Selling Property In Spain As A Non Resident?

Selling Property In Spain As A Non Resident
What is the IRNR or the capital gains tax in Spain? – If you sell property, you must pay IRNR or capital gains tax on your sale profits. The difference between the purchase and sales values must be included when calculating the IRNR:

  • The property’s acquisition value – The purchase price plus notary fees, land registry fees, and other fees incurred as a result of the purchase. Furthermore, the improvements and investments made to the property will be included.
  • The property’s sales value – The price at which the property is sold plus the costs of the sales procedure (real estate agency, notary’s office, etc.

Non-residents from EU/ EEA countries pay 19% capital gains tax , whereas non-residents from other countries pay 24%. If you are not an official Spanish resident, the buyer is obligated to pay the tax authorities 3% of the purchase price after completion of the sale. This will be deducted from any capital gains tax liabilities you may have. You must pay any remaining balance within 30 days of the sale , or you may seek a tax refund , if applicable.

  1. If the percent withheld exceeds the taxes due, the seller is entitled to a refund once all taxes are paid;
  2. However, if the seller’s tax bill exceeds the percent retention, the Spanish tax authorities may pursue the vendor back home, although it is rare;

This tax retention is referred to by a variety of terms in both English and Spanish. It is known as the’retención ( sobre la venta de inmuebles ) a cuenta del impuesto de la renta de los no-residentes’ in Spanish, and the capital gains tax retention on property sales in English.

Some individuals also refer to a withholding tax, which is money that is withheld, deducted, or held back from a property sale in Spain. If the vendor believes he is entitled to a refund, he has three months to submit Form 212 demanding a refund.

This procedure is carried out at the local tax office ( delegación de hacienda ). This tax rebate does not apply automatically, that’s why you must hire a lawyer or a tax expert to do it on your behalf who will actively seek it. On average, it takes less than 6 months.

In the unlikely event that it takes more than a year, the tax office will pay legal interest on top (3% in 2021). You are paid more for the delay than any high street bank now pays on savings. Be aware that if there are any minor errors in the documentation, the tax authorities will use these to delay any refund.

As a result, ensure that all of the information on your 212 reclaim form is correct. .

Do non-residents 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;
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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 ).

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;
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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.

Do I need a Spanish bank account to sell a property in Spain?

DO I NEED TO OPEN A BANK ACCOUNT WHEN BUYING IN SPAIN? https://spanishsolicitors. com/wp-content/uploads/2020/02/OPEN-BANK-ACCOUNT-IN-SPAIN-WHEN-BUYING-A-PROPERTY. png 800 800 TLA TLA https://secure. gravatar. com/avatar/1ac851cb6be6750eeaea02b00c65d831?s=96&d=mm&r=g febrero 22, 2017 mayo 17, 2020 One of the most important points when buying a property in Spain is to open a bank account in Spain.

  • Is this obligatory?;
  • Before or later, is necessary to open a bank account in Spain if you decided to purchase a Spanish property;
  • It will help you to pay and settle payments for utilities, local taxes, expenses, etc;

But, after the approval of determinate regulations on  money laundering  in Spain, whcih forces to buyers to pass the filer of the money laundering system. This system requies you to justify the origin of the funds to confirm that they are not proceeding from illegal sources, or from tax evasion.

So, if you transfer the necessary funds to your Spanish bank account, your Spanish bank will then pass the filter of the money laundering, and they will instruct you to provide the proper documentation to proceed.

So,  it is more than recommendable to open a bank account in Spain in the earliest steps of the purchase proces s. In fact, this is one of the actions that we recommend to all our clients, in fhe first prospection trip to visit propeties for buying in Spain.

Thus, if you are thinking to make a trip to Spain to buy properties, it will be a good idea to  to get time to open a bank account in Spain. The essential point on this is that, at the end of the purchase process, the  final payment to be paid to the vendor must come from your  bank account in Spain already opened on your name.

In the past, lawyers we could receive the funds from our clients in our client’s bank account in Spain in order to pay the price to the vendors. But, due to recent normative of money laundering, this is not a recommended way. So, Spanish lawyers, although we are in the position to deal with partial payments like deposits, reservations, etc, receiving them into our client’s bank account, it is not recommendable to deal in this way for final payments into our client’s bank account, as the best way is to pay from Buyer’s Spanish bank account to Vendor’s Spanish bank account.

And this is usullay done by Bankker’s draft (” Cheque Bancario “) at the end of the process (on completion of the sale). Spanish laws require buyers to open a bank account in one of the Spanish banks, and transfer the funds there to pay to the vendor directly from the Spanish bank account.

Then the bank passes the filter of these funds from money laundering. It is possible to pay directly from your origin  bank account to the vendor, but this will not pass the filter of the money laundering, and then, the transaction may be inspected during 10 years from the Spanish money laundering Dpt.

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This is why we suggest always to our clients to open a bank account in the earliest steps of the process, and then send the funds from UK to this bank account in Spain, and then paying to the vendor directly from the Spanish bank account.

I am now in Spain , what I need to open a bank account in one of the Spanish banks? Just your original passport. So, if you just visit one the Spanish branches and ask them to proceed to open a bank account, they will do it straight away just with your  original passport or identity card.

Do I need the NIE to open a bank account? In order to start the process to open the bank account you  NIE number will not be requested. It will be requested in further steps of the process, but not to start the process.

Just your original passport or Identity Card. I am out Spain and would like to open a bank account, how can I do it? To open the bank account, the process can be started even if you are out of Spain. So, you should contact one of the Spanish banks to inform them that you wish to open a bank account, but you are not currently in Spain.

Usually the bank start the process of opening the bank account on your name, and the account is operative, and can then receive funds from you. Then, you should be transferring funds from your country to this bank account, the bank then passes the filter for money laundering, and the process is complete when you come so Spain to make physical  presence in the branch of the bank, or in any of the authorized branches in the area.

Please, note that the personal visit to the bank is compulsory and obligatory to complete the opening process of the bank account. The bank needs to get your original signature and to formally identify you in person at least once. And then, once this is done, the account will be operative.

What income is not taxable in Spain?

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

Filing your Spanish tax return After the first year, you don’t have to file a Spanish tax return if your income from all sources is less than €8,000 and you have less than €1,600 of bank interest or investment income.

Do you pay capital gains on property 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.