Everything you need to know about the Spanish Income Tax for Non-residentes (IRNR)
Today, our law firm in Marbella, wish to share with you one of most consulted issues relating the Spanish Income Tax for non-residents (IRNR). What is important to know? How is this income in Spain taxed? What tax is paid on the profit of a sale in Spain?
Let’s go through it step by step. It might be the case that you have a property in Spain, but you are non-resident in Spain, which means you have your fiscal residency in other country for example U.K, Ireland, The Netherlands, France, etc.
You wish to sell your property situated in Spain. You have sold it? Congratulations. You might now have a profit to enjoy. However, if you have a capital gain, take one thing into account. Even if you are non-resident, you must should settle the so known “Impuesto sobre la Renta de No Residents” the Spanish Income Tax for non-residents (IRNR), Spanish capital gain Tax.
It is important to make a hold and think a second on this issue. It’s a topic that generally creates quite a lot of confusion. Almost in all cases that the seller is a non-resident, the person to face the tax is the person who made the payment of the price.
As a general rule, if the purchaser buys the property from a non-resident, it is he/she who is obliged to make the withholding of 3% of the purchase price agreed on the property and must deposit this 3% at Spanish Inland Revenue.
This means that the purchaser, whether a natural person or legal entity, resident or not, must hand over to the non-resident selling party, a copy of model 211 to give a guarantee that the withholding has been paid to Spanish Inland Revenue
Important to take into account regarding model 211, is that you may not file the form later than one month since the conveyance of the property.
Once the selling party obtains a copy of said document, that is to say of the form 211, you must file the tax return on the benefits you have obtained in the sale. Therefore, you must fill in form 210, in which you will mention the payment of the 3% withholding. Once again, you have a specific term to do this. In total you have 3 months since the end of the term that the purchaser has to file form 211, which is one month since the date of conveyance.
It might happen that, when you file form 211, the 3% withholding may be higher than the benefits, or there is even a loss when you sold the property. In this case, you can request the return of part or all of the 3%.
In order to do so, you need to carry out a procedure with the form 212, in which you request said return from the Tax Office.
In any case, should you face any of the situations mentioned in the post, take into account that you can make any enquiry to our experts at Welex on this issue.
Need additional information on capital Gain Tax in Spain? It would be convenient to obtain a Breakdown of taxes and disbursements to be met at the time of the sale prior to sign any sale agreement avoiding any unexpected payment of taxes due in Spain.
Do not hesitate to contact our law firm in Marbella now for any legal and tax advice relating the purchase or sale of your property in Spain. Welex, your conveyancing experts in Marbella.