The 25-story tower of offices and apartments, completed in 1953 under the dictatorship of General Francisco Franco, dominates one end of the Plaza de Espana square in western Madrid.
It has stood empty since 2006, a symbol of the 2008 real estate collapse that thrust Spain into a double recession that wiped out millions of jobs.
Spanish officials had expressed hope that the sale of the building would breathe new life into the neighbourhood, a key part of the city.
Santander said it sold the white and red brick Edificio España to Renville Invest, a subsidiary of Chinese conglomerate Dalian Wanda which is chaired by Wang.
The bank paid €389 million for the red and white brick building in 2007, just before Spain's decade-long building boom went bust, but in a statement it said the impact of the sale on its results and capital would be "immaterial".
Wang, formerly a senior member of China's ruling Communist Party, was ranked the richest man in China and 26th richest in the world, with personal wealth estimated at $14 billion, business magazine Forbes reported in February.
In 2012 he bought US cinema chain AMC Entertainment.
Madrid mayor Ana Botella announced on Wednesday she would allow public buildings in the capital to be privatized and converted into shops and offices.
These include national broadcaster RTVE's Torreespaña buildings and Civil Guard barracks in the city.