New tax incentives on Mallorca

Effective from 12 May 2012 new tax concessions come into force. All individuals and companies, who acquire an urban property between 12 May 2012 and 31.12.2012, whether directly from the promoter or a used property, need only pay 50% of the profit tax on any subsequent sale. These concessions are not applicable to ‘restricted transferability parties’ (companies and its shareholders, relatives etc.) As is known the profit tax for 2012 & 2013, for non-residents is 21% and from 2014, 19%.

Therefore a non-resident who buys an urban property in the period from 12.05.12 to 31.12.2012 and sells it before 31.12.2012 pays only 10.5% profit tax, if he should sell it after 31.12.2013 then only 9.5% profit tax. Residents pay 27% profit tax up until 31.12.2013 and from 01.01.2014 the profit tax is 21%. Consequently the same applies to residents for the same period whose taxes will be reduced to 13.5 % and 10.5%. The same incentives also apply to limited companies who will pay only 15% instead of the usual 30%.

Horia Mainescu