Selling Property in Spain: the 3% Tax for Non-Residents
Foreigners selling property in Spain should be aware of Spain’s 3% non-resident tax. For this reason, it is challenging, and we at JLA Notarios get numerous inquiries about it from non-residents.
What are the taxes for non-residents in Spain?
Any transaction involving the sale of real estate located in Spain is subject to a tax of 3 percent for foreign sellers. The seller must pay the tax if he does not have a Spanish address. Considering that, it is highly recommended that the parties involved consult a Notary or Notario before any transaction.
The 3% tax for non-resident explained
Anytime a non-resident of Spain sells property there, the buyer must visit a Notary in Barcelona or in his area and set aside three percent of the sale price to pay the Spanish government as Capital Gains Tax (CGT). After taxes are paid, the vendor will be refunded the difference between the 3% taxation of non-residents in Spain and the total amount owed. However, the Spanish tax authorities would try to deport the seller if the tax debt was higher than the 3% retention.
So, in reality the 3% is a tax that has to be paid by the seller but as the seller is a non-resident the buyer will not pay this 3 % to the seller but straight to the Tax administration in the name of the seller. Also, an official paper has to be filled for the Administration.
After taxes have been settled, it may take a long time for the seller to receive any refunds that the authorities may owe him. Several names refer to this tax holdback in English and Spanish. The phrase “capital gains tax retention on property sales” translates directly from the Spanish phrase “retención (sobre la venta de inmuebles) a cuenta del impuesto de la renta de los no-residentes.” The sale of property in Spain is sometimes accompanied by discussions of a withholding tax or other amounts being withheld, deducted or held back.
A 3% retention must be paid to the local tax office within one month of the selling date using model 211. The next step in the refund process is to provide the seller or attorney with a copy of the completed form.
In JLA Notarios, if we sign a purchase of land in Cataluña or Barcelona, in which the seller is non-resident, we can fill all the documents that are needed and we can pay in your name this tax.
How is the 3% Taxation of Non-Residents in Spain Calculated?
The non-resident will be subject to taxation on any gain from the sale of the property. Subtracting the selling price from the buying price yields this capital gain (expenses and taxes included). The purchaser is responsible for providing the non-resident with a copy of Tax Form 211. It allows for the full fee to be withheld and, if necessary, for the excess to be refunded.
If you want to include this rate on your form 210 (IRNR), you need to do so not later than three months after the end of the period covered by form 211. It is not simple to determine the exact worth of the profit made (e.g., rented properties). To avoid any trouble with the Spanish Public Treasury, learn more about selling a property in Spain by contacting JLA Notarios or any other Notary in Spain.
Conclusion
The seller and the buyer must physically appear at the Notaria Publica to sign the final documents. The seller, his legal representative, and his lawyer, together with a Notary or Notario, will be involved.
Before signing, be sure you fully understand and can afford the payments, fees, and taxes that will become due.
If you have any doubt about Real estate contracts and taxes or if you are looking for Notaries in Barcelona: feel free to contact us! JLA Notarios has years of knowledge and will guide you through every step of your transaction, once you have decided the land you want to buy. A Notario will also ensure that all documents are signed properly, including those required by banks, mortgage companies and Public Treasury. You can trust your Notario to advise you on any issues that may arise throughout your process to make informed decisions about what steps to take next.
