When a foreigner sells a property in Spain, whether they are an EU citizen (community resident) or from outside the EU (non-community), they must pay taxes on the capital gain from the sale. The main taxes are:
1. Non-Resident Income Tax (IRNR)
- Applied to the capital gain (the difference between the purchase price and the selling price, minus certain expenses and accredited improvements).
- The tax rate depends on the seller’s country of residence: residents in the EU, Iceland, or Norway pay 19%; residents of other (non-EU) countries pay 24%.
2. 3% Withholding Tax
- The buyer is required to withhold 3% of the sale price and pay it directly to the Spanish Tax Agency on behalf of the foreign seller.
- Later, the seller files the IRNR tax return. If the 3% exceeds the actual tax due, the seller can claim a refund.
3. Municipal Capital Gains Tax (Plusvalía Municipal)
- Levied by the local town hall.
- Calculated based on the cadastral value of the land and the number of years the property was owned.
In short, both EU and non-EU foreigners must pay taxes when selling Spanish property, but the applicable tax rate on capital gains depends on their country of tax residence.