Last Updated on November 21, 2024
If you are a UK resident selling property in Spain, the allure of the market is often balanced by the need to navigate a complex web of tax rules and legal obligations.
Spain’s vibrant culture, stunning landscapes, and favorable climate make it an attractive destination for foreigners looking to buy or sell property.
If you’ve bought property in Spain as an investment, or spotted a promising selling opportunity in the market, there are several factors to weigh before selling as a non-resident.
We’ve compiled the following guide to provide you with all the essential information needed to make informed decisions if you are a UK resident selling property in Spain, ensuring you save on costs and minimize potential risks.
UK resident selling property in Spain
If you are a UK resident selling property in Spain, you should know that this process involves a few key steps, much like selling a home in the UK, but with some unique twists.
First, gather important documents: title deeds, utility bills, proof of municipal property tax payments, and a list of any furniture or items included in the sale.
You’ll also need an Energy Performance Certificate, which you can get from an architect or engineer, and its cost depends on your property’s size.
During the sale, the buyer will make a 10% deposit, which they lose if they back out. If you change your mind, you might have to pay double the deposit.
Spanish law requires a notary to complete the sale. The notary checks that all paperwork is correct, confirms taxes are paid, and updates the Spanish Land Registry with the new ownership details.
Finally, since you’ll be receiving euros, make sure to handle the currency exchange wisely to avoid losing money.
Am I considered a resident or non-resident in Spain for tax purposes?
It is also critical to understand whether you are a non-resident or a resident of Spain.
The Spanish Tax Office considers a person to be a legal resident in Spain if any of the following conditions are met:
- the individual spends more than 183 days of the year in Spain.
- the individual’s economic activities are centered in Spain.
- when a non-legally separated spouse and her/his dependent underage children normally reside in Spain.
On the other hand, if you just spend 1 to 182 days in the country, you will be considered a non-resident.
Got questions? Request a no-obligation call with a tax advisor.
I am a UK resident selling property in Spain. Do I need to report the sale to HMRC?
If you live in the UK, you need to report any property sale abroad, including in Spain, on your self-assessment tax return.
There’s no need for a separate disclosure to HMRC within 60 days, as it’s included in your overall Capital Gains report.
Currently, the UK and Spain have a Double Taxation Treaty, which means you shouldn’t pay tax twice on the same gains. The Capital Gains Tax (CGT) you pay in Spain will count as a credit against any UK CGT you owe.
The next question is whether you’ll owe any extra tax in the UK. Since each country calculates CGT differently, you’ll need to compare the rates and rules in both countries to determine if additional tax is due in the UK.
What documents do I need to sell property in Spain?
Here are some of the documents you will need if you decide to sell your property:
- Certification of ownership:
- Title deed or deed of the house – You received this document when you bought the property.
- Identity document – The document that allows citizens to be identified personally and unequivocally. “NIE” (Foreigner’s Identity Number) is one example.
- Certifications that prove you are up to date with payments, copies of utility bills
- Land registry record or “Nota simple registral”
- (IBI) Property Tax or “Impuesto sobre bienes inmuebles”
- Certificate stating there are no outstanding debts with the resident’s association or “Certificado de estar libre de pagos de la Comunidad de Vecinos”
- Certificate of outstanding debt and cancellation of encumbrances in the Registry or “Certificado de deuda pendiente y Cancelación Registral”
- Your residencia card if you have residency status
Some other documents that you might need:
- Energy Performance Certificate (EPC) or “Certificado de eficiencia energética”
- Report of Building Inspection or “Certificado de Inspección Técnica del Edificio (ITE)”
- Certificate of Occupancy or “Cédula de habitabilidad”
What is NIE (Numero de Identidad de Extranjeros) and why do you need it?
The NIE (Número de Identidad de Extranjeros) is your Spanish Tax Identity Number. You’ll need it for various tasks, including:
- Buying or selling property
- Opening a bank account
- Handling utility services
- Getting insurance
- Interacting with tax authorities
- Trading stocks or bonds
- Purchasing a car
Even if you bought property years ago without an NIE, you’ll need one to sell now.
NIE requirements can vary by location and change frequently, so we’ll guide you on the current process and costs when you reach out to us.
What are the fees and costs when selling property in Spain?
As a seller, you will have to pay:
- Estate agency fees (around 3-6%)
- Legal fees – around 1-2% of the sale price
- A certificate of energy performance
- If you sell for more than you bought it, you must pay capital gains tax (see below)
- Plusvalía tax (we will explain more below)
- Mortgage cancellation fees: 0.5-1% of the outstanding mortgage balance
- Notary and registry fees: 0.1-0.5% of the final sale amount.
Got questions? Request a no-obligation call with a tax advisor.
What is the 3% Withholding Tax?
When a non-resident sells property in Spain, the buyer must withhold 3% of the sale price and pay it directly to the Spanish tax authorities.
This acts as a precaution to cover the seller’s potential capital gains tax.
The 3% is deducted from the sale price at closing. The seller can later use this amount to offset their actual capital gains tax liability or request a refund if it’s not needed.
What taxes should I pay when I sell a property in Spain?
There are a number of taxes to consider if you are a non-resident selling real estate in Spain.
When selling a house in Spain, you must be aware of Plusvalia and Capital Gains Tax.
The Capital Gains Tax rate is between 19% and 24%, and Plusvalia is a percentage of the transaction.
What is the PlusValía tax?
This local tax goes to the town council where your property is located. It’s based on how much the land value (Valor catastral) has increased since you bought it, not the property’s market value.
In Spain, plusvalia is a municipal tax paid to the local Town Hall in the area where the property is situated.
When the seller is a non-resident, the buyer could be held liable for the payment, so it is necessary that you or your lawyer ensure that the Plusvala Municipal is paid within 30 days of the sale.
The value depends on the growth in the cost of the property, known as valor catastral, as well as the number of years you have had it.
Plusvalia is due even if you lose money selling because the land value rises every year, regardless of the real market worth of the property.
In Spain, the official value of land always rises, even when actual values drop.
*IBI or the Impuesto Sobre Bienes Inmuebles, is a tax that all property owners in Spain are required to pay. Also referred to as property tax.
What is the capital gains tax in Spain for non-residents?
If you sell property, you must pay IRNR or capital gains tax on your sale profits.
You’ll owe Capital Gains Tax on the profit from selling your property, which is the difference between the sale price and the purchase price.
Non-residents from the EU/EEA usually pay a 19% rate, while those from outside pay 24%. You can deduct certain costs, like legal fees and major repairs, from your gain.
Since 2015, EU and EEA residents might qualify for a Capital Gains Tax exemption if the property was their main home and they use the proceeds to buy another main home. However, UK residents may no longer benefit from this exemption due to Brexit.
What is the UK Capital Gains Tax?
If you own property outside the UK and sell it, you’ll need to report the capital gain in the UK for the tax year when you sell it.
For example, if you sell the property before 5 April 2024, you must include the details in your tax return, which is due by 31 January 2025.
The process is pretty straightforward but involves converting the amounts from euros to pounds using the exchange rates from the day of each transaction. You can easily find these rates online.
In the UK, Capital Gains Tax (CGT) rates are either 18% or 28%, depending on whether you’re a basic rate or higher rate taxpayer.
This process is similar to Spain’s, but you’ll need to convert amounts from euros to pounds using the exchange rates from the day of each transaction or expense.
You can also deduct an annual Capital Gains Tax (CGT) allowance from the gain.
For 2023-24, this allowance is £6,000 per person, but if you sell the property after 5 April 2024, the allowance drops to £3,000 each.
You’ll pay tax on the remaining gain at 18% if you have any of your basic rate tax band left, and 28% on anything above that.
You can also subtract any Spanish tax you’ve paid, but only up to the amount of UK tax owed.
What is the energy efficiency certificate?
Before selling a property in Spain, sellers must provide an Energy Efficiency Certificate (Certificado de Eficiencia Energética). This certificate, which is required for all property sales, assesses the property’s energy efficiency.
What is the community certificate?
If the property is part of a community, a Community Certificate (Certificado de Comunidad) is needed. This document shows that all community fees are paid and there are no outstanding debts.
Other Considerations
- Agency Commission: Typically 5% plus VAT of the sale price, paid by the seller.
- Debt Clearance: Sellers must settle any existing debts on the property, including mortgage cancellations or other encumbrances.
- Title Deed: Make sure the title deed is current and accurately reflects the property’s details.
- Tax Obligations: Non-residents must report the sale using Form 211 for withholding tax and Form 210 for capital gains tax.
- Non-Resident Income Tax: Different tax rules apply to non-residents, including non-resident income tax.
Who can help me deal with my Spanish property taxes?
Do you feel overwhelmed and stressed by the prospect of dealing with tax papers?
We are here to help you!
Who are we?
Save time and hassle by letting us handle your tax paperwork!
Our tax advisors help both residents and non-residents with Rental Income Tax, and we also assist with Capital Gains Tax.
We offer a cost-effective alternative to local UK accountants, helping you save money.
Property Tax International is part of CluneTech (formerly known as Taxback Group), employing over 1,500 people in more than 20 countries worldwide with over 25 years of experience in international property tax.
We ensure your tax paperwork is accurately prepared and that you stay compliant with UK and Spanish tax regulations.
Last year alone, we successfully filed over 322,000 tax returns.
Got questions? Request a no-obligation call with a tax advisor.
For regular Tax Tips and Deadline, reminders follow us on Linkedin or Facebook.