Capital Gains Tax in Spain for Non-Residents

If you're a non-resident individual who has earned capital gains from the sale of assets in Spain, understanding the intricacies of capital gains tax is essential. Navigating the tax obligations and requirements can be complex, but fear not! In this comprehensive guide, we will delve into the details of capital gains tax in Spain for non-residents, equipping you with the knowledge to navigate the process easily and effectively with IberianTax.

What is Capital Gains Tax?

Capital gains tax is a tax levied on the profits from the sale of assets, most commonly property or land. In the context of non-residents in Spain, Capital Gains Tax applies to individuals and companies who sell assets within Spain and earn capital gains from those transactions.

Calculation of Capital Gains

When calculating capital gains, the sales price of the asset is subtracted from the acquisition cost (purchase price) to determine the profit. However, it's important to note that certain expenses directly related to the acquisition and sale, such as legal fees, taxes, and improvement costs, can be deducted from the taxable capital gain.

Tax Rates for Non-Residents

For non-resident individuals in Spain, the capital gains tax rate is a flat 19% for residents of the European Union (EU), European Economic Area (EEA), and for those non-EU/EEA residents. It's crucial to stay updated on any changes to tax rates, as they are sometimes subject to revision!

Withholding Tax

When the seller is a non-resident taxpayer, the purchaser must withhold 3% of the sale price on account of the Capital Gains tax of the seller. This 3% will be deducted from the final tax due. If the 3% exceeds the final tax due (for example, if the property is sold at loss), the seller can claim the 3% back by submitting the capital gains tax return.

Reporting and Filing Obligations

Non-residents who have earned capital gains from the sale of Spanish assets are required to file a non-resident tax return (Modelo 210) within 4 months from the sale date. This tax return should include accurate information regarding the capital gains and any applicable deductions. It’s important to note that these transactions are regularly monitored by the Spanish tax authorities, as Spanish notaries report these transactions to the authorities, therefore compliance with reporting and filing obligations is crucial to avoid penalties and interest charges from the Spanish tax agency. 

Deductions and Allowable Expenses

To optimise your tax liability, it's important to consider the deductions and allowable expenses that can be claimed when calculating capital gains tax. These deductions may include acquisition costs such as notary fees, lawyer fees, land registry fees, VAT or property transfer tax, improvement expenses, and other direct expenses related to the sale e.g., real estate agent fees and Plusvalia tax. Ensuring proper documentation and understanding the eligibility criteria for these deductions is essential.

Tax Treaties with Other Countries

Many countries around the world have tax treaties with Spain that aim to prevent double taxation and provide some benefits for taxpayers. All of the tax treaties that have been signed by Spain details that any capital gains derived from Spanish real estate are subject to taxation in Spain. In the case of double taxation, the country of tax residency should allow you to deduct taxes paid in Spain. 

Seeking Professional Assistance

Given the complexities of capital gains tax and its potential impact on your financial obligations, seeking professional assistance is highly recommended. A specialized service, such as IberianTax, can provide invaluable guidance, ensure compliance, and help you to optimise your tax obligations in Spain. 

How to File Your Capital Gains Tax with IberianTax

IberianTax is an online tax-filing service designed specifically for non-resident property owners in Spain. Our user-friendly software simplifies the process of calculating and filing capital gains tax, allowing you to file your return quickly and easily. With our expertise and regularly updated tax tools, you’ll have peace of mind knowing that your taxes will be calculated accurately. 

Using IberianTax's software, you can easily navigate the complexities of capital gains tax as a non-resident in Spain, starting at just €149,95! Our software guides you step-by-step, ensuring that all the necessary information is gathered, and that calculations are made accurately – our team even double checks your return before filing, to give you that extra peace of mind. 

Don't let capital gains tax overwhelm you! Visit IberianTax's website and discover our user-friendly tax software designed for non-residents in Spain. Simplify your tax obligations, optimise your tax liability, and gain peace of mind with IberianTax's expertise and support. Register for your FREE account today and experience the convenience and accuracy of our online tax-filing service!