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How to file a 3% tax rebate on the sales proceeds of your Spanish property

Raymundo Larrain explains how non-resident sellers are entitled to a tax rebate on their sales proceeds.

Introduction

Non-residents selling property in Spain undergo a 3% retention which is practised on the sales proceeds. This money is withheld by the buyer (or his lawyer) which is then transferred to the tax office.

Unbeknownst to most people, sellers are legally entitled to apply for a tax rebate on the full 3% of the sales proceeds providing they have sold at a loss, or have broken even.

This procedure is technical, meaning it requires the input of a seasoned lawyer to file this tax rebate (a seller cannot do this on his own).

Additionally, a seller is also entitled to legal interest when the tax office takes longer than usual to repay the withheld sales proceeds. This can be rather substantial, and most certainly higher than what any high street bank is paying savers nowadays for their deposits!

Surprisingly, most sellers are oblivious to this rebate and never bother to ask for their money back,  which is lost!

3% retention explained

The purpose of this retention is to act as guarantor of a seller’s Capital Gains Tax liability on selling property in Spain. If a seller makes a profit, he must pay CGT. The 3% ensures sellers will not be doing a ‘runner’.

However, not all sales make a profit. Moreover, you would be surprised to learn that after adding all the associated costs and expenses most sellers are breaking even! Which would mean they are all entitled to apply for this tax rebate.

When you add up the associated conveyance expenses (both on buying and selling the property), the associated taxes, professional fees due (estate agent, notary, land registry, lawyer), and improvements on the property over time it is often the case that sellers are breaking even, or even making a loss, however small.

When you sell at a loss, or break even, the 3% retention is no longer justified legally. Meaning, the seller has a legal right to claw it back from the Spanish Tax Office, plus interests on top!

Procedure

As mentioned, on selling property in Spain, a 3% retention is practised on the non-residents’ sales proceeds at completion. For example, on selling a €500,000 house, €15,000 will be withheld by the buyer at the notary’s office.

Following completion, this retention is paid by the buyer to the tax office.

Depending on whether a profit or loss was made, the seller’s lawyer can apply for a tax rebate on the full, or part of the €15,000. Additionally, contingent on how long the tax office takes to pay the rebate, legal interests accrue, which can be quite substantial over time.

Law firm LNA helps you getting your money back

At LNA, we have assisted thousands of sellers getting their money back over the last two decades.

We offer the following competitive tax service: Calculating seller’s taxes

We offer a highly demanded tax service to calculate seller’s taxes (Capital Gains Tax and Plusvalia Tax) without having to instruct us on the conveyance. This includes filing a seller’s 3% tax rebate.

You can of course also hire us to handle your conveyance too, we act all over Spain.

Our team of pro-active lawyers will get your money back within months.

Our fee is tax-deductible from your seller’s taxes, meaning you pay even less taxes!

Conclusion

If you plan to sell your property in Spain, and you are a non-resident, you can contact us to recover your money in a timely manner.

Don’t let your money go to waste! It is your seller’s right to recover this money, your money.

Because every penny counts.

Contact us at LNA if you need us to calculate your seller’s taxes, and/or want us to file a tax rebate for the 3% on your behalf. Tax rebates are usually paid within months.

 

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Maurizio Pollini (5 January 1942 – 23 March 2024). Was an Italian pianist and conductor. He was known for performances of Mozart, Beethoven, Chopin, Debussy, among others. A staunch left-wing activist in the 1960s and 1970s, he would remain politically engaged in later life. He maintained a separation between his ideals and his music magic. Maestro.

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Marbella-based Larraín Nesbitt Abogados (LNA) has over 21 years’ taxation & conveyancing experience at your service. We offer a wide range of 50 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

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