3 Retention Non Resident Spain?
A synopsis of the Spanish capital gains tax retention on property sales by non-residents, often referred to as the 3% withholding tax. When a non-resident sells property in Spain, they buyer is obliged to retain 3% of the price and pay it to the tax authorities to cover the vendor’s Capital Gains Tax (CGT) liabilities. If the 3% retained exceeds the taxes due, the vendor can expect a refund once all taxes have been paid.
On the other hand, if the vendor’s tax bill is greater than the 3% retention, the Spanish tax authorities may chase the vendor back home, though it is unlikely. If the vendor is due a refund after taxes have been settled, it can take years to get paid (see link to forum discussions below for more information on how long it takes to get refunded).
Various terms in English and Spanish are used to name this tax retention. In Spanish it is known as the ‘ retención (sobre la venta de inmuebles) a cuenta del impuesto de la renta de los no-residentes ‘, whilst in English it is referred to as the capital gains tax retention on property sales. GGT rates on real estate assets sold in Spain by EEA/EU-residents have changed over the years as follows (tax rate at time of sale):
| PERIOD | RATE |
| Up to 31/12/06 | 35% |
| Up to 31/12/07 | 25% |
| 2008 | 18% |
| 2009-2011 | 19% |
| 2012-2014 | 21% |
| 2015 | Up to 11-Jul 20% From 12-Jul 19. 5% |
| 2016 | 19% |
+ Agencia Tributaria reference page (English) The 3% retention does not cover the vendor’s ‘plusvalia’ tax liability, which is paid to the town hall at the time of sale. After the sale, the buyer has one month from the date of sale to pay the 3% retention to the local tax office using the form (modelo) 211. A copy of the submitted form should then be given to the vendor or his lawyer, so a refund can be claimed.
What is the statute of limitations in Spain?
Tax in Spain for Non-Residents
Alternative dispute resolution – 30. What are the main alternative dispute resolution (ADR) methods used in your jurisdiction to settle large commercial disputes? Is ADR used more in certain industries? What proportion of large commercial disputes is settled through ADR? In Spain, the main ADR methods are assisted negotiation, mediation and arbitration.
- Cases with a highly technical background.
- Mergers and acquisitions.
- International cases in areas such as infrastructure, energy, engineering and sport.
31. Does ADR form part of court procedures or does it only apply if the parties agree? Can courts compel the use of ADR? Spanish legislation encourages and promotes the use of ADR, but the parties can only be obligated to engage in it if there is a previous agreement to that effect.
In all of those methods, the main rule that applies is that the parties are free to agree as to the process. An agreement reached through ADR is binding. The process requires the intervention of a third party as assistant, mediator or arbitrator.
32. How is evidence given in ADR? Can documents produced or admissions made during (or for the purposes of) the ADR later be protected from disclosure by privilege? Is ADR confidential? The most commonly used evidence types in ADR are documentary, witness and expert evidence.
- The rules of the International Bar Association on the taking of evidence are generally followed in international arbitrations that take place in Spain;
- A common feature in ADR is the high level of confidentiality at every stage of the procedure;
Anyone involved in the mediation or arbitration process (including the mediators or arbitrators) must keep confidential any information acquired as a result of the process. They are also exempted from giving evidence concerning the information in judicial or arbitration proceedings, unless the parties agree otherwise or the evidence is requested by a criminal court 33.
- How are costs dealt with in ADR? Arbitration courts have fixed fees for both arbitrators and court expenses;
- In ad hoc arbitration, the arbitrator fixes the costs of arbitration;
- If one of the parties is ordered to pay the court fees, the costs are passed to them;
In a mediation, some rights and fees may be apportioned by the mediator depending on the type of mediation (institutional or ad hoc mediation). 34. What are the main bodies that offer ADR services in your jurisdiction? The main bodies providing arbitration and mediation services in Spain are the:
- Civil and Mercantile Court of Arbitration (Corte Civil y Mercantil de Arbitraje-CIMA) ( www. cimaarbitraje. com ).
- Arbitral Tribunal of Barcelona (Tribunal Arbitral de Barcelona) ( www. tab. es ).
Do you have to do a tax return in Spain?
All Spanish residents have to submit an annual tax declaration or pay income tax to the Tax Administration Agency (IRPF), based on the income they earned in the previous year. Right now, it’s time to submit your tax declaration for 2021. But don’t worry—you have three months before the first draft is due.