The property transfer tax in Madrid or in any other Autonomous Community is a tax that must be paid when registering a property at the Land Registry. From the moment a house is purchased and the notary is consulted in order to grant the deed, the buyer is subject to payment of a certain amount based on the real value of the property. The payment of this tax is compulsory and in the event of non payment, the owner will face tax penalties and many other implications, such as not granting the change of title in the Land Registry.
This is the so-called ITP / AJD and is not only valid in the case of property but it is also payable on vehicles and other movable property as well as all kinds of assets, leases, loans, pensions, shares or administrative concessions that form part of the assets of persons. In any case, if these operations affect a business or professional activity, they will not be subject to the ITP tax and will be taxed by VAT or Value Added Tax unless the business owner is exempted from paying VAT.