If you have recently sold a property in Spain, you have likely encountered the concept of the 3% withholding tax (retaining tax). This amount is not an actual tax but a provisional deduction that the Spanish Tax Agency (Hacienda) retains from the sale price to guarantee payment of the Non-Resident Income Tax (IRNR) on your capital gain.
For many sellers, this retained amount represents a significant refund opportunity. At Asesoría Orihuela Costa, we are here to guide you step-by-step to recover every euro you are entitled to.
🔑 What Exactly is the 3% Non-Resident Withholding Tax?
When a non-resident individual or entity sells a property in Spain, Spanish law mandates that the buyer (whether resident or non-resident) must withhold 3% of the sales price and deposit it directly with the Spanish Tax Agency using Form 211 (Modelo 211).
The objective is clear: To ensure the non-resident seller declares and pays the required tax on the profit (capital gain) made from the sale.
When do I have to pay the 3% withholding?
The 3% is paid when signing the deed of sale at the notary and is withhold by the buyer who is the responsible for paying.
In other words, if you are a non-resident and you sell a house in Spain, the buyer of your home, whether resident or non-resident, is obliged to withhold you a 3% of the sale price and pay it to the tax agency within 30 days using form 211.
This is usually done by the tax advisor who represent the buyers house.
Practical example of the 3% withholding
You have sold your house on November 19 and the sale price of the deed is €250,000.
3% x 250,000 = €7,500
As it is a withholding, the value of 3% of the purchase price, the buyer deducts it from the sale price and enters it into the treasury, that is, the buyer will pay you €242,500 ( Less possible other withholdings)
In our example, the buyer of the house will have to pay the tax agency €7,500 by presenting the 211 form and the deadline is December 19.
📈 When am I entitled to a refund of the 3% withheld?
You are entitled to claim a refund of all or part of the retained amount when, after calculating your actual capital gains tax, one of the following situations applies:
When there is no actual gain (or the gain is less):
If the final calculation of your Non-Resident Income Tax (IRNR) proves that the tax due is less than the 3% retained.
Or, if the sale of the property resulted in no capital gain, or even a loss.
When an Exemption applies:
If you meet any specific exemption requirement (Although they are less frequent cases).
⏰ Deadlines: The Critical Factor for Recovering Your Money
Timing is essential when dealing with Hacienda. Many non-residents lose their right to the refund by failing to adhere to these strict deadlines:
Submission Deadline: You have three months from the end of the one-month period the buyer had to deposit the retention (Form 211).
In Practice: Generally, you have four months from the date of the public deed of sale to submit your refund request using Form 210 (Modelo 210).
⚠️ Warning! If you submit Form 210 outside of this strict three-month period (four months from the sale), the Spanish Tax Agency has the legal right to deny your refund claim based on extemporaneity (late submission), even if you should legally be entitled to a refund.
📃 Required Documentation to Claim the Refund (Form 210)
The refund application must be submitted via Form 210 (Non-Resident Income Tax Return), specifically under the section for capital gains derived from the sale of real estate.
For a successful application, you must provide the following documentation:
The Public Deeds for both the original purchase and the subsequent sale.
Form 211 (Proof of the 3% retention paid by the buyer).
Proof of Deductible Expenses (see next section).
Tax Residency Certificate (if required to apply lower tax rates, usually for EU/EEA citizens).
Bank Account Certificate for the refund transfer (must be in the seller’s name).
💡 Maximising the Refund: Don't Forget Deductible Expenses!
To accurately calculate your capital gain (the difference between the sale price and the acquisition price), you can deduct a series of expenses that directly impact the amount you recover:
| Expense Category | Details and Condition |
| Acquisition Costs | Taxes paid when purchasing (ITP, VAT), notary, registry, and legal/agency fees from the original purchase. |
| Sales Costs | Real estate agency fees, energy performance certificate, and the local Plusvalía Municipal tax (local gain tax). |
| Investments and Improvements | Costs of renovations and works that represent a genuine improvement or extension of the property (not simple maintenance). It is crucial to retain all invoices. |
🛠️ Specific Examples of Deductible Expenses (Investment and Improvement)
An expense is considered an improvement when it contributes something that did not exist before or that implies a substantial change in the replaced element.
The most common examples that the Tax Agency usually accepts are:
Examples of NON-Deductible Expenses (Maintenance/Conservation)
These expenses are intended to maintain the property in normal use, so they DO NOT increase the acquisition value in Model 210 for sale:
- Paint the house.
- Fix a pipe breakdown.
- Replace an old boiler with a new one of equal performance.
- Replace old doors or floors with others of equal quality.
- Fix the roof or deck to avoid leaks.
These expenses, if they are deductible to calculate the return of the annual rent.
📌 Key Professional Recommendation
For these expenses to be admitted by the Treasury, it is essential that you, as an advisor, insist on the following to the foreign client:
- Detailed Invoices: Invoices must clearly specify the concept of the work. A simple “Integrally Reform” without breakdown can be rejected. They must indicate that it is the installation of new elements or structural expansion/modification.
- Building Licenses: If the work required a municipal license (as is usual in extensions or structural reforms), the license must be provided. This proves its “improvement” nature.
The burden of proof that an expense is for improvement and not maintenance always falls on the taxpayer (his client). If the invoices are ambiguous, the Treasury will consider it maintenance and will deny its deduction.
🤝 Why Hire an Expert Tax Advisor for Non-Residents?
While the process may seem straightforward, the Tax Agency scrutinises these refund applications carefully, especially in areas with high volumes of foreign transactions like Orihuela Costa.
Our services ensure:
Optimal Calculation: We review your historical deductible expenses to ensure the highest possible refund amount.
100% Tax Compliance: We verify that you are up-to-date with all previous IRNR payments (annual non-resident tax) to prevent Hacienda from blocking the refund.
Follow-up and Response to Inquiries: We handle all information requests (requerimientos) that Hacienda may issue until the money is successfully paid into your account.
🎯 Ready to Claim Your Refund Without the Hassle?
If you have sold your property and want the maximum refund of the 3% in the shortest time possible, do not risk navigating Spanish bureaucracy alone.
At Asesoría Orihuela Costa, we are economists with proven expertise in international tax law and non-resident procedures.
