The Canary Islands enjoy a year-round season with over 300 days of sunshine every year. (weather in the Canary islands) This makes them very popular with holidaymakers and ideal places to buy property if you are looking for an investment. Buying property in the Canaries is relatively simple and generally follows the same process as for Spain albeit there are still a few differences.
If you are buying property in the Canary Islands from a non-resident (e.g. the current owner is also English) you must withhold 3% of the price and this has to be paid to the tax office on completion. The buyer will also need to apply for a local tax number not just to be able to purchase the property but also to have the utilities changed into the new name.
Buyers of property on the Canary Islands will need to open a local bank account to make the transfer of funds and tax payments. The cost of opening a bank account can vary but is typically around €10-€15. Getting the utilities changed or connected can also cost up to €150.
As the UK and Spain have a dual taxation treaty in place you will not be liable to pay tax twice on any income you earn such as rental income from a property in the Spain or the Canaries. However, this will depend on your personal circumstances and it is important to use the services of a competent tax professional to ensure you do not end up paying more than you should – there is no incentive for either tax jurisdiction to chase after you to return overpaid taxes! The cost of an annual return prepared by a local tax representative should be in the region of €100-€150.
The language issue always needs to be considered when buying property in a Spanish speaking territory as legal documents, tax forms and similar papers may need to be translated for you. Whatever you do, never sign something you do not understand – the costs of translating rarely outweigh the risks of signing a foreign document you cannot read.
Lastly consider how and when to transfer your money across. Leaving this to the last minute and assuming your bank will always give you the best prevailing rate can cost you another 2%-3% of the price compared to planning it in advance and using a specialist money transfer company. Similarly, if you are moving to the Canaries and planning to have money (e.g. a pension) transferred over regularly these companies can save you a bundle in the course of a year.