Retention of 3% of the value of a home in non-resident vendors
The retention of 3% of the value of a home in non-resident sellers is an issue that many foreign owners still do not know in Spain. It is very important to be aware of this retention, especially if we are the part that is going to buy the house, since then they can claim it from us.
Why should this withholding be applied?
When a non-resident sells his home in Spain, he signs before a notary and as he has no further obligation in Spain he can return to his country or wherever he wants. So … how are the relevant taxes claimed? Well there it is, the buyer is responsible for retaining 3% of the sale value of the home.
Therefore, before going to the notary to sign the deed of the house, it must have been agreed with the seller of the house that 3% of the sale price will be withheld and therefore we will deduct it in the check that we will deliver , or the agreed payment method.
What is paid with this withholding?
The seller of the home has the obligation to pay taxes for the profits obtained when making the transfer, difference between what the acquisition cost and what he obtains for the sale.
This is a tax different from the municipal CAPITAL GAIN TAX, but that the buyer must also retain the seller because in case of default by the owner the new one will be claimed.
Normally the term to present the payment of this tax is one month from the signing of the deed of the house, and once this has been settled with the model 211 of the Tax Agency. See model Here.
The Tax Agency will return to the seller the remaining part (if applicable) when making the declaration and income of the tax when the final amount is known within the deadlines established in the relevant Law, see Here
The seller may provide a document issued by the Tax Agency certifying that it is not subject to the withholding of this Tax.
For more information on Income Taxes of non-residents with permanent establishment or without permanent establishment see Here.