Selling a home as a non-resident: the 3% retention and Form 210

Why the buyer withholds 3%

The rule is in Article 25.2 of the Ley del Impuesto sobre la Renta de no Residentes, the law on non-residents' income tax (IRNR): when a taxpayer without a permanent establishment sells a property in Spain, "el adquirente estará obligado a retener e ingresar el 3 por ciento … de la contraprestación acordada" (the buyer is required to withhold and pay in 3% of the agreed price). If the seller isn't tax-resident in Spain, the buyer withholds 3% of the price and pays it to the Agencia Tributaria (AEAT), the Spanish tax agency, using form 211 (modelo 211), as a payment on account of the seller's tax.

The obligation applies to the buyer "sea o no residente" (resident or not), as the AEAT points out. And the law adds a detail every buyer should know: if the retention isn't paid in, "los bienes transmitidos quedarán afectos al pago" (the property transferred remains liable for payment) of whichever is lower, the retention or the tax due. The home you've just bought is liable for a debt that isn't yours, which is why I get form 211 ready before completion.

Form 211: one month, and a copy for the seller

The AEAT is precise about the deadline: "el adquirente ingresará la retención mediante el modelo 211, en el plazo de un mes a partir de la fecha de transmisión" (the buyer pays in the retention using form 211, within one month of the date of transfer). One month from the date of completion, not from handing over the keys.

Then comes the step that matters for the seller: the buyer hands over a copy of the paid form 211, because that document is what lets the seller deduct the retention. Without that copy, form 210 can't be completed, and I ask for it in writing.

Form 210: the gain at 19%

The retention is only a payment on account: the actual tax is worked out on the gain, the difference between the sale value and the purchase value, and it's declared on form 210 (modelo 210). The gain a non-resident makes selling the home is taxed under the IRNR at 19%, and the retention the buyer paid in with form 211 is deducted from that tax. The rate comes from Article 25.1.f) of the law, and the AEAT confirms it.

The deadline is what confuses people most, because it's a two-stage one: the AEAT describes it as "tres meses una vez transcurrido el plazo de un mes desde la fecha de la transmisión del bien inmueble" (three months once the one-month period from the date of transfer of the property has passed). You wait for the month the buyer has to pay in form 211, and the three months run from there. Anyone counting three months from completion files late.

For anyone resident in another EU or EEA state, Article 24.6 sets out special rules for working out the taxable base.

How you recover the excess

The 3% is worked out on the price; the tax is worked out on the gain. When the gain is small, or there isn't one, the retention is more than the tax owed, and the AEAT says so in one line: "si la retención es superior a la cuota tributaria, se podrá obtener la devolución del exceso" (if the retention is higher than the tax due, the excess can be refunded).

For self-assessments due a refund, the AEAT says they can be filed from 1 February of the year after the income was earned, and within four years of the end of the period for declaring and paying in the retention. You need a bank account: a seller who's already closed their Spanish one is the most mundane reason a refund gets stuck.

This is general guidance on the Spanish rule, not tax advice: your own position also depends on how the income is taxed where you live. For your specific case, speak to a suitably qualified professional.