Claiming the 3% Refund on the Sale of Your Spanish Property

When selling property in Spain as a non-resident, you are subject to a 3% withholding tax on the sale price. This retention is meant to cover potential capital gains tax liabilities. If your actual tax liability is less than the amount withheld, or if you incurred a loss on the sale, you can claim a refund. Here’s how to do it:

When to Claim the 3% Refund

You can claim a refund of the 3% retention in the following situations: 

• Capital Gains Tax is less than the 3% withheld

If the actual capital gains tax calculated on the sale of your property is less than the 3% retention that was initially withheld, you are entitled to a refund of the difference. 

• Capital Loss

If you sold the property at a loss (i.e., the sale price was less than the purchase price, resulting in no capital gain), you can claim a refund of the entire 3% that was withheld.

Steps to Claim the Refund

1. Buyer Submits Form 211

After selling your property, the first step involves the buyer. The buyer needs to submit Form 211 to the Spanish tax authorities. This form is crucial as it officially declares the property transaction and confirms the 3% retention that was withheld from the sale price.

The buyer has a strict deadline to meet: they must submit Form 211 within one month of the sale date. This quick turnaround ensures that the transaction is promptly reported to the tax authorities. 

Additionally, the buyer must send a copy of Form 211 to the seller to prove that the withheld tax has been duly deposited with the tax authorities. The seller will need to provide Form 211 for the refund application.

2. Seller Submits Form 210

As the seller, your next step is to submit Form 210. This form is where you declare the actual capital gain or loss from the sale of your property. If you made a profit, you'll report the capital gains; if you sold at a loss, you'll document this loss.

You have a bit more time to complete this step. Form 210 must be submitted within four months from the date of the sale. This means you have three months after the buyer's submission of Form 211 to get your paperwork in order.

When preparing Form 210, gather all necessary documentation, which typically includes the purchase and sale agreements, proof of the initial purchase price, and the final sale price. Also, include evidence of the 3% retention and any other documents that support your calculation of the actual gain or loss.

Documentation Required for the Refund application

• Copy of Form 211: Proof that the buyer has declared the transaction and the 3% retention.
• Bank Account Certificate: Certificate of account ownership of the bank account where the funds should be refunded.

Additional Supporting Documents (to expedite the process):

• Proof of Purchase and Sale: Provide the deeds (Escritura de Compraventa) for both the purchase and sale of the property.
• Deductible Expenses: Include invoices for any improvements or refurbishments and any costs related to the purchase and sale (e.g., legal fees, real estate commissions).

These documents can be submitted online using the “aportación de documentación complementaria” option on the Agencia Tributaria website, which requires an electronic certificate.

Timing for Resolution

Typically, the Spanish tax authorities take about 6 to 12 months to process and issue a resolution regarding the refund claim. However, the timing can vary based on the completeness and accuracy of the submitted documents and the workload of the tax office handling your case​.

Steps to Ensure an Efficient Refund Claim

1. Prepare Documentation: Gather all necessary documents in advance, including the purchase and sale agreements, proof of the initial purchase price, the final sale price, and evidence of the 3% retention. Having these documents ready will streamline the submission process.
2. Submit Forms Timely: Adhere to the deadlines for submitting both Form 211 (by the buyer within one month of the sale) and Form 210 (by you, within four months of the sale). Timely submission is key to avoiding delays.
3. Seek Professional Help: Given the complexities involved in the refund process, consider using professional services like IberianTax for filing your tax refund applications accurately and completely online. IberianTax specializes in handling non-resident tax returns in Spain and can ensure that all requirements are met promptly and accurately. Their expertise can save you time and help you avoid potential pitfalls, ensuring compliance with Spanish tax regulations.

By following these steps and ensuring all necessary documentation is in order, you can efficiently claim a tax refund on the sale of your Spanish property if your capital gains tax liability is below the 3% withholding amount.