Capital Gains Tax On Property In Spain For Non Residents?

Capital Gains Tax On Property In Spain For Non Residents
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.

  1. In accordance with this regime, reduction coefficients (14;
  2. 28%, 25%, or 11;
  3. 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 ).

  1. 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.

See also:  Living In Spain On A Pension?

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.

Who is exempt from capital gains tax in Spain?

Absolute relief – As we explained earlier, all tax residents in Spain who are over the age of 65 years are exempt from paying the capital gains tax. Especially if the property they are selling is their main home.

How much tax do you pay when selling property in Spain?

What tax do you pay if you sell a property in Spain? – When selling a property in Spain, Plusvalia Municipal and Capital Gains Tax are a tax that you’ll need to pay. This is usually a percentage of the sale ranging from 19-24%, or calculated by the local authority based on other criteria.

What is non resident capital gains tax?

Non-resident capital gains tax (NRCGT) imposes a UK tax charge where non-UK residents dispose of UK land and property. The latest version of the regime applies to disposals from 6 April 2019 onwards.

Who pays capital gains tax in Spain?

Something that both residents and non-residents in Spain must once during their life in the country. The capital gains tax is one of the main taxes you will need to pay after obtaining a profit from an economic transaction. In this article, we are going to learn how does this tax work, which are the exact percentages to be paid , and how can you benefit from the existing bonifications and exemptions.

What happens when you sell a house in Spain?

What are the costs of selling property in Spain?  – As the seller, it is your responsibility for paying all the debts associated with the property and providing an Energy Performance Certificate. You will also be expected to pay estate agent’s fees for marketing the property upon the completion of the sale, as well as a municipal tax upon sale.

  • You may find that there are some liabilities that cannot be paid by you upon completion, for example the IBI, as you may not yet have received the payment document;
  • If that is the case then it can be agreed with the purchaser that the amount of the liability or a proportion of that amount be retained from the purchase price;

If you are selling a property in Spain and you are not resident in Spain for tax purposes, then 3% of the selling price will be retained upon the sale on account of capital gains tax. In the event that no tax is payable you may be able to claim a refund.

See also:  Non Lucrative Visa Spain Uk?

Do I pay CGT in Spain and UK?

Residents selling their home in the UK – In Spain, as in many European countries, you are liable for tax on your global income. If you are a resident in Spain and sell your property in the UK, then you are also liable to pay capital gains tax in Spain.

  1. You must declare the income from the sale on your annual resident tax declaration;
  2. However, it is important to remember that this declaration covers the previous year;
  3. Therefore, if you sold your house in May 2019 you would declare it in June 2020 and not in that year’s declaration;

Furthermore, the Autumn 2018 budget introduced changes to capital gains tax in the UK. Currently, you don’t have to pay capital gains tax on your main home. However, now you need to pay capital gains tax on second homes and buy to let properties. In the UK, you pay a higher rate of capital gains tax on property than other assets.

Do I have to pay capital gains tax in Spain?

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.

Tax implications if buying or selling a property in Spain as resident or non-resident

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 ).

  1. 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%);
See also:  Smoking On Beaches In Spain?

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.

  1. A maximum of EUR 240,000 may be used to establish an assured life annuity;
  2. 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.

Who pays capital gains tax in Spain?

Something that both residents and non-residents in Spain must once during their life in the country. The capital gains tax is one of the main taxes you will need to pay after obtaining a profit from an economic transaction. In this article, we are going to learn how does this tax work, which are the exact percentages to be paid , and how can you benefit from the existing bonifications and exemptions.

Do you pay capital gains after age 65?

Capital Gains Tax On Property In Spain For Non Residents Capital gains are one of the most important financial considerations to make when selling your property. Over the years, there have been plenty of exemptions that prevented consumers from having to pay capital gains taxes on certain sales. One of these was a home sale exemption for people over the age of 55. However, this exemption has not been in place since 2007.

Today, anyone over the age of 55 does have to pay capital gains taxes on their home and other property sales. There are no remaining age-related capital gains exemptions. However, there are other capital gains exemptions that those over the age of 55 may qualify for.

Here’s what you’ll need to know about capital gains taxes when selling your investments.

How can I avoid paying capital gains tax?