Capital Gains Tax in Spain

The Spanish Parliament passed the law 35/2006 on 28/11/2006. This modified the 2007 regulations and as a result from the 1st of January 2007 a non-resident owner will pay 19% on the profit that is made on the sale of a property in Spain.

As far as a resident owner is concerned, the capital gains tax in Spain has been increased to 19%. The changes on the non-resident tax are due to a ruling from the EEC that the previous rate that was levied at 35% was discriminatory towards the non-resident European Union property owners in Spain, given that the residents were taxed at a lower rate of 15%. The 2 rates have now been made the same. As of January 2010, this new rate of 19% applies to all sellers regardless of whether they are resident or not and even if they are not citizens of the EU.

Up until 01/01/2007 purchasers of property in Spain from owners who were non-resident were required to withhold 5% of the total purchase price, and pay this directly to the tax authorities in Spain, due to the nonresident seller's capital gains tax liability. The new law has reduced the amount of the retention to 3%.

Vendors who are non-resident and buyers who purchase from non-resident owners are required to make this retention and declare it to the tax authorities.

If they fail to do this the tax authorities in Spain are able to put a charge on the property itself.

As a seller you will be required to file the form 212 in respect of the capital gains tax. On this form the non-resident declares his capital gain or loss when he sells his Spanish property. If the tax is lower than the 3% tax then a refund is applied for and if it is more than 3$ then an extra payment needs to be made.