Sold Your Property in Spain as a Non-Resident? Don’t Forget the 3% Retention Deadline

Important* Regardless of residency status, all sellers who cannot provide a certificate of fiscal residency at point-of-sale (notary)will have the 3% withheld

Many non-resident property sellers in Spain assume that once the sale has completed, their lawyer or conveyancer will automatically deal with the recovery of the 3% retention paid to the Spanish Tax Agency. Unfortunately, this is not always the case. The buyer is required to submit Modelo 211 and pay the 3% within one month of completion, but the seller must then submit Modelo 210 within the following three months to declare the capital gain or loss and claim back any excess tax. If this step is overlooked, the seller may miss the deadline to recover money that is rightfully theirs.

This issue arises frequently because many sellers understandably believe that everything relating to the sale is handled automatically once the notary signing has taken place. However, the 3% retention is only a provisional payment on account of the seller’s potential capital gains tax liability. In order to calculate the actual tax due—or to claim a refund where the 3% exceeds the tax owed—the non-resident seller must submit Modelo 210 within the permitted timeframe. Without this declaration, the Tax Agency will simply retain the amount withheld.

Another surprise for many non-resident sellers is how long it can take to receive the refund, even when the claim has been submitted correctly and within the deadline. While the Tax Agency must review the declaration before issuing any repayment of the excess 3% retained, it is not unusual for refunds to take many months and, in some cases, more than a year. Where there has been a long delay, sellers may wish to ask their lawyer to follow the matter up directly with the Tax Agency, or make enquiries themselves to check the status of the refund and ensure that no further documentation has been requested.

In practice, delays usually occur for three reasons:

The claim was never submitted. Some sellers assume their lawyer or gestor will automatically apply for the refund, but this is not always included in the conveyancing service. If the declaration is never filed, the tax office will simply retain the 3% payment.

The claim was submitted incorrectly or with missing information. Errors in the declaration, missing documentation, or incorrect bank details can lead to the tax office requesting further information, which delays the refund.

The tax office takes time to process the repayment. Even when everything has been filed correctly, the Agencia Tributaria may take several months to review the declaration and process the refund, particularly if they decide to check the capital gains calculation or supporting documents.

Sellers can also be proactive if they feel their refund is taking longer than expected. If they are in Spain, they may visit their local office of the Agencia Tributaria and ask for an update on the status of their refund. In many cases the enquiry is handled by the collections department, known as Recaudación, where staff can check the record and confirm whether the declaration submitted using Modelo 210 is being processed or whether further information is required.

When visiting the tax office, it is important to take a copy of the submitted Modelo 210 along with the sale details, such as the notary deed and the amount of the 3% retention. Having these documents ready makes it much easier for the staff in Recaudación to locate the file and provide an update on the refund.

Please note: The information provided is based upon our understanding of current legislation. It is not legal advice but is provided freely to enable you to be properly informed. We recommend that if you are considering taking action, you should seek professional advice.