tax retention

Current legislation stipulates that it is necessary for 5% of the declared purchase price of a property to be retained by the purchaser, and for this retention to be paid to the Spanish Tax Authorities within 30 days of signing for the escritura (title deeds). This is payable only when the seller is a non-resident in Spain, and ensures that any taxes the seller may owe to the Spanish Tax Authorities are paid before they depart to parts unknown.

The responsibility for ensuring that this retention is paid to the Spanish Tax Authorities rests solely on the shoulders of the purchaser, and it is then up to the seller to instruct his fiscal representative to claim the money back from the Spanish Tax Authorities if in fact he can prove all due taxes are paid.

If the seller is in fact a resident of Spain, then there is no retention of any kind, as the seller would be responsible to declare the sale in his own annual tax returns.