Spanish capital gains tax retention on non-residents

LoadingFavourite

This topic contains 12 replies, has 7 voices, and was last updated by Profile photo of Fuengi (Andrew) Fuengi (Andrew) 4 years, 7 months ago.

  • Author
    Posts
  • #55553
    Profile photo of Anonymous
    Anonymous
    Participant

    As some of you know, non-residents who sell property in Spain are automatically deducted 3% of the sale price by the taxman to cover any capital gains tax liability. There is a lot of confusion and conflicting opinion on this issue (as 135yearswaiting says here) so let’s try and make this thread a useful source of information for non-resident vendors who want to know where they stand.

    It’s an issue that is growing in relevance as increasing numbers want to sell up and go home. Most people have no idea about this procedure, and one of the big questions is ‘how long will it take to get a refund?’

    Well, this is Spain, so it depends on where you are. Some are reporting a year, others 16 months.

    Anyone have any experience of this issue? How long did it take you to get refunded? Anyone find they had to pay more (increasingly common)? Please say where the property is. This will help build a picture of what is going on around Spain. Nobody really has a clue (most lawyers only know what is happening in their local tax office).

    Also, please read my guide to this question:
    Spanish capital gains tax retention on property sales by non-residents

    Let me know if you spot any mistakes, or have any comments to make it better.

    MarK

  • #98082
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi i had, the 3% held back, i sold a property in murcia it took 18 months to come back to me i got it 6 weeks ago,it got paid into my spainish bank a/c, so if do sell up and come back to the uk make sure you keep a bank a/c open in spain. I had no help from my lawyer to get the money back she did not wont to know, i just waited for it to come. I had no letters from the tax man to tell me it was being paid back to me,so make sure you keep a eye on your spainish bank a/c.

  • #98085
    Profile photo of katy
    katy
    Spectator

    Jus word-of-mouth but, it is rare to get anything back. The tax authorities will not accept a lower selling price than their own. If you have had a property for a long time you may owe them more than the 3%.

    Most sellers (if they are returning to the UK) look on the 3% as a write-off. They close all spanish accounts and bugger off. Not that I am advocating doing this of course :mrgreen: 😉

  • #98092
    Profile photo of logan
    logan
    Participant

    Since when did the Spanish government start refunding CGT to none residents? First I have heard of it. It’s a tax and tax only goes one way. 👿
    I suppose in these difficult times a vendor may sell without a gain or at loss which would mean a theoretical entitlement to a refund but I still think it’s unlikely. They will usually find some justification to keep it.

  • #98093
    Profile photo of Anonymous
    Anonymous
    Participant

    If they hold 3% back this is not CGT, i did not make a profit on the property ( apart from the euro moving the other way )The 3% was to make sure i was up to date with my taxes.

  • #98096
    Profile photo of Anonymous
    Anonymous
    Participant

    Property in Almeria
    Dificult to dispute any gain as bought near the peak, and priced to sell quickly in the crash
    Almost 12 months from the day of completion to FULL refund of 3% retention
    Hacienda also paid 20 Euros interest to me 😆
    Letter received to Spanish address informing me of the refund and stipulating time limit to query the sum repaid.

  • #98097
    Profile photo of Anonymous
    Anonymous
    Participant

    Mark,

    Two additional points that you readers my be interested in.

    1) Hacienda are obliged to pay interest on the monies due to be refunded starting from a period of 6 months from the date the vendor submitted form 212.

    2) The refund will be reduced by any taxes/fines owed on the property that have not be paid in previous tax years. So anyone who has not paid wealth tax and income tax on deemed rental income will find that Hacienda take these taxes from the refund due.

  • #108487
    Profile photo of Anonymous
    Anonymous
    Participant

    Note that the Spanish Government quietly put up CGT this year from 19pc to 21pc.

  • #108490
    Profile photo of Anonymous
    Anonymous
    Participant

    I worry about this. I’m married to a Spaniard and have an NIE and registered on Padron. Everyone here assumes that I am Resident because I have lived here since 2004, abeit we went to the UK for a few years and then came back.

    I own land for my Dad, as it was ‘easier’ ha ha… to have it in my name. Dad is now fed up with Spain and wants to sell the land which is in my name.

    Would it be best for me to quickly go down to Almeria and get Residency? Some people say you have to have it, others say that you only have to prove that you live here etc. What is the truth?

    If I sell the land, fingers crossed as I feel bad enough for my Dad (had lots of his things stolen from storage and now his dog has gone missing etc.) We paid half in cash (ha ha, that’s what we all do here I was told). So we have 15k declared on the escritura and the rest was in cash.

    I’ve put it up for 40k which is the price paid including the costs. I worry about dropping too much as what will we have to pay out in costs?

    Other land locally in a worse position is up for 90k, I guess they haven’t sussed that there is a crisis going on. Maybe we should just sit on it, let Dad go back to Ireland and sell in about 5 years just to recoup what was paid??

    All so confusing….

  • #108491
    Profile photo of Anonymous
    Anonymous
    Participant

    And on the declaration de la renta, should I note down that I own land? I usually go on my husbands with the children just as ‘wife’……and that I don’t earn anything.

  • #108492
    Profile photo of logan
    logan
    Participant

    Itsme.
    Sell the land as you bought it. 😉

  • #108495
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @ Itsme.

    If you are a Spanish fiscal resident and can prove it, there is no 3% retention. If not, you have to pay it on selling.

    If you go and become a tax resident I beleive it will not benefit you until the next tax year.

  • #108496
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @mark wrote:

    It’s an issue that is growing in relevance as increasing numbers want to sell up and go home. Most people have no idea about this procedure, and one of the big questions is ‘how long will it take to get a refund?’

    Well, this is Spain, so it depends on where you are. Some are reporting a year, others 16 months.

    Anyone have any experience of this issue? How long did it take you to get refunded? Anyone find they had to pay more (increasingly common)? Please say where the property is. This will help build a picture of what is going on around Spain. Nobody really has a clue (most lawyers only know what is happening in their local tax office).

    (please note this is based on my experiences only, no hearsay)
    As long as it gets paid in on time (first twenty days after sale) and the forms are filled out correctly it takes approximately 6 months to get it back. Slightly longer if august or christmas is during that time, as the tax office staff in charge always seem to be on bloody holiday. This is based on properties sold in the Fuengirola/Mijas/Benalmadena areas. The tax office is in torremolinos by the way.
    Most vendors get the full 3% back unless they are skipping on paying CGT (capital gains) or have not been paying the other taxes due.

    The biggest issue for many foreign sellers, is they are in the situation where they cannot prove they are not making a profit. Either because they under-declared when they bought, or they do not have the invoices to prove their costs.

    There is also the issue of getting a copy of the modelo (cannot remember the number!) that was given to the tax office, a must for reclaiming the retention.

    I have also found, in my experience, that lawyer is not as suited as a conveyancer for reclaiming the monies. You need someone who knows the system and the praticalities. Lawyers seem to be all theory and more expensive.

You must be logged in to reply to this topic.