Selling a property in Spain UK Tax Implications

Posted by admin 09/11/2021 0 Comment(s) Spain,Selling Guides,Buying Guides,


When selling property in Spain, it is vital to understand the tax implications. This includes the taxes you must pay as the seller and any tax deposits the buyer may be required to pay (which comes from the sale price you receive).


You'll also need to know when your NIE (Numero de Identidad de Extranjeros) will be required throughout the sale. Having a good grasp of Spanish property sales taxes might help you avoid unexpected expenditures and budget wisely.


Spanish property attorneys can help you with:


  • What taxes would you have to pay if you sell a Spanish property?
  • How do buyer's tax deposits work?
  • When will you require your Nuevo Nmero de Identidad de Extranjeros? (NIE)
  • Any tax breaks that you may be qualified for (e.g., the principal residence exemption)
  • Any potential obligation for UK Capital Gains Tax (including the rules around double taxation)

You may learn more about Spanish property sales taxes by reading on, or you can contact a member of our team for personalized assistance suited to your specific circumstances.


Property taxes in Spain are explained


When you put your overseas property for sale in Spain, you may be subject to two taxes: Plusvalia tax and Capital Gains


Plusvalia Tax


The Pluvalia tax is a local property sales tax that you must pay to the Town Hall in the region where your property is situated. Plusvalia is determined based on the increase in land value (the 'Valor catastral del Suelo,' which translates as the 'rateable value of the land), as well as the length of time you have owned the property.


The valour catastral for property rises year after year and is unrelated to the property's market value. This implies that in the past, even if the property's worth had dropped since you bought it, you would still be liable for plusvalia. However, due to legal challenges, Town Halls can no longer recoup Plusvalia if the value of the land when sold is less than when it was acquired.


Capital Gains Tax in Spain


If you are not a Spanish tax resident, you may be obliged to pay Capital Proceeds Tax on any gains from the sale of your overseas property. If you are a Spanish tax resident, and the property is not your principal abode, you must pay Capital Gains Tax. The amount of Spanish Capital Gains Tax you will pay is computed by comparing the price you declared when you bought the property to the price you reported when you sold it.


The difference would be your gain if you sold the property for more than you paid for it. Instead of the wholesale price, you will be taxed on this gain. Non-residents from the EU and EEA nations typically pay a capital gains tax rate of 19%, while those outside the EU/EEA pay 24%.


It is crucial to remember that you may deduct some expenditures from the gain before computing your Capital Gains Tax due. Deductible expenditures may include expenses related to the sale, any substantial repairs to the property (provided you have paperwork to back up your claim), and an allowance for inflation.


Residents of any EU or EEA nation with a tax information-sharing agreement with Spain have been eligible to claim a 'main home' Capital Gains Tax exemption since 2015. For example, this would apply if the property you are selling was your primary residence, and the money would be used to acquire a new primary residence. Regrettably, as a result of the impact of Brexit, this exemption may no longer be accessible to UK citizens in the future.


If you are a UK resident, you must additionally report the Capital Gain made in your home country as part of your Worldwide Capital Gains. The tax paid in the United Kingdom will be based on the regulations and rate for capital gains in the United Kingdom. Because Spain and the United Kingdom have a Double Taxation Treaty, you can balance any tax paid in Spain against any Capital Gains Tax owed in the United Kingdom.


Buyers' tax deposits when selling a Spanish property


If you are not a Spanish resident and have not owned the property since 1985, the buyer must pay 3% of the transaction price with the tax authorities, and you will only receive the remaining 97 percent. Contrary to popular belief, this is not a tax but rather retention made by the tax authorities.


The IRS will keep this money until they are satisfied that you have paid all your dues and taxes. Then, suppose you have paid your taxes, you will be reimbursed, or else they will keep the amount of overdue taxes if you haven't.


You must request for the money to be returned, and it might take up to a year for the authorities to do so. It is the buyer's responsibility to pay the tax authorities this sum.


NIE is an abbreviation for National Institute (Numero de Identidad de Extranjeros)


Your Tax Identity Number is the NIE (Numero de Identidad de Extranjeros, which translates simply as your Foreigner's Identity Number).


There are numerous occasions when you are most likely asked to present your NIE number;


  • When you buy or sell a house
  • Establishing a bank account
  • Having to deal with utility providers
  • Purchasing insurance
  • Having to deal with the tax officials
  • Buying and selling stocks, bonds, and shares
  • Purchasing a Vehicle


If you purchased several years ago, you might not have realised you required an NIE, but you will need one to sell. The regulations governing NIEs change regularly and vary by geographical location. Sometimes you have to do it yourself, and other times someone else can do it for you.

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