Selling property in Spain as a non-resident involves specific tax rules that do not apply to resident sellers, and they affect how much of the price you receive on completion and when the final tax position is settled. Raso Investments advises international owners of property in Mallorca and elsewhere in Spain throughout the sale: from reviewing the offer and the private contract to completing the deed, filing the non-resident tax returns and, where appropriate, recovering amounts withheld in excess.
The key point to understand from the outset is that the buyer will not pay you the full price. Spanish law requires part of it to be retained and paid to the Tax Agency, and the seller must then file a return declaring the capital gain.
The 3% withholding when selling property in Spain
When the seller is not tax resident in Spain, the buyer must currently withhold 3% of the agreed price and pay it to the Spanish Tax Agency using form Modelo 211 within one month of the date of the sale. The withholding is a payment on account of the seller’s non-resident income tax on any gain; it is not the final tax. If the buyer fails to pay it, the property itself remains answerable for that amount, which is why buyers’ lawyers and notaries pay close attention to the seller’s residence status.
After the sale, the non-resident seller must file form Modelo 210 declaring the capital gain or loss. The general deadline is three months from the end of the one-month period the buyer has for paying the withholding. In the return, the 3% already paid is credited against the tax due:
- If the tax on the gain is higher than the amount withheld, the seller pays the difference.
- If the tax is lower, or if there is no gain at all, the seller can request a refund of the excess withheld.
For individuals, the tax on the gain for non-residents is currently charged at a flat rate of 19%. Refund claims are reviewed by the Tax Agency, which may request evidence of the acquisition price, costs and improvements, so a complete and well-documented file is essential. You can read more about how the gain is calculated on our page on capital gains tax on property in Spain.
Municipal plusvalía tax
In addition to the tax on the gain, the sale of urban land, including the land on which a house or apartment stands, is subject to the municipal tax on the increase in value of urban land, commonly called the plusvalía municipal. It is levied by the town hall and is normally borne by the seller. Where the seller is a non-resident individual, the law makes the buyer the substitute taxpayer, which is why a further amount is usually retained from the price or settled at completion.
Following rulings of the Spanish Constitutional Court and the subsequent reform of the tax in 2021, the taxpayer can opt for the calculation method that produces the lower result, and no tax is payable where it is shown that there has been no increase in the value of the land. Whether that is the case must be supported by the deeds of acquisition and sale.
How we work on your sale
- Preliminary review. We check the Land Registry status, outstanding charges, the energy performance certificate and any document the buyer’s lawyer is likely to request, so that the sale is not delayed.
- Contract. We review or draft the private contract and the deposit clause, and we ensure that the retentions for the 3% withholding and the plusvalía are correctly reflected.
- Completion. We attend the notary with you or on your behalf under a power of attorney, and coordinate the cancellation of any mortgage.
- After completion. We verify that the buyer has paid the Modelo 211, prepare and file your Modelo 210 and follow up any refund request.
Common risks and mistakes
- Not keeping evidence of the original purchase price, purchase costs and improvement works, which reduces the deductible amounts and may increase the tax.
- Assuming that the 3% retained is the final tax and not filing the Modelo 210.
- Failing to request the refund of an excess withholding within the applicable deadlines.
- Overlooking outstanding non-resident income tax for previous years of ownership, which can be raised at the time of the sale. Our page on non-resident tax and Modelo 210 explains the annual obligation.
- Not obtaining a certificate of tax residence from the country of residence where treaty protection or proof of non-residence is needed.
Other tax considerations
Where the property is owned jointly, each co-owner is treated separately for withholding and filing purposes. Properties received by inheritance or gift have specific rules for determining the acquisition value. Double tax treaties may determine how the gain is treated in your country of residence, and the tax paid in Spain is usually relevant there. Every case is reviewed individually and the rates mentioned are those currently in force; the final position depends on the facts and on the regulations applicable at the date of the sale.
Frequently asked questions
Can I avoid the 3% withholding?
Not if you are non-resident at the time of the sale. The obligation lies with the buyer. What you can do is ensure that any excess is recovered through the Modelo 210.
How long does a refund of the 3% take?
Timeframes vary depending on the Tax Agency’s review. A complete file with supporting documents reduces the risk of requests for further information.
Who pays the plusvalía if I am non-resident?
The buyer acts as substitute taxpayer and normally retains the amount from the price, so economically it remains a cost of the seller unless the parties agree otherwise.
Do I have to travel to Spain to sell?
No. A power of attorney allows us to sign the deed and manage the post-completion formalities on your behalf.
Next steps
If you are selling property in Spain as a non-resident, write to us at info@raso.law and describe the transaction and the property: location, date and price of acquisition, expected sale price, ownership structure and your country of tax residence. We will review your case individually and reply in writing. You may also consult our general tax law page.