisional (provisional payment proposal). Example of a complementaria letter (source: El Confidencial).

2. He has ten working days to register his interest upon the notification of the letter by recorded delivery. He can make allegations and submit documents to uphold his counter-arguments. Failure to comply within the ten-day window time-bars any option to appeal.

3. These allegations are normally dismissed and the Tax Office sends a liquidación tributaria definitiva (Final Payment Proposal).

4.  Two options fan out on filing an appeal:

a) Recurso de Reposición: It consists on filing an appeal before the very Tax Office (Agencia Tributaria) that drafted the letter so they ‘reconsider’ their calculations and decision. Needless to say the chances are slim to non-existent. This appeal is optional. One can first file this appeal and if it fails follow the TEAR appeal explained below. Deadline is 30 days.

b) Recurso Económico-Administrativo: This files an appeal before the regional economic administrative tribunal (Tribunal Económico Administrativo Regional, or TEAR) which is independent from the Tax Office; though slower usually ends in success. Appealing through TEARs is your best bet (pun not intended). Deadline is 30 days.

5. If the appeal succeeds, the revised (lower) Property Transfer Tax (ITP) is paid.

6. If the appeal fails the lawyer may opt to file legal proceedings before a Juzgado Contencioso-Administrativo (it normally doesn’t reach this stage).

Focus on the Recurso Económico-Administrativo

The lawyer in his appeal will hunt down formal errors made by the Administration on making their case. He will also make reference to ample jurisprudence on cadastral values to support his arguments as well as making good use of the surveyor’s report.

Regardless of the outcome, a client will not recoup the expenses incurred on hiring a lawyer and a chartered surveyor. The appeal procedure takes over a year.

La Complementaria or ‘Bargain-Hunter Tax’ – Conclusion

A market awash with bargains, coupled with the exceptional pro-buyer circumstances highlighted in this article’s introduction, fostered a U-turn in 2014 as I pointed out in my article Buying Property in Spain Safely. The remarkably favourable buying conditions, sustained by a mortgage lending rebound, translate into a sharp increase of bargain sales which account for a surge in complementarias over the previous two years which may, in due time, lead to a steady rise in property prices.

The spike in complementarias can be pinned to an undervalued market, a buyer’s market by definition, as opposed to London’s seller’s market which is eye-watering overvalued. The widespread phenomenon of complementarias was largely unheard of in the boom days and will foreseeably cease to exist in the near future when the market gathers pace and momentum gently drives prices upwards across the board.

In my experience the Spanish Tax Office (Hacienda or AEAT) struggles understanding both a buyers’ and sellers’ plight in a buyer’s market. Given today’s bargain prices, below Hacienda’s rateable values, buyers will be demanded supplementary Property Transfer Tax and, by the same token, sellers will be demanded additional Capital Gains Tax as I explain in detail in my article Taxes on Selling Spanish Property; they are two sides of the same coin.

Planning ahead is key to mitigate tax exposure on buying or selling Spanish property safely. I strongly advise both buyer and seller hire a competent lawyer.

If you fail to plan, you plan to fail” – Benjamin Franklin.

Founding Father of the United States. Exceptionally gifted scientist, inventor, diplomat, writer, printer, postmaster and political theorist. Even politician in his spare time; nobody’s perfect.

Related articles

How to Buy Property in Spain – Advice by the Foreign & Commonwealth Office
Buying Distressed Property in Spain – 8th August 2011
Spain’s Wealth Tax – 10th October 2011
Off-Plan Construction Guarantees – 8th November 2011
Rent-to-Buy in Spain: The Smart Choice – 8th April 2012
Buying Resale Property in Spain – 21st February 2013
Licence of First Occupation – 8th April 2013
Bank Guarantees in Spain – 8th April 2013
Buying Off-Plan Property in Spain – 8th of June 2013
Investor Guide to Spain’s Golden Visa Law – 8th November 2013
Bank Repossessions in Spain – 21st February 2014
Buying and Owning Spanish Property through Companies: Pros and Cons (Dispelling Spanish Inheritance Tax Myths) – 7th March 2014
How to Buy Commercial Property in Spain – 4th July 2014
How to Buy Rural Property in Spain – 8th August 2014
How to Buy Property in Spain Safely – 10th October 2014
Taxes on Selling Spanish Property – 8th December 2014

House Hunting in SpainThe New York Times. June 2015

Taxes on Buying Spanish Property – 8th July 2015

Resurgent Spain: Málaga Sees Strong Sales – Mansion Global (The Wall Street Journal). December 2015

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2015 © Raymundo Larraín Nesbitt. All rights reserved.



18 thoughts on “La Complementaria or ‘Bargain Hunter Tax’”

  1. Chris Nation

    I applaud Raymundo’s bid to find something positive about this ‘two bites at the cherry’ that the taxman is taking but I can’t agree with the reasons. To say that the extra tax is an indication of having found a bargain or evidence of the bottom of the market is looking at it through the wrong end of the telescope. The case is that Spanish properties were wildly OVERVALUED during the boom and what we see now is what the economists call ‘the market self-correcting’. In the 1630’s in Holland, tulip bulbs were traded for sums equivalent to one tonne of butter or a skilled worker’s income for 10 years. Like the inflated prices of property in Spain, it was crazy, it couldn’t last and it didn’t.

    The Spanish taxman is taking advantage of the inflated prices at the peak of the bubble. This is, at best, unreasonable and at worst, calculated, indefensible and unscrupulous extortion by a government department. It is an attempt to claw back some of the transfer tax that didn’t materialise during the period – which continues – of very low numbers of property tranfers.

    1. Paul C

      I agree with the comment. Just another reason not to trust the Spanish governance model. It is more like dealing with a dysfunctional 3rd world country.

    2. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

      Morning Chris,

      Don’t get me wrong, I am obviously in agreement with your view. I am positioned against this additional tax as it should not be happening.

      I was just trying to dig a bit deeper and find something positive out of them. I think my two points are valid from a wider angle (market perspective). Of course they don’t mean anything to an individual who is demanded the (unnecessary) payment of extra taxes.

      Complementarias could be stopped from one day to the next if there was a resolute political will. It’s as easy as municipalities updating the cadastral value of their properties reflecting the 50% slump (on average).

      Will this be done? Doubtful. Not in the short term. They are cash-strapped and only seek to prop up their coffers.


  2. Arthur

    The complementaria falls into the same category as imputed income tax – an attempt to tax a gain which has not been made. It is based on a lie and is “legalised” robbery.

  3. Stu

    For people who bought when the prices were over-valued I assume they will get suitable tax refund…not!
    Well, I for one will be reviewing whether I purchase in Spain or not. This tax is deferred for a year or more so as not to effect the market for unsuspecting buyers..

  4. Phil

    Just a warning to anyone buying a “bargain” Spanish property now or in the future, this unlawful robbery will get you, so do allow and budget for it!

    I bought Spanish property just weeks ago from Sabadell at a great price and assumed wrongly that as I was buying from a bank all would be well. How wrong could you be within just a few short weeks I have received a tax demand, very carefully placed at just below the optimum 2K Euro’s level so they know you will pay as you just cannot do anything else as to appeal would cost you such a lot more…
    On another note I also sold a property in Spain as well just before this, at no profit, in fact small loss if we include the amount spent improving it over the years, but that aside essentially no profit made, and guess what despite trying very hard to date I have still not managed to get back the tax retention the taxman has placed under the Spanish tax law of the land on this sale.
    So very quick to tax on a purchase and I would suspect very unlikely to ever refund on a sale, the Spanish government would do well to remember you don’t kill the goose that laid the golden egg, not at this stage where even a fragile recovery is still not in sight, they are either just totally stupid, short-sighted or just so plain arrogant and don’t care to look at the longer term view.
    So be warned you will get hit and quickly don’t imagine for one minute your bargain will not have an additional tax levied post sale, it will!!!

  5. Arthur

    I got hit on a settlement of an English Court Action where the price was agreed by two abogados, based on the catastral (Tenerife).
    I entered a recurso (appeal) in February 2014. I have still had no response.

  6. Phil

    Hi Mark, I guess it is what it is but I wanted to make others aware through your excellent website, then at least they can make an informed decision and budget for the worst case scenario, the property purchased was in Almeria

  7. Michael O'Kane

    Raymundo, yet another fascinating and erudite piece of work from you. Thanks as always and keep articles like these coming – they’re really useful. On a personal note we bought a piso in Malaga and, knowing this tax was likely, elected to pay it when the transaction was completed. Since we’re non-residents we were concerned the bill might arrive at the flat when we were home in the UK and wouldn’t therefore be in a position either to receive the bill or to pay it on time. in such a case we were aware that we might have to pay yet another sum as a penalty.

  8. G P

    Is it a Spanish legal requirement to send the

    “1. A buyer receives from their local Tax Office a letter titled Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados (Property Transfer Tax) under the heading Propuesta de Liquidación Provisional ”

    to the property owner?

    I simply received a Propuesta de liquidacion, IMP.Sobre Transmisiones Patrimoniales Y A.J.D. Medelo P10 Actos Juridicos Documentos, through my purchasing abogados and then two weeks later yet another one as above Transmision Patrimon.Onerosa.!
    I simply can’t pay it on a UK state pension. they want nearly 5,000 from me……….

    1. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

      Hi GP,

      You only receive one.

      You, as the new buyer, are liable for this ‘extra’ tax as I explain in detail above.

      If you can’t pay it they will place a charge on the property which may lead to a public auction in the future if left unchecked.


  9. Julie

    I have just received one…. is there anything I can do? I have appealed and am now awaiting the ‘Acuerdo de Transmisiones Patrimoniales y ajd’… I have been told that if we do not accept the new valuation that a third Perito (Achitect) will be employed by the Junta de Andalucia and then we will have to pay his fees if we do not win… is this true?

    Just wanted to add your articles are great.

    with regards Julie

    1. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

      Morning Julie,

      Thank you for your kind words.

      Yes it is true. If there is more than a 10% difference between what your valuer and the one appointed by the Tax Office state in their appraisal report a third perito (or appraisal expert) is appointed.

      There is little you can do now other than to wait for the outcome.


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