Capital Gains Tax on Real Estate Sales: Georgia, UAE, Spain

Capital gains tax is levied on income earned by an individual or a legal entity from the sale of assets (e.g. real estate, securities, company shares, etc.). Both tax residents and non-residents may be liable for capital gains tax, depending on the country, source of income, and type of asset. Residents generally declare worldwide income, while non-residents declare only income derived from the specific jurisdiction.

This article examines how capital gains tax applies to the sale of real estate in three popular jurisdictions: Georgia, the United Arab Emirates, and Spain.

Georgia

There are two possible taxation scenarios for income earned by Georgian tax residents, depending on the location of the real estate:

1. Sale of property located in Georgia
   If a Georgian tax resident sells property located in Georgia, the key factor is the holding period. If the property has been owned for more than two years, the income from its sale is exempt from tax. If the property is sold before this period, the standard personal income tax rate of 20% applies.
2. Sale of property located abroad
   When the property is located outside Georgia, it is essential to refer to the double tax treaties between Georgia and the country where the property is located. These treaties determine the applicable tax treatment.
   For example, when selling property located in Belarus, the income is taxed in Belarus at a rate of 13%. At the same time, Georgian legislation exempts income from foreign sources for tax residents, meaning no additional tax is payable in Georgia. However, the income must still be declared, and the declaration should be filed by 1 April of the year following the income year.

United Arab Emirates (UAE)

There is no personal income tax in the UAE, including no capital gains tax. Therefore, the sale of real estate located in the UAE does not create a tax liability.

An exception may apply if the transaction is considered a business activity (e.g. frequent buying and selling for profit), which could trigger corporate tax.

If a UAE resident sells real estate in another country, taxation will depend on the laws of the country where the property is located. Generally, income from real estate sales is taxed first in the country where the property is situated, and then in the country of tax residence (with relief under double tax treaties, if applicable). Since the UAE does not impose personal income tax, such income is usually taxed only in the foreign country.

Spain

There are two main scenarios for taxation on real estate sales in Spain:

1. Sale by a Spanish tax resident

The capital gains tax is calculated on a progressive scale:

• up to €6,000 – 19%
• €6,000 to €50,000 – 21%
• €50,000 to €200,000 – 23%
• €200,000 to €300,000 – 27%
• above €300,000 – 30% (effective 2025)

Allowable deductions include:

• purchase-related costs (taxes, notary fees, registration)
• capital improvements
• agent commissions on sale
   

Tax exemptions may apply in certain cases:

• a. sale of a primary residence with reinvestment in a new one within 2 years;
• b. seller aged over 65 who lived in the property for at least 3 years.

2. Sale by a non-resident

For non-residents selling property in Spain, a flat tax rate of 19% applies. Additionally, the law requires a 3% withholding of the sale price as an advance tax payment.
The buyer must withhold 3% of the purchase price and remit it to the Spanish tax authorities on behalf of the seller. This amount is credited against the final tax liability. If the actual tax is lower, the seller can claim a refund of the difference.

REVERA Lawyers’ Key Recommendations

1. Georgia: Tax exemption applies if the property has been owned for more than two years. Ideal for long-term investments.
2. Spain: High tax rates linked to income thresholds. Careful tax planning is essential.
3. UAE: No capital gains tax, but high entry costs. Attractive for major investors considering residency status.
4. Before buying or selling real estate, consult an international tax lawyer to avoid overpayment or incorrect reporting of taxes.

Author: Yaroslavna Zadesenskaya

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