Spanish capital gains tax for non residents

The Spanish capital gains tax for non-residents taxes the increase in value experienced by those lands of an urban nature as a result of the transfer of a property by any title, by the constitution or transmission of any real right of enjoyment, limiting the ownership of the property land.

If the property of urban nature is sold by a non-resident natural person, it is the buyer who has the obligation to pay the municipal capital gain before the City Council as a substitute for the taxpayer. As the seller is the taxpayer as taxpayer, he will have to pay the buyer the amount of the tax.

This can be read in article 106 of Royal Legislative Decree 2/2004 of March 5, which approves the revised text of the Law Regulating the Local Treasuries, as well as the provisions of Article 36 of the General Law Tax.

In article 106 you can read:

The taxpayer is a taxpayer.
a) in the transmissions of land, constitution or transfer of real rights of enjoyment limiting the domain for profit, the natural or legal person or entity referred to in article 35.4 of Law 58/2003 of December 17.
b) In the transmissions of land, constitution or transfer of real rights of enjoyment limiting the domain for consideration. The natural or legal person or entity referred to in article 35.4 of Law 58/2003 of December 17, which transmits the land, constitutes or transmits the real right in question.
c) In those cases referred to in paragraph b of the previous section, the substitute taxpayer of the taxpayer, the natural or juridical person or the entity referred to in article 35.4 of Law 58/2003 of 17 will be considered December, that acquires the land or in whose favor the real right in question is constituted or transmitted, when the taxpayer is a natural person not resident in Spain.

Capital gains for non-residents

Non-residents in Spain who sell their Spanish properties must pay capital gains tax. The capital gain or loss when selling properties is calculated as the transfer price less the acquisition cost. In this article we want to share with you information of great importance about capital gains for non-residents.

What you should know about capital gains for non-residents?

If you are selling your Spanish property and you are non-resident in Spain, the buyer is obliged by our tax laws to retain 3% of the purchase price and to pay it to the Tax Authorities on your behalf, as a payment in advanced towards your final capital gains tax bill. This does not happen to seller who are resident in Spain. They will declare the sale of their property, and any potential capital gains, through their usual Income Tax return, filed in June of every year.

Do not forget the IIVTNU, the tax on the Increase in the Value of Urban Land or “Plusvalía Tax”, as it is widely known. In this case, all sellers, whether they are residents or not, must pay this tax on the increase in the value of the urban land when they sell their property.

Likewise, the tax base must also be taken into account, which is the cadastral value of the land at the disposition date multiplied by a certain percentage. This percentage is calculated as the number of years the land remained multiplied by a coefficient of 3 to 3.7.

The rate is established by each municipality and can reach up to 30%. If the owners decide to give the property as a gift or inheritance, it will be the beneficiary who would have to pay this tax. Do you want help with this topic? You need the best professionals.

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