What is the 3% retention when selling a property in Spain?

According to Spanish Law, specifically article 25.2 of Royal Decree 5/2004 that regulates Non-Resident Tax, if a non-resident sells a property in Spain, the buyer must withhold 3% of the purchase price and deposit it into the Public Treasury within one month. This amount will pay for any outstanding taxes or debt on the property, like non-resident tax or profit on the sale.

property in spain

The reason for this measure is to guarantee the Tax Agency will receive everything it is due. That is, since the seller is a non-resident and the property sold might be the only remaining asset in Spain, the Tax Agency avoids any risks and potential litigation in another country, in case the seller leaves any outstanding debts in Spain when leaving.

If the seller is up to date a full refund can be claim within 3 months after paying it, our Lawyers can help you if that is the case. Otherwise, the amount withhold will pay for any pending debt or tax and any excess can be claim back. Worst case scenario, the seller needs to send more money if debt and/or taxes are more than the amount withhold.

As a result, buyers of property in Murcia and all around Spain must be careful and withhold a 3% of the purchase price, unless the seller can prove they are tax-resident with the proper certificate, to avoid unnecessary fines and liability. But the 3% is not the only amount to be withhold, in other posts we will explain why Plusvalía tax must be withhold as well and other issues.