Income tax for a non-resident on the sale of a property in Spain.

When a non-resident sells their property in Spain, the buyer is required to withhold 3% of the sale value to pay to the Ministry of Finance. The form 211 must be completed and submitted to the Tax Agency (Agencia Tributaria) within one month after the date of the signing of the deed before a notary.

What do these 3% correspond to? In fact, it is the tax that the seller must pay on the profit they obtained from the sale of their property, the capital gain tax. Since the seller is a non-resident in Spain, it is difficult to claim the amounts due once the sale is completed, which is why this withholding is made on the amount the seller should receive that day. It is also a security for the buyer, as they are assured that the Ministry of Finance will not come after them for this tax. In fact, if this withholding is not paid, the property will be subject to the payment of the lesser amount between the withholding and the corresponding tax.

The profit is calculated by the difference between the sale value and the acquisition value (expenses and taxes included in both transactions). If the property was rented, the acquisition value must be reduced by the amount of depreciation corresponding to the rental period. The tax rate is 19%.

Therefore, the buyer will provide the non-resident seller with a copy of the form 211 (with which the withholding was registered), so that the seller can deduct the 3% withheld from the amount of their capital gain. If the withheld amount is greater than the amount due, a refund of the excess can be obtained. The seller can submit form 210 within 3 months from the end of the 1-month period the buyer has to submit form 211. It is better to calculate carefully before claiming, as the tax authorities may refund the difference if there was an overpayment, but they can also require the seller to pay the balance! Also, do not forget to pay the municipal capital gains tax "plusvalía municipal" or "Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana". I will explain this in a future post!