Non-residential property sale
The Spanish government can tax any non-Spanish citizen who owns real estate in the country, no matter what the property is used for. The sale of an asset results in a capital gain that must be reported for Non-Resident Income Tax purposes if the sale price exceeds the original purchase price (IRNR). The Personal Income Tax Act specifies the method by which residents and non-residents alike arrive at their respective taxable bases.
Value at Acquisition
Value acquired plus costs associated with the purchase (notary, registration, attorneys, commissions, taxes, etc.) plus the cost of any capital improvements made to the property.
The individual or company responsible for the work or service must issue an invoice to back up all of these costs. Depreciation should be subtracted from this value if the property is rented out.
Value Transfer
As long as it is not less than the market price, this is the amount at which the property is transferred plus any costs associated with the sale (real estate agent, notary’s office, etc.).
In this case, the IIVTNU (capital gains tax) is appropriate because trading is equivalent to making a profit. If the buyer is responsible for this fee, it is added to the purchase price and is not deducted from the sale price.
Those who live in the EU, Iceland, or Norway will pay 19% tax on the difference between the transfer value and the acquisition value, while those who live elsewhere will pay 24% tax.
A withholding rate of 3%
The buyer of a property sold by a non-resident is required by law to withhold three percent (or the equivalent amount in another currency) as a payment in full toward the final settlement of the applicable tax (IRNR). Form 211 must be filed within 30 days of the sale date to account for this withholding.
Once this month has elapsed, the seller will have three months to file Form 210 for the amount resulting from applying 19% to the capital gain minus 3% of the withholding previously made. The resulting balance will be paid or refunded.
Tax relief for home improvement projects
Capital gains realized upon the sale of a taxpayer’s principal residence in Spain may be exempt from taxation if the full amount realised upon the sale is invested in the purchase of a new principal residence in that country (applicable to gains accrued since 1 January 2015). This exemption applies to taxpayers from the European Union, Iceland, and Norway.
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