Taxes on Selling Property in Spain – What Foreigners Need to Know

1. Capital Gains Tax (CGT) on the Sale

Capital Gains Tax is levied on the profit you make from selling your property. The gain is basically the difference between the selling price and the acquisition price (what you originally paid, plus certain costs like purchase taxes and improvements).

For non-resident sellers, Spanish tax law distinguishes based on your tax residence:

• EU/EEA/UK residents: Capital gains are taxed at a flat 19% in Spain. (The UK, while no longer EU, was often treated under similar rules while it was EU. Post-Brexit, the UK is technically third-country; however, many references still cite 19% for UK sellers due to treaties. It's safest to confirm case by case, but generally EU/EEA benefit from 19%.)
  
  

• Non-EU/EEA residents: Capital gains are taxed at a flat 24%. This means, for example, if you are a resident of the US, Canada, Australia, or any other non-European country, Spain will apply 24% tax on the gain.
  
  

This disparity means British sellers, now considered non-EU, face a higher CGT rate of 24%. (By contrast, Spanish tax residents pay progressive rates on gains: 19%, 21%, 23%, 27% depending on the size of the gain, but as a non-resident you pay the flat non-resident rate).

Example: You bought a Spanish property for €200,000 and sell for €300,000. The gain is €100,000. If you’re tax resident in an EU country (say France or Germany), you’d owe €19,000 CGT (19%). If you’re resident in a non-EU country (USA, for instance), you’d owe €24,000 (24%). Spain does not allow deducting inflation from the gain (indexation was abolished), but you can deduct substantial acquisition costs such as the purchase Transfer Tax or VAT you paid and any notary/registry fees, as well as costs of selling (agent commission, lawyer fees for sale).

Primary residence exemption: Non-residents generally do not get any exemption for reinvesting in another home or age-related exemption. Those benefits (like the exemption for over-65 sellers on their main home) apply only to Spanish tax residents. So as a non-resident, assume the full gain is taxable.

2. 3% Withholding by the Buyer

Spain has a special mechanism to ensure non-resident sellers pay their capital gains tax. When you, a non-resident, sell your property, the buyer is required to withhold 3% of the purchase price and pay it directly to the Spanish tax authorities on your behalf.

This 3% is not an extra tax; think of it as an advance payment of your CGT:

• If the 3% withheld exceeds your actual CGT liability, you can request a refund of the difference.
  
  

• If the 3% is less than the CGT due, you must pay the remaining amount.
  
  

Example: Using the previous scenario, sale price €300,000 -> buyer withholds €9,000 (3%). If you owe €19,000 CGT (EU resident example), you’ll later pay an additional €10,000 via your tax return. If instead the property was sold at a loss (no gain), you would file for a refund of the €9,000.

Buyer’s obligation: The buyer must file form 211 and deposit that 3% within one month of the sale. As the seller, you should receive a copy of the form/payment receipt from the buyer as proof.

Seller’s obligation: You then have to file a Modelo 210 within 4 months of the sale to declare the actual capital gain and settle the tax. If a refund is due (e.g., you sold at a loss or minimal gain such that 3% was too much), you claim it on this form. Refunds can take several months to be processed by Spanish Tax Agency, so be patient and ensure your Spanish bank details are provided for the transfer.

Failing to file this form can be costly – if you don’t declare the gain, the tax authorities will keep the 3% and can pursue you for any shortfall (plus penalties). Always follow through with the post-sale declaration.

3. Plusvalía Municipal (Local Land Value Tax)

On top of capital gains tax, sellers often face a municipal tax on the increase in land value, commonly known as Plusvalía. This is levied by the town or city council where the property is located. In PlusvaliaFacil.com they are expert in how to deal with this tax.

Key features of Plusvalía tax:

• It is calculated on the cadastral value of the land (the officially assessed value of the land portion of your property) and the number of years you owned the property. Buildings and improvements aren’t considered – it’s purely land value appreciation based on town formulas.
  
  

• Each municipality sets its own rates and coefficients. There’s usually an optimal holding period (capped at around 20 years) beyond which the tax doesn’t increase.
  
  

• Typically, the seller is liable for this tax (except in some regions or by private contract which might shift it, but by law it’s a seller tax).
  
  

• If you sold at a loss overall, recent legal changes allow you to avoid Plusvalía (you must prove the sale price was lower than purchase price, so no real gain was made – then no Plusvalía due).
  
  

Although Plusvalía often isn’t enormous (compared to CGT), it can be a few hundred to several thousand euros depending on the location and length of ownership. For example, owning a Madrid apartment for 10 years could result in a Plusvalía tax bill of perhaps €1,000–€2,000, whereas a long-held property in a coastal town with big land value jumps might be higher.

Practical tip: Your conveyancing lawyer can calculate an estimate of Plusvalía before you sell, so you know what to budget. After sale, you must file the Plusvalía form at the local town hall, usually within 30 days of the transaction (each council has a specific procedure).

4. Tax Planning Tips for Sellers

Selling as a foreigner comes with these tax costs, but there may be ways to minimize or manage them:

• Use of tax treaties: Check if your home country has a tax treaty with Spain. Most treaties (like Spain-UK, Spain-USA) allocate the right to tax real estate sales to the country where the property is located (Spain), but you may avoid double taxation by getting a credit in your home country for Spanish tax paid. Ensure you declare the sale in your home country’s tax return if required, and claim foreign tax credit for the Spanish CGT.
  
  

• Consider timing: If you are close to becoming a Spanish tax resident (or conversely about to lose Spanish tax residency), timing can affect which regime you fall under. Generally, non-resident flat rates (19-24%) can be lower than if you became a resident and the gain pushed you into higher brackets (up to 23%). However, as a resident you might avoid the 3% withholding hassle and have some exemptions (like reinvestment in a new primary home, if that applied). Plan the sale in the tax residency status that is more favorable for your situation.
  
  

• Deductions of costs: Don’t forget to compile and keep evidence of all allowable costs to reduce the taxable gain. These include:
  
  

  • The purchase price you originally paid (from your title deed).
    
    

  • Purchase expenses: transfer tax or VAT, notary and registry fees from when you bought.
    
    

  • Cost of significant improvements (extensions, new roof, major renovations – with invoices).
    
    

  • Selling costs: real estate agency commission, lawyer fees, any capital gains tax valuation reports, etc.
    
    

• These can be deducted on your Modelo 210 calculation, potentially saving a substantial amount of tax.
  
  

• Currency exchange: If you bought in another currency (e.g., a British buyer who purchased in GBP equivalent and now sells in EUR), note that for Spanish tax the gain is calculated in euros. But you might face a loss or gain in your home currency separate from the euro gain. Unfortunately, Spain taxes the euro gain regardless. However, from your home perspective, sometimes currency fluctuations could mean you have less home-currency gain than the euro suggests – discuss with a cross-border tax advisor how to handle this in home country reporting.
  
  

• Special cases of exemption: If by chance you were once a Spanish tax resident and used the property as your main home, and you sell within 2 years of moving abroad, you might qualify for a reinvestment exemption (if you buy a new primary residence in your new country) per some interpretations of EU law – this is complex and you’d need personalized advice. Generally, though, non-residents have no main home exemption except treaty relief for some government employees (rare cases).
  
  

5. After the Sale: Repatriating Funds and Other Considerations

Once you’ve paid Spanish taxes, you can freely repatriate your sale proceeds. Spain has no controls on moving money out for non-residents, aside from standard anti-money laundering checks for large transfers.

• Certificate of Fiscal Residency: If you’re claiming a treaty benefit or a refund of the 3%, you might need to provide a certificate of tax residence from your home country to Spanish authorities to prove eligibility (for example, to ensure you got the EU rate of 19% rightfully if you’re from an EU country).
  
  

• Update or revoke NIE: If this property sale marks your exit from Spain and you have no further assets, you don’t actually “cancel” a NIE (it’s for life), but you might inform the tax agency of your new address abroad via form Modelo 030 to make sure any correspondence (like about that refund) reaches you abroad.
  
  

• Inheritance or Gift tax note: If you plan to gift the property to someone instead of sale, remember that triggers Spanish gift tax (often higher than the capital gains tax, depending on relationship). Selling to a third party at market value and then gifting cash might in some cases be more tax-efficient, but this is a complex area beyond our scope – consult an advisor.
  
  

6. Don’t Forget Community and Utility Closures

While not a tax, it’s worth mentioning post-sale housekeeping:

• Ensure community fees and utility bills are settled up to the sale date. The new owner or their lawyer might hold back a small amount from the sale for any unpaid bills if not confirmed. By law, unpaid community fees for the year of sale and previous 3 years can become the new owner’s responsibility, so they will want proof of payment. You should obtain a community debt certificate from the condo association before selling.
  
  

• Cancel any direct debits or standing payments related to the property after the sale (or better, transfer them to the buyer if agreed, like maintenance contracts).
  
  

In summary, when you sell property in Spain as a foreigner, expect to pay capital gains tax (19% or 24%) and the buyer will withhold 3% upfront towards that tax. Additionally, budget for the local Plusvalía tax which the city council charges on the land’s increased value. By preparing for these taxes and filing the required forms, you can avoid penalties and ensure a smooth sale. The process can be handled by your tax advisor or lawyer as part of the closing, so be sure to engage professionals who understand non-resident transactions.

If you need tailored advice on your property sale – for example, calculating your expected tax bill or navigating the 3% withholding refund – feel free to book an appointment with our tax experts in Spain. We’ll help you minimize taxes and handle compliance so you can focus on enjoying the proceeds of your sale. Schedule a consultation here: Book an appointment.