Capital gains from the sale in Spain

Capital Gains Arising from the Sale of Buildings

Capital gains obtained as a result of selling a property are subject to tax. This income shall be deemed to be accrued when the property is transferred.

In general, net gains shall be calculated based on the difference between the cost price and transmission value of the property.

The cost price consists of the real amount for which the asset being sold was acquired, plus the sum of the costs and taxes inherent in the acquisition, excluding interest, paid by the transferor. This value will be corrected, according to the year in which the property was acquired, by applying updating coefficients that are established annually in the General State Budget Act.

For assets sold in 2010, the coefficients are as follows:

Year of acquisition Coefficient

(1) For investments made on 31 December 1994, the coefficient applicable is 1.3502.

The application of a coefficient other than the unit requires the investment to have been made at least one year in advance of the date of transfer of the real estate asset.

For assets sold in 2011, the coefficients are as follows:

Year of acquisition Coefficient

 

However, if the investment was made on 31 December 1994, a coefficient of 1.3637 is to be applied.

The application of a coefficient other than the unit requires the investment to have been made at least one year in advance of the date of transfer of the real estate asset.

If the building being transferred had been rented, the value determined should be reduced by the amount of the depreciation corresponding to the rental period. This depreciation will also be updated in accordance with the year to which it corresponds.

The transfer value is the real amount for which the disposal was made, reduced by the amount of any costs or taxes related to the transfer paid by the seller.

As a result, the capital gain on which taxation will be paid consists of the difference between the transfer value and the cost price, determined as described above.

Nevertheless, if the property is transferred by an individual who purchased it prior to 31 December 1994, net gains will be subject to a transitory scheme and the previously calculated figure will be reduced.

If the transferor acquired the property on two separate dates or the property has been renovated, calculations must be made as if there were two net gains.

Tax rate: 19%.

The person who acquires the building, whether resident or non-resident, is obliged to withhold and deposit with the Public Treasury 3% of the consideration agreed. For the seller this amount constitutes a payment on account for the tax on the income arising from the transfer. Therefore, the purchaser will give a copy of form 21, used to deposit the withholding, to the non-resident seller, so that the seller can deduct this withholding from the tax to be paid as a result of the tax return including the capital gain. Should the amount retained be greater than the tax liability, it is possible to obtain a refund of the difference.

In the event that the withholding is not deposited, the building will remain liable to payment of the lower of the amount of the withholding or payment on account and the corresponding tax.

Tax Return Form:

· Properties sold before 31 December 2010: form 212, approved by Order HAC/3626/2003, of 23 December.

Means of filing:

- Printed (pre-printed or downloaded from the Tax Agency's website).

- Electronically, via the Internet.

· Properties sold after 1 January 2011: form 210, approved by Order HAC/3316/2010, of 17 December, recording income type 28.

Means of filing:

If the property is under shared ownership by a married couple in which both spouses are non-resident, a single self-assessment may be provided.

When to file the tax return: three months from the end of the period that the person acquiring the building has to deposit the withholding (this time period, in turn, is one month from the date of the sale).

Refund of excess withholding. Should there be a capital gains loss, or if the tax withholding is greater than the whole payment due, you will have the right to have the excess amount withheld refunded. The refund procedure is initiated by filing the tax return form. The refund will be made in the form of a bank transfer to the account shown on the tax return. The holder of the account will be the non-resident taxpayer or their representative; in the event of the person being a representative, they must be expressly granted powers to receive the refund in the documentation showing their status as representatives. The "for non-residents" copy of form 211 used to pay the tax withholding shall be attached to the tax return.

The Agency shall, where appropriate, make a provisional payment within the six months following the end of the established period for filing of the form. If the provisional payment is not made within this time period, the Tax Agency shall voluntarily refund the excess owing over the self-assessed amount. Once six months have elapsed without payment having been ordered, for reasons not attributable to the taxpayer, the amount pending refund shall accrue late payment interest.