nothing to add to Mark’s post.
The European Commission has warned Spain that this is unfair play and the non-residents CGT must be reduced to 15% same as residents.
The advice given to you by your lawyer is the correct one. It’s always better to pay 15% than 35%.
You are confusing two things Flynn.
The Spanish Government witholds 5% of the money paid by the purchaser If the seller (yourself) is a non-resident. This is done to gurantee that you will not run away without paying your taxes to Spain.
Note I write the 5% is withheld it is not taxed, so it is in fact recoverable or refundable through Tax form 212 and takes approximately between 12-18 months at most.
Another different matter is the Capital Gains Tax:
R= 15%
NR= 35%
What you must do is see what profit you’ve made.
Eg.- Say the property was bought for 170 k and you sell for 200k at the notaries.
Your profit is 30k.
Your CGT as a NR is 10.5k
the 5% witheld on account of the CGT as NR is on 200k= 10k
You owe us 10.5k in Taxes but we’ve already witheld from you 10k. So now you only owe us 500 Euros in CGT.
Now this is when a good lawyer comes into play. Your lawyer will make sure that the 170k you bought the property for is raised, through technicalities, to as close as possible to the 200k mark (selling price). In this manner, your “supposed” profit will be lower, thus paying less CGT.
For a majority of our clients, the profit is scant (we make it so) lowering there tax liability. So for most of them, the 5% witheld is actually returned to them in a years time. Normally 80% or more of the 5% withheld.
So without a lawyer= you lose the 5% witheld and you even have to pay more (500 euros).
With a -good unbiassed- lawyer you actually have part of the 5% returned to you. We charge on average 300 euros for this service because obviously it is not included in the 1% fee to purchase a property.
