Capital gains Tax in Spain
This is a tax on the profit that a seller may have made when selling their property and is calculated taking into account the difference between the original purchase price paid and the selling price achieved. The Capital Gains Tax in Spain is calculated as follows:
19% for the 1st €6000 profit & 21% for any amount above this.
The capital gains tax is often a point of confusion for vendors and depending on the seller’s tax status in Spain, the Capital gains Tax must be paid in varying ways.
Non Tax Residents (none fiscal residents.)
The buyer (or the buyer’s Lawyer) is obliged by law to retain 3% of the selling price and to pay it to the Inland Revenue on behalf of the vendor. If profit is not achieved by the vendor they have a right to claim back the 3% and should be refunded within 12 months.
If a profit has been made but the amount is less than the 3% Capital Gains tax paid, then a claim for a refund can also be made.
Tax Residents (Fiscal Residents)
There is no 3% retention made by the buyer.
It is the seller’s responsibility to declare and pay the Capital Gains Tax, if any, the year after completing the sale and when filing their annual Income Tax Returns.
The only time that Capital Gains tax does not have to be paid on the sale of a property is if the seller is a Fiscal Resident of Spain, is over 65 years old and if the property being sold is their primary residence.