Non-resident properties located in Spanish territory are subject to taxation in Spain, regardless of their use. When a property is sold, provided that the transfer value is higher than the acquisition value, the capital gain generated must be declared for Non-Resident Income Tax (IRNR). For both residents and non-residents, the taxable base is calculated in accordance with the Personal Income Tax Act.

Acquisition value

This is the value for which the property was acquired plus the expenses derived from the acquisition (notary, registration, lawyers, commissions, taxes, etc.), to which must be added any improvements and investments made in the property.

All these expenses must be justified by means of an invoice issued by the person carrying out the work or providing the service. In case that the property is rented, the depreciation must be deducted from this value.

Transfer value

This is the value at which the property is transferred plus the expenses derived from the sale process (real estate agency, notary’s office, etc.), provided that this is not lower than the market price, in which case this one will prevail.

The IIVTNU (or capital gains tax) corresponds to the tranacting. In the event that it is agreed that the buyer pays this tax, it constitutes a higher acquisition value of the property and does not reduce the transfer value.

Once the amount of the difference between the transfer value and the acquisition value has been calculated, a tax rate of 19% will be applied for citizens of the European Union, Iceland or Norway and 24% for citizens of other countries.

3% withholding tax

On the sale of a property by a non-resident, the purchaser, whether an individual or legal entity, resident or non-resident, is obliged to make a withholding of 3% as a payment on account of the final settlement of the corresponding tax (IRNR). This withholding must be made within one month from the date of the sale of the property by filing Form 211.

Once this month has elapsed, the seller will have three months to file Form 210 for the amount resulting from applying 19% to the capital gain minus 3% of the withholding previously made. The resulting balance will be paid or refunded.

Exemption for reinvestment in the main residence

There is an exemption for reinvestment in the main residence for taxpayers from the EU, Iceland and Norway (applicable to gains accrued since 1 January 2015) according to which capital gains obtained from the transfer of what has been their main residence in Spain may be excluded from taxation, provided that the total amount obtained from the transfer is reinvested in the purchase of a new main residence in their country.

Ramón Sánchez

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