VAT on agent's fees

Tagged: ,

Viewing 10 reply threads
  • Author
    • #192663

      Hi, we are in the process of buying a house in Spain. So far everything has been negotiable and we’re just entering the home stretch for the actual purchase. However, the agent has just sprung on us that his quoted fee is ex-VAT. When we went through costs with him at the beginning this was never mentioned, although all the other fees and costs seem have been accurate. As its a matter of 4000 euros, its a matter of some concern for us.

      Can anybody please confirm if traditionally the agents 3% fee is including VAT or without VAT?


    • #192671
      Mark Stücklin

      Traditionally the vendor pays the estate agent’s fee, including VAT. Did you agree as a buyer to pay the estate agent’s fee? Or are you using a buying agent?

    • #192672

      Yes, we agreed to pay the estate agency’s fees. The house was originally shown to us by another agent who turned out to be the c0-owner. We did not feel comfortable with this arrangement, and having been looking at other house with another agent with whom we felt more comfortable, we proposed that he became our buyer’s agent and we’ll pay his fees. There has been no mention of seller’s fees since, so I think that our agent’s fees are the only pertinent ones.

      However, when we lined out all the costs a few month’s ago, there was no mention of VAT on his fees. Now we’re close to closing, and he’s just added 21% VAT on top. My feeling is that if it was not listed before, then it should be assumed that his fee is including VAT. However, not having bought a house in Spain before, it’s difficult to argue the point without knowing what is normal.

    • #192676
      Mark Stücklin

      Yes, it’s normal to pay VAT of 21% on estate agent fees, but it should be made clear from the outset.

    • #192694

      As Mark says IVA is payable on estate agents fees but its the agents responsibility to pay this not yours so it rather depends on what you have signed.  If you have signed a contract with the agent you will need to pay whatever it says on the contract, if it says plus IVA you will have to pay it if it does not I would hold out and refuse to pay it.  Don’t be intimidate with statements such as ‘its normal in Spain’ if its not written on the contract there is no obligation to pay it.

      If you don’t have a signed contract you don’t actually have to pay them anything but by the sounds of it you have agreed something verbally if nothing else.  If this is the case just explain that IVA was not mentioned, you have not budgeted for it and you do not have the funds to pay it as you are already maxed out on credit cards etc.  Explain that they have not incurred the usual costs of advertising or viewings and that if you had not come to them they would not be getting any fee at all!!

    • #192700

      @ poujol.

      Maybe I’m missing something here, but €4,000 in VAT implies agents fees of around €19,000.

      Since you found the property, did your agent actually do anything to earn these fees ?


    • #192702

      Before we even visited Sanlucar, we looked at house on the internet and contacted various agents with whom interesting looking houses were listed. We’re not Spanish speakers (but are looking forward to learning and are not daunted by this after 23 years running businesses in France), so having an English (or French) speaking agent would be a necessity. This particular agent got back to us immediately, in English, with a list of a dozen houses to see. By contrast most of the others failed to respond to our first contacts in (Google translated) Spanish.

      I have bought up the lack of warning for his fees + TVA and he has resent us a copy of the first email that he sent us, before we even met him, where he makes clear that he charges the standard 3% agency fees plus 1% for transactions where he has to translate + VAT. However once we started talking about the house that we found, we should have renegotiated his fee. The negotiations between us and the sellers were complicated as they are a divorcing couple and the husband was not motivated to sell. So whilst I don’t begrudge our agent’s 4% fee, I just wish he’d mentioned the VAT again when we lined out costs on the house a few months ago.

      We’ll be going down again next week and I think that I’ll propose a compromise whereby we split the difference, ie. the total including tax will be halfway between the full amount and the amount that we understood that we would pay. I’ll justify this because it was us who found the house and without us bringing him in, he’d be getting nothing, as you mention. But to be fair, such was the bad feeling between the sellers, without him, I don’t think we’d be buying this house.

    • #192706

      I don’t want to enter in the question who is liable to pay the agents’ fee. I only would like to state that the fee of agents is always subject to Spanish VAT, because the property is situated in Spain.

    • #192834

      Hi everyone, and thank you for all your replies. Most helpful. But all moot, as the seller pulled out, literally an hour before we were to sign the preliminary sales contract and pay a deposit. As I said, he had been a nightmare to deal with from the beginning so maybe it was better this way. Still, very frustrating to have spent three months negotiating for no result.

      Thank you again for all your helpful posts.


      • #192897

        Buying agents fees range from as low as 1% in the UK up to maybe 3% in Spain, although I have noticed some as high as 4% in Madrid. However, a buying agent’s service will include inspection, assessment and reporting on an unlimited number of properties, viewings, negotiation, translations, etc., etc. VAT is always applied if the company handling the acquisition is fiscally based in the same country as the location of the property; so a Spanish company working for a buyer in Spain adds IVA to their invoice while a UK Ltd company does not, at least under current reciprocal EU VAT rules – who knows after Brexit.

        You say it “turned out” that the original agent who showed you the house was a co-owner. Does that mean that this fact was not disclosed prior to you viewing? If so, that’s bad but I have a feeling it may also be illegal – I think there is something in Spanish law that requires a selling agent to disclose a personal interest. Secondly, for an agent to think about charging more than a symbolic fee in this case as he did not even introduce you to the property is, in my opinion, more than a bit off.

        However, it seems you are unaware of a quirk in Cádiz province (I assume you are referring to Sanlúcar de Barrameda) and that is the fact that it is still common for an agent to take 3% from the seller and 3% from the buyer, as often happens in the US in the multi-listing system. Some Cádiz agents do state, in small letters, that 3% is added to the price and payable by the buyer but many do not as they know it can be a deterrent and then they spring it on the buyer later. This system was normal in many Spanish provinces years ago but has more or less died out, Cádiz being an exception.
        Kind regards
        Barbara Wood
        The Property Finders

    • #245986

      Hello, my wife and I purchased house 36 years ago in Andalusia . We lived there for a year and left. So for 36 years we have been paying bills and taxes for this property. It is never rented. It just stands there as a monument to our stupidity.  Now we are selling and what a mine field. The last item we have to understand or get a straight forward answer to is this. The estate agent with whom we have sold is invoicing with IVA.  I am told by my solicitor that is incorrect. My solicitor is not charging us IVA. She says it is a service to a non resident non Spanish national and therefore is exempt from IVA. My solicitor is Spanish and is based in Barcelona.  I do not want to fall out with our agent but at the same time have no desire to add 21% to our already absurd costs.  The agency is based in Spain and is a Spanish company. The energy certificate has IVA as it is classified differently as are many other things.  Some good advice on this matter would be most welcome.

    • #246007
      Mark Stücklin

      Peter, that’s an amazing story. Did you furnish it? After 36 years, what made you decide to sell now?

      In answer to your question, agents invoice with IVA / VAT regardless of your nationality of residency status.

Viewing 10 reply threads
  • The forum ‘Property Questions & Answers’ is closed to new topics and replies.