Selling Your Property in Spain as a Non-Resident: 3% Withholding and Other Taxes

When you sign the deed, the buyer makes the transfer, and you discover that 3% of the agreed price is missing. It is not an error or a hidden commission: it is a withholding that the law requires in certain property sales, and it is an obligation that is often not explained sufficiently in advance. If you are going to sell a flat, premises, or any property in Spain while being a non-resident for tax purposes, it is advisable to understand this withholding —and the other taxes that accompany it— before sitting down before the notary, not afterwards.

01. The 3% Withholding: What It Is and Who It Applies To

Article 25.2 of the IRNR Law requires the buyer of a property located in Spain —regardless of where they reside— to withhold and pay to the Tax Authorities 3% of the agreed consideration, when the seller is a taxpayer subject to Non-Resident Income Tax (IRNR) and transfers the property without the involvement of a permanent establishment in Spain.

The important distinction is that what matters is not whether the seller lives outside the country, but their status as a tax non-resident in Spain at the time of the sale. And this 3% is not an additional tax or a commission: it is a payment on account of the IRNR that you will have to settle later, based on the capital gain obtained, not on the total price. The withholding is calculated specifically on the consideration agreed in the transaction, which normally corresponds to the sale price, although in some cases it may include other items.

02. Form 211: How the Withholding Is Paid

The obligation to withhold and pay the amount falls on the buyer, not on you. They must file Form 211 within one month from the date of transfer of the property, which normally coincides with the date of the deed.

In practice, at the signing you will receive the agreed price less that 3%, and it is advisable to also receive the payment receipt. Keeping it is highly recommended because it facilitates the subsequent tax return and the refund request, although its absence does not necessarily prevent you from filing Form 210 later.

Along with this receipt, it is worth keeping all documentation related to the transaction: the purchase deed, the deed or purchase agreement for the property, invoices for works and improvements, proof of taxes and expenses paid when purchasing, and invoices from the estate agency, notary, land registry, and other selling expenses. This documentation is what allows the capital gain or loss to be calculated correctly in the next step.

03. Form 210: The Definitive Tax

You must file Form 210 to declare the capital gain and calculate the final IRNR. The general deadline is three months from the end of the one-month period that the buyer has to pay the withholding, which in practice normally means around four months from the date of the transfer.

The capital gain is generally calculated by comparing the transfer value with the acquisition value.
It is important not to mix up two concepts that are often confused:

Expenses and taxes inherent to the acquisition of the property are added to the acquisition value.
Expenses and taxes inherent to the sale that you have paid are deducted from the transfer value.
Loan interest, on the other hand, is not included in these concepts.

The resulting taxable gain —calculated in accordance with these specific rules and with the expenses properly documented— is generally subject to a rate of 19%. This gives rise to three possible scenarios: if the final tax is lower than the 3% withheld, you can request a refund of the difference; if it is higher, you will have to pay the outstanding amount; and if there is no taxable gain, or there is even a loss, you can request a refund of the full withholding, provided that the requirements are met and the calculation is properly documented.

The refund does not arrive automatically: it normally has to be requested by filing Form 210. For self-assessments resulting in a refund, the Spanish Tax Agency allows their submission from February 1 of the year following the year in which the four-year general period begins, counted from the end of the period for filing and paying the withholding. This gives you some leeway, but it should not be interpreted as meaning that deadlines do not matter: the sooner it is filed, the sooner it can be resolved, and certain specific cases may have additional conditions.

04. Municipal Capital Gains Tax: A Separate Tax

The 3% withholding and the IRNR are national tax obligations. There is also a separate local tax, the municipal capital gains tax —the Tax on the Increase in Value of Urban Land— which taxes the increase in the value of the land from the time of purchase to the time of sale.

The taxpayer for this tax is usually the seller, but when the seller is a non-resident individual, the buyer becomes legally considered the substitute taxpayer, and it is common for the process to be handled at the notary’s office. The general deadline for transactions between living persons is 30 business days from the date of the sale, although the specific procedure —self-assessment or declaration— depends on the regulations of each municipality.

It is also worth knowing that, if there has been no actual increase in the value of the land, there may be grounds for the tax not to be payable, provided that this circumstance can be demonstrated in accordance with the applicable regulations. In any case, the municipal capital gains tax does not replace the IRNR, nor is it calculated in the same way: they are two different taxes, administered by different authorities and handled separately.

05. Other Expenses That Also Affect the Final Amount

The 3% withholding and the municipal capital gains tax are usually the most discussed, but they are not the only amounts that reduce what you ultimately receive. Before calculating the net amount from the transaction, also take into account the estate agency commission if the property was sold through an agency, the corresponding notary and land registry fees, the land registry cancellation of the mortgage if you had an outstanding mortgage, the energy efficiency certificate, representation or tax advisory fees, and any withholding or debt that may affect the transaction. The allocation of several of these expenses depends on what was agreed in the contract, so it is advisable to review it before signing.

06. A Simple Example

Let’s assume a sale for €200,000. The buyer withholds €6,000 —3%— and pays it to the Tax Authorities using Form 211.

If, after adding eligible expenses and improvements, the taxable gain amounts to €20,000, the 19% tax comes to €3,800. You could then request a refund of €2,200, without prejudice to the Tax Authorities reviewing the documentation provided.

If, on the other hand, the taxable gain were €40,000, the tax would amount to €7,600. Since €6,000 has already been withheld, there would be a remaining €1,600 to pay.

07. Limitations and Criticism

The system, designed to ensure tax collection from sellers who may later be more difficult to locate, has an obvious point of friction: the withholding is calculated on the agreed consideration, not on the actual gain. Someone who sells with a reduced gain, or even at a loss, still has 3% of the total transaction value withheld and must rely on a refund procedure that requires submitting documentation, meeting deadlines, and waiting for the Tax Agency to review the case.

In addition, calculating the taxable gain is not always straightforward: determining which expenses are added to the acquisition value, which are deducted from the transfer value, and what documentation is admissible requires a certain level of technical knowledge that many non-resident sellers do not have readily available, nor do they always receive it from the other party to the transaction. For this reason, in transactions involving a certain level of complexity —high amounts, improvements carried out years ago, poorly documented purchase expenses— it is advisable to seek professional advice before signing, not only when filing Form 210.

08. When These Rules Change

Everything above describes the general case: the sale of a property by a non-resident individual, without a permanent establishment in Spain. The treatment may vary significantly if the seller is a company, if they operate through a permanent establishment, if the transfer takes place through inheritance or donation, if there is a double taxation treaty applicable to their country of residence, or if the property is used for an economic activity. In any of these cases, it is advisable to review the specific situation before taking the general rules for granted.

09. Conclusion

The 3% withholding is not the final tax on selling a property in Spain, but rather a payment on account of the IRNR. The buyer pays it using Form 211 within one month; you, as a non-resident seller, will normally have to file Form 210 to calculate the final tax and, depending on the outcome, request a refund of the difference or pay any outstanding amount. In addition, separately, there is the municipal capital gains tax payable to the relevant town hall.

The key takeaway is simple: there are three separate procedures —national withholding, final IRNR, and municipal capital gains tax— that should not be confused with one another. Have you already located the documentation from when you purchased the property? It is the first step to knowing precisely how much you are required to pay or can recover.