Capital gains tax when selling a Spanish property as a non-resident

What is the capital gains tax rate in Spain for non-residents?

It’s 19%. The gain from selling a property in Spain is taxed under the non-resident income tax (Impuesto sobre la Renta de No Residentes, IRNR), and the law sets 19% for gains from the transfer of assets without any condition on where you live.

That’s worth saying clearly, because a lot of what you read online gets it wrong for British sellers. Brexit did change things for UK residents, but in other areas: the general non-resident rate, which applies for example to rental income, is 24%, and only EU and EEA residents get the lower 19%. For capital gains on a sale, the rate is 19% for everyone, the UK included.

Where Brexit does matter for a sale is in one specific exemption: the one for reinvesting the money from your main home into a new main home. The tax office applies it only to residents of the EU or the EEA (Norway, Iceland and Liechtenstein included). It’s also only relevant if the Spanish house was your main home, which is rare for someone who has always lived abroad.

How the gain is calculated

The gain is the difference between two figures:

• Sale value (valor de transmisión): the real sale price, minus the costs and taxes of the sale that you pay. That includes, for example, the plusvalía municipal and your notary costs.
• Purchase value (valor de adquisición): the real price you paid, plus the costs and taxes of buying (transfer tax or VAT, notary, land registry), but not mortgage interest. Add the cost of improvements. If you let the property out, subtract the depreciation.

The line between improvements and repairs is where most arguments with the tax office start. A new kitchen, an extension or a pool are improvements. Painting, fixing a leak or replacing a broken boiler with a similar one are maintenance, and they don’t count. On form 210, improvements made in a year other than the purchase year are entered separately.

If you inherited the property, the purchase value is the one used for inheritance tax, capped at market value. There’s more on that in selling an inherited property in Spain.

Two special cases the tax office lists, in case they apply to you:

• Bought before 31 December 1994: part of the gain generated before 20 January 2006 may be reduced under a transitional rule.
• Bought between 12 May and 31 December 2012: half of the gain on urban property bought in that window is exempt, with exceptions for purchases from close relatives or related companies.

The plusvalía municipal: a separate tax

The plusvalía municipal (officially, Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) has nothing to do with the 19%. It’s a town hall tax on the increase in the value of the land the home sits on, and on a sale the seller is the one who owes it.

The points that matter to a non-resident seller:

• Each town hall sets its own rate, with a legal maximum of 30%.
• If there’s no increase in value, comparing the purchase and sale prices in the deeds, there’s no tax. You have to declare the sale and provide both deeds to prove it.
• If your real gain is lower than the figure the standard method gives, you can ask for the tax to be worked out on your real gain.
• The buyer pays it for you. When the seller is a non-resident individual, the law makes the buyer responsible for paying it in your place (sustituto del contribuyente). That’s why it’s usually kept back from the price at signing, along with the 3%.
• Deadline: 30 working days from the sale.

Whatever you pay in plusvalía municipal then counts as a selling cost when you work out your gain for the 19%.

How the 3% retention fits in

Because you live abroad, the buyer must keep back 3% of the agreed price and pay it to the tax office with form 211 within a month of signing. That 3% is an advance on your 19%, not an extra tax.

You then file form 210 in the three months that follow that first month, so by the end of the fourth month after the sale. There you declare your gain, apply the 19% and subtract the 3%. If the result is positive, you pay the difference. If it’s negative, or you made a loss, Hacienda refunds the excess, but only if you file.

Many sellers think the 3% settles everything. On a sale with a big gain, the 19% is usually much more than 3% of the price, and the difference is still owed.

A worked example (hypothetical)

These figures are invented to show the steps. They’re not a real sale and they’re not advice for your case.

A British couple bought a villa in 2008 and own it half each. They’ve never rented it out.

Because they own it half each, each of them files their own form 210 for half the gain (€62,500), with half the retention (€6,300), and each pays €5,575.

Notice the kitchen: €15,000 of invoiced improvements cut the tax by €2,850. Without the invoices, that money goes to Hacienda.

What about tax in your home country?

Spain has double taxation treaties with the United Kingdom, Norway and Sweden. As a general rule, these treaties let the country where the property is located tax the gain on it, so Spain taxes the sale first.

What your home country does afterwards depends on its own rules: whether it also taxes the gain, and how it takes the Spanish tax into account so you’re not taxed twice on the same money. That part I can’t answer for you. Keep the form 210 and the proof of payment, because your home tax adviser will ask for them.

Your taxes on the sale at a glance

When you sell from abroad, the hard part isn’t the maths, it’s coordinating the notary, the buyer’s side and the paperwork from a distance. That’s what we do when you sell your property in Spain from abroad, and you can see how we handle the NIE, notary and taxes.

Frequently asked questions