Capital Gain Tax Spain Non Resident?

Capital gains – Capital gains and losses are variations in the value of a person’s wealth due to an alteration in its composition that are not considered to be income under Spanish PIT law. It is important to note that capital gains can arise on all inte r vivos transfers, but not on mortis causa transfers.

When the capital gain or loss is generated from the transfer of an asset, it is calculated by deducting the previous acquisition value from its transfer value; otherwise, the capital gain or loss is the market value of the asset.

Capital gains arising from transfers of assets are included in savings income and are taxed at the corresponding progressive tax rates of between 19% and 26%. A transitory tax regime may be applied for transfers of assets or rights that are not used to carry on a business activity and were initially acquired before 31 December 1994. Therefore, if the transitory regime is applicable, the total capital gain should be divided into two parts:

  • The part of the capital gain generated from the acquisition date up to 19 January 2006, on which the reduction coefficients is applied.
  • The part of the capital gain generated from 20 January 2006 up to the date of the transfer. This part is taxed at a progressive tax rate of between 19% and 26% and no reduction coefficients apply.

With effect from 1 January 2015, this transitory tax regime is applied when the value of the transfer does not reach EUR 400,000 per taxpayer. For this purpose, the transfer values of all assets transferred from 1 January 2015 on which this transitory regime may be applied should be added together, and if the total amount exceeds the threshold, the transitory regime is applied proportionally to the part of the transfer value that does not exceed the threshold.

In accordance with this regime, reduction coefficients (14. 28%, 25%, or 11. 11% per year, depending on the type of assets, for each year that the assets or rights have been held between the acquisition date and 31 December 1996) may be applied on the proportional part of the capital gain generated from the date of acquisition up to 19 January 2006.

The capital gain generated from the sale of a person’s home is tax exempt for the same proportion as the amount that is reinvested in a new home, provided that the new home is purchased within two years. Capital gains not generated from transfers of assets (such as some lottery prizes) are included in the general tax base and are taxed at progressive tax rates, which are different for each autonomous community ( see the Taxes on personal income   section for further information ).

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Capital gains obtained in Spain by non-residents without a PE are taxed at a rate of 19% when they are generated from transfers of assets otherwise they are taxed at the general NRIT rate of 24% (for residents of other EU member states or EEA countries with which there is an effective exchange of tax information, the rate is 19%).

The transitory tax regime for transfers of assets and rights not used to carry on an economic/business activity and initially acquired before 31 December 1994 is also applicable for capital gains obtained in Spain by non-residents without a PE. Capital gains arising from transfers of assets by PIT payers over the age of 65 are tax exempt if the total amount of income obtained from the transfer is used within six months to establish an assured life annuity for the taxpayer.

  • A maximum of EUR 240,000 may be used to establish an assured life annuity;
  • For partial reinvestments, only the part of the capital gain obtained that corresponds to the reinvested amount will be tax exempt;

For transfers of properties located in Spain by non-residents without a PE (individuals), the purchaser is required to deduct 3% of the price of the transfer and deposit it with the local tax authorities. This withholding is treated as an advance payment of capital gains tax for the seller.

What taxes do you pay in Spain as a non-resident?

How much is non resident tax in Spain? – Non-resident taxpayers in Spain are taxed at the rate of 19-24 % on income earned in Spanish territory or income that arises from Spanish sources such as property. Specific rates apply to other kinds of income.

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What is the tax rate for non resident?

References and links: –

  • Taxation of Nonresident Aliens
  • Publication 515, Withholding of Tax on Nonresidents and Foreign Entities
  • Publication 519, U. Tax Guide for Aliens
  • Publication 901, U. Tax Treaties
  • Form 1040NR, U. Nonresident Alien Income Tax Return, and Instructions
  • Form 4868, Application for Automatic Extension of Time to File U. Individual Income Tax Return

Return to:   The International Tax Gap Series.