3% withholding tax on the sale of property to non-residents:
what is it and how does it work?

Buying or selling a property in Spain always involves tax formalities, but when theseller is a non-resident, there is a special obligation that many are unaware of: the3% withholding on the purchase price, regulated in theNon-Resident Income Tax (IRNR) and managed through theTax Agency's Form 211.

What is Form 211?

Form 211 is the form to be filed by thebuyer of a property when the seller does not reside in Spain. Its purpose is to pay3% of the purchase price to the Inland Revenue, as a guarantee that the seller will comply with his tax obligations.

In other words: the buyer pays the seller the agreed priceminus this 3%, and pays it directly to the Tax Office.

Why does this withholding exist?

The reason is simple: to ensure that the non-resident seller declares thecapital gain from the sale.

• If the seller makes a profit, he will have to pay tax on it in Spain.
• If there is no gain, he will be able to request a refund of the withholding.

In this way, the tax authorities prevent a foreign seller from leaving without complying with his tax obligations.

How is it applied in practice?

1. Calculation of the withholding tax: 3% is applied to the total purchase price.
   • Example: property sold for €200,000 → withholding tax of €6,000.
2. Payment to the seller: the buyer hands over €194,000 to the seller.
3. Payment to the Tax Authorities: the buyer files Form 211 and pays the €6,000 to the Tax Authorities.
4. Declaration by the seller: the seller filesForm 210 to declare the capital gain and, if applicable, request a partial or total refund of the withholding.

What does this imply for each party?

• Buyer: must comply with this obligation to avoid penalties.
• Non-resident seller: must declare the transaction in Spain and may recover part of the withholding if there is no gain.
• Tax Agency: ensures fiscal control of operations with non-residents.

In summary

Form 211 is an essential formality in the sale and purchase of real estate when the seller is a non-resident. Although it may seem an obstacle, in reality it is a guarantee of transparency and legal security for all parties involved.

AtZarola Zarola Inmobiliaria we accompany our clients through every step of the sale and purchase process, including the management of withholdings and tax forms such as 211 and 210. Our aim is that both buyers and sellers, residents and non-residents, enjoy a secure, clear transaction with no surprises.