What taxes apply to property sellers in Spain?

Spanish Capital Gains Tax on Property Sale – What taxes apply to real estate sales in Spain for non-residents?

The sale of real estate in Spain by non-residents is subject to various taxes and fees. It is important to be aware of tax obligations in advance to avoid unpleasant surprises. The main taxes that may apply to real estate sales for non-residents in Spain are:

1. Capital Gains Tax (Plusvalía Municipal): Plusvalía is a municipal tax levied on the profit from the sale of a property. Its amount depends on various factors, including the duration of ownership and the appreciation of the property. This tax is set by the local city administration and varies depending on the location.

2. Non-Resident Income Tax (Impuesto sobre la Renta de No Residentes): Non-residents must pay income tax on the profit obtained. The tax rate is usually 19%, but exceptions and changes may occur depending on the seller’s home region and the value of the property. It is important to note that the income tax is calculated on the remaining profit margin after deducting the costs of the sale.

3. Withholding Tax (Retención): When selling a property by a non-resident, the buyer is obliged to withhold a source tax and remit it to the tax authorities. This amount serves as a security measure to ensure the payment of taxes. The withholding tax is usually 3% of the selling price.

4. Value Added Tax (IVA): For the sale of new properties by a construction company, value-added tax may apply. However, this tax usually does not affect the resale of used properties. The VAT rate varies depending on the type of property, for example, 10% for the sale of residential houses and apartments, while commercial premises and plots may be subject to a rate of 21%.

Tax Rate for the Sale of a Spanish Property

The tax rate for the sale of a Spanish property by non-residents depends on various factors, including the type of property and the profit obtained. The relevant taxes in this context are the Capital Gains Tax and, if applicable, the Withholding Tax. Here is the basic information:

1. Non-Resident Income Tax (Impuesto sobre la Renta de No Residentes): Non-residents selling a property in Spain are subject to the Non-Resident Income Tax. The standard tax rate is usually 19%. This tax rate is applied to the profit obtained, which is calculated as the difference between the selling price and the recognized costs of acquisition and sale of the property.

2. Withholding Tax (Retención): In the sale of a property by a non-resident, a withholding tax is often applied. The buyer is required to withhold and remit a specific percentage of the selling price as withholding tax to the Spanish tax authorities. The common rate is 3% of the selling price. This withholding serves as security to ensure that the seller’s tax liability is covered. The actual tax amount is then taken into account in the seller’s subsequent tax declaration.

It is advisable to consult with a tax expert or lawyer before selling a property to ensure compliance with all tax obligations. The exact regulations may vary depending on the region in Spain, and professional advice helps avoid potential pitfalls and ensures a smooth sales process.