For international property owners selling Spanish real estate—British retirees unwinding Marbella investments, German entrepreneurs exiting Barcelona properties, American tech workers liquidating Valencia apartments, French investors closing Madrid holdings—the moment of closing represents a financial shock that catches nearly every non-resident seller unprepared: when you sell a property for €500,000, the notary does NOT hand you the full €500,000; instead, the buyer is legally required to withhold exactly 3% (€15,000) from the purchase price at closing and remit it directly to the Spanish Tax Agency (Agencia Tributaria/AEAT) via a mandatory filing called Form 211.
This means you leave the closing with only €485,000 in hand while the government holds €15,000 as a “payment on account” of your capital gains tax. This often creates confusion about whether this 3% is an additional tax owed (it is NOT) or simply an advance payment that you may recover once you file your capital gains tax return (Model 210) within four months of the sale.
Many non-residents misunderstand this system, resulting in unnecessary delays, overpayment of taxes, or missed refund opportunities that could return between €5,000 and €50,000 depending on the transaction.
This comprehensive guide explains exactly how the 3% retention works, when it applies, how it is calculated, how to recover it, and the critical deadlines you must respect to avoid penalties.
Part I: The Mechanics of the 3% Retention System
What Is the 3% Retention?
The 3% retention is not a tax itself. It is a payment on account (pago a cuenta) of Spanish Non-Resident Income Tax (IRNR).
Spanish authorities collect this amount at the time of sale to ensure tax compliance from sellers who may no longer have a presence in Spain after completion. Your actual capital gains tax liability is calculated later based on your real profit, which may be higher, lower, or even zero if the sale resulted in a loss.
Who Is Subject to the 3% Retention?
The retention applies if you are a non-tax resident in Spain at the time of sale.
You are considered non-resident if:
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You spent fewer than 183 days in Spain during the tax year
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Your center of economic interests is outside Spain
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Your habitual residence is not in Spain
Nationality is irrelevant. A Spanish citizen living abroad is non-resident, while a foreign national living in Spain for more than 183 days is resident.
The buyer is legally responsible for withholding the 3% and filing Form 211 with the Spanish Tax Agency within 30 days of completion.
How Is the 3% Calculated?
The calculation is straightforward:
3% withholding = Sale price × 3%
The sale price is the gross amount stated in the notarial deed, with no deductions allowed.
Even if:
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The buyer assumes a mortgage
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The seller grants a price concession
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Closing costs are reallocated
The 3% is still calculated on the full declared price.
When Is the 3% Paid?
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At completion: The buyer withholds 3% from the seller’s proceeds
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Within 30 days: The buyer files Form 211 and pays the amount to the Spanish Tax Agency
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Seller’s obligation: Obtain a copy of Form 211 and file Model 210 within four months
Part II: When You Can Recover the 3%
Scenario 1: Sale at a Small Profit
If your actual capital gains tax is lower than the 3% withheld, you are entitled to a refund of the difference.
Scenario 2: Sale at a Loss
If the property is sold at a loss, your capital gains tax is zero and you can reclaim the entire 3% withheld.
Scenario 3: Breakeven Sale
If purchase and sale prices (including costs) are equal, you can reclaim 100% of the withheld amount.
Scenario 4: High Profit Sale
If your capital gains tax exceeds the 3% withheld, you must pay the difference when filing Model 210.
Part III: Step-by-Step Refund Process
Step 1: Obtain Form 211
Form 211 is the buyer’s declaration confirming the 3% withholding. You must include it with your Model 210 filing.
Step 2: Calculate the Capital Gain
Capital gain equals sale price minus purchase price and deductible costs such as:
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Transfer taxes paid at acquisition
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Notary and registry fees
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Documented improvements
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Agent and legal fees
Step 3: File Model 210
Model 210 must be filed within four months of the sale date. This is mandatory even if no tax is owed.
Step 4: AEAT Review and Refund
Refunds typically take 6–12 months to be paid after approval, depending on workload and documentation requests.
Part IV: Deadlines and Penalties
Model 210 Deadline
Failure to file within four months can result in penalties ranging from 5% to 150% of the tax due, plus interest.
Form 211 Deadline
The buyer must file Form 211 within 30 days. Delays can affect your refund timeline.
Frequently Asked Questions (FAQ)
Is the 3% retention an extra tax?
No. It is an advance payment against your final capital gains tax.
Do I have to file Model 210 if I sold at a loss?
Yes. Filing is mandatory to claim a refund of the withheld amount.
How long does it take to get the refund?
Typically between 6 and 12 months after filing Model 210.
What happens if I miss the 4-month deadline?
You may face significant penalties and lose your right to a refund.
Can the buyer ask me to pay the 3% separately?
No. The buyer withholds it from the purchase price and pays it on your behalf.
Get Professional Support
If you are a non-resident selling property in Spain, Lextax provides:
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Pre-sale tax planning
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Form 211 verification
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Model 210 preparation and filing
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Refund claim management
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Communication with the Spanish Tax Agency
A proper filing can mean recovering tens of thousands of euros.
