When a non-resident sells property in Spain, they undergo a 3% retention which is practised on the sales proceeds. This money is withheld by the buyer (or his lawyer) which is then transferred over to the tax office within a month of completion.
Unbeknownst to most people, sellers are legally entitled to apply for a tax rebate on the full 3% of the sales proceeds providing they have sold at a loss or have broken even.
This procedure is technical, meaning it requires the input of a seasoned lawyer to file this tax rebate (a seller cannot do this on his own), as the tax still needs to be filed.
Additionally, a seller is also entitled to legal interest when the tax office takes longer than usual to repay the withheld sales proceeds. This can be rather substantial, and most certainly higher than what any high street bank is paying savers nowadays for their deposits!
Surprisingly, most sellers are oblivious to this rebate and never bother to ask for their money back, which is lost!
3% retention explained
The purpose of this retention is to act as guarantor of a seller’s Capital Gains Tax liability on selling property in Spain. If a seller makes a profit, he must pay CGT. The 3% ensures sellers will not be doing a ‘runner’.
However, not all sales make a profit.
Moreover, you would be surprised to learn that after adding all the associated costs and expenses most sellers are breaking even! Which would mean they are all entitled to apply for a tax rebate on the 3% withheld.
When you add up all the associated conveyance expenses (both on buying and selling the property), the associated taxes, professional fees due (estate agent, notary, land registry, and lawyer), and the improvements made on the property it is often the case that sellers are breaking even, or even making a loss, however small.
In such cases, when selling at a loss or breaking even, the 3% retention is no longer justified legally. Meaning, the seller has a legal right to claw it back from the Spanish Tax Office, plus interests on top!
Law firm LNA can assist you getting your money back
At LNA, we have assisted thousands of sellers getting their money back over the last two decades.
We offer the following competitive tax service: Calculating seller’s taxes
We offer a highly demanded tax service to calculate seller’s taxes (Capital Gains Tax and Plusvalia Tax) without having to instruct us on the conveyance. This includes filing a seller’s 3% tax rebate.
You can of course also hire us to handle your conveyance too, we act all over Spain.
Our team of pro-active lawyers will get your money back within months.
Our fee is tax-deductible from your seller’s taxes, meaning you pay even less tax!
Conclusion
If you plan to sell property in Spain, and you are a non-resident, you can contact us to recover your money in a timely manner.
We can file a tax rebate on the full 3%, or part of it, contingent on your own particular circumstances.
Contact us at LNA if you need us to calculate your seller’s taxes, and/or want us to file a tax rebate for the 3% on your behalf. Tax rebates are usually paid within months.
Related services available from LNA:
At Larrain Nesbitt Abogados (LNA) we have over 21 years’ experience assisting foreign clients buying, selling, or renting properties in Spain. We offer a competitively priced accounting service to file your landlord taxes every tax quarter nationwide. We are also specialized in litigation, and immigration & residency visas. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on our UK line (+44) 07543 838 218, our Spanish line (+34) 952 19 22 88, or by completing our contact form to book an appointment.
Larraín Nesbitt Abogados, small on fees, BIG on service.
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