Find out what taxes you’re liable to pay when you sell your Spanish property as a non-resident.
As a non-resident of Spain when you sell your Spanish property you are obliged to pay capital gains tax. Capital gains tax is applied to the difference between the original purchase price of the property (the acquisition value) and the sale price (the transfer value).
The acquisition value: the amount you paid for the property including any expenses and tributes you paid resulting from the purchase but not including any interest charges from these.
If the property has been rented at some point since you bought it then the value is depreciated according to the corresponding values for the period in which it was rented out.
The transfer value: the amount you sell the property for minus the expenses and taxes linked to the sale and paid by the vendor (you).
Income from Capital Gains up to 31 December 2014
You may well be aware that previous to 2014 there were updating coefficients. These in effect increased the purchase price of a property based on when it was bought in an attempt to bring the purchase price in line with inflation. This reduced the amount of tax due as the original value of the property was increased, thus the taxable difference between the acquisition and transfer values was reduced.
The original purchase price was multiplied by the coefficient corresponding to the year it was bought to calculate the real value of the property at the time of purchase taking into account the rising cost of living. The coefficients are listed in the table below:
Year of Purchase |
Coefficient |
|
1994 and before 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 |
1,3299 1,4050 1,3569 1,3299 1,3041 1,2807 1,2560 1,2314 1,2072 1,1836 1,1604 1,1376 1,1152 1,0934 1,0720 1,0510 1,0406 1,0303 1,0201 1,0100 |
Important: these coefficients were abolished with Spain’s recent tax reforms. The current capital gains taxes are now as follows:
Income from Capital Gains from 1 January 2015
You are taxed on the difference between the purchase price (with no adjustment made for inflation) and the sale price at the following rates:
Spanish Capital Gains Tax Rates for Non-Residents
Year |
2011 |
2012-2014 |
2015 |
2016 |
|
Tax Rate |
19% |
21% |
Up to 11-07-15:20% |
From 12-07-25:19.5% |
19% |
3% Withheld Tax on Spanish Property Sales Applicable to Non-Residents
When you sell your Spanish property as a non-resident, the buyer (whether resident or non-resident) is required to withhold 3% of the purchase price and pay it directly to the Spanish tax authorities. This tax withheld functions as an advance payment of the capital gains tax payable by you, the vendor. If the 3% retained is higher than the amount of capital gains tax due, the Spanish tax authorities refund you the difference. If the capital gains due exceeds the tax withheld, you must pay the difference. As the vendor you must file a Spanish tax declaration on the transaction within 4 months of the completion date.
Paperwork
The buyer gives you, the non-resident vendor, a copy of the 211 tax form with which they have paid the 3% retention.
Tax Exemption for Reinvestment in the Main Home
There is a tax exemption for reinvestment in the main home for taxpayers from the EU, Iceland and Norway, applicable only to property sales from 1 January 2015.
If you’re a resident of a member state of the EU or the European Economic Space with a two-way exchange of tax information with Spain, you can be exempt from capital gains tax when you sell your property in Spain providing all the following conditions are met:
- The property is your main residence in Spain.
- The total amount gained from the sale is reinvested in the purchase of a new main residence.
When the amount reinvested is lower than the total amount received from the property sale, only the amount reinvested in the new property will be exempt from capital gains tax.
Paperwork
Form 210 (income type 28). However, when you are applying for the exemption resulting from reinvestment in a main residence the income type will be 33 or 34.
When the property concerned is of shared ownership by a married couple in which both partners are non-residents, a sole declaration can be made.
Spain’s Plusvalía Tax on the Transfer of Property
What is the plusvalía tax?
The plusvalía tax is charged when a property is transferred from one owner to another, whether by inheritance or through sale. It is a local tax levied on the increase of the value of the land upon which the property is built calculated according to the amount of time that’s passed since the property last changed hands. This is not the same as capital gains tax and it must be paid in addition to capital gains tax. Each local authority applies their own plusvalía tax rate, which can vary widely from one autonomous community to another.
Who is liable to pay the plusvalía tax?
When a property is sold it is usually the responsibility of the vendor to pay the plusvalía tax, although this is negotiable and who pays it often depends on the strength of the market as to whether the buyer or seller has the upper hand in negotiations. If the property is being transferred as a gift or an inheritance it is the recipient of the property who is liable to pay the plusvalía tax.
When is the plusvalía tax due?
The plusvalía tax is due within 30 days of the sale of a property. In the case of an inheritance or a gift it is due within 6 months of the passing of the deceased or the legal bestowing of the gift by the benefactor.
Contact Us
Are you a non-resident in Spain looking to sell Spanish property? Contact us to enquire about our tax and conveyancing services.