Buying a home from a non-resident seller: the 3% withholding and the municipal plusvalía

If you buy a home from a non-resident seller, two matters should be reviewed before signing: the 3% withholding and the municipal plusvalía.

Both can create obligations for you as the buyer. Preparing them in advance lets you organise the payments and avoid leaving a tax matter pending after you receive the keys.

At MH Legal & Seguros we explain what you should check and how to build these questions into the preparation of the purchase.

Check the seller’s tax residence

The first question is where the seller is tax resident.

Nationality, the NIE (foreigner identification number) and tax residence are different matters. A foreign owner may be tax resident in Spain, while a Spanish citizen may be a non-resident.

It is not enough to know where they spend their holidays or which address appears on the contract. Ask for this circumstance to be checked and documented.

If there are several sellers, review the situation of each one and their share in the property. This matters for calculating the payments and withholdings that apply.

What is the 3% withholding when buying from a non-resident?

When the seller is a non-tax-resident and transfers the property without a permanent establishment, the buyer must, as a general rule, withhold and pay 3% of the consideration corresponding to that seller.

It is a payment on account against the seller’s tax. It is deducted from the amount delivered to them and paid to the tax authority (Hacienda) using form 211 (modelo 211).

The withholding is calculated on the consideration, not on the seller’s profit. Nor does it necessarily equal their final tax.

For that reason, the statement that they are selling at a loss does not allow the withholding to be omitted automatically.

Example: a purchase for EUR 200,000

If you buy for EUR 200,000 from a single non-resident seller to whom this obligation applies:

• EUR 6,000 corresponds to the 3% withholding.
• EUR 194,000 goes to the seller, before adjusting for deposits, cancellations or other items.

These are not EUR 6,000 in addition to the price. They are part of how the agreed EUR 200,000 is distributed.

If you have already paid arras (earnest money) or there is an outstanding mortgage, prepare a breakdown that reconciles all the amounts. That document should make it possible to know how much remains to be paid and to whom.

When is form 211 filed?

The buyer must pay the withholding via form 211 (modelo 211) within one month of the transfer.

Afterwards, the buyer must give the seller their copy so that the seller can justify that payment on account in their own return.

Before signing, confirm who will handle the filing and who will keep the receipt. If an adviser acts, identify the engagement in writing and request the documentation when it concludes.

Withholding the money and filing the form are two steps that must both be completed.

Municipal plusvalía: what changes if the seller is a non-resident

The municipal plusvalía, or IIVTNU, is a tax distinct from the IRNR (Non-Resident Income Tax) and affects urban land.

In a sale, the seller is normally the taxpayer. But if the seller is a non-resident individual, the buyer acts as the taxpayer’s substitute before the town hall.

This rule must be reviewed separately from the 3% withholding.

Its calculation depends on the legislation and the municipal ordinance. There is no single percentage of the sale price applicable to every transaction.

If it is shown that there has been no increase in the value of the land, the transfer is not subject to the tax, but it must be declared and justified.

For transfers between living persons (inter vivos), the legal declaration deadline is 30 working days. You must check whether the municipality requires a declaration or self-assessment and, where applicable, the payment calendar.

Organise how the plusvalía will be met before paying the price

Ask for an estimate and review how the amount will be covered in the transaction.

An additional retention from the price may be considered, expressly agreed and documented. Its amount must respond to the analysis of the plusvalía: it must not be confused with the 3% paid to Hacienda.

The agreement should specify:

• Who handles the declaration or self-assessment.
• How much is withheld, if agreed.
• How the payment is documented.
• How differences against the estimate are regularised.

A phrase such as “the seller will handle it” deserves more detail when you have an obligation before the town hall.

What to review before signing

Preparing these matters is not just about calculating a percentage. Documents, payments and the people responsible must also be coordinated.

Check that you have:

• The accredited tax residence of each seller.
• The breakdown of the price, deposits and pending amounts.
• The calculation of the 3% withholding, where applicable.
• The documentation needed to analyse the plusvalía.
• The payment instructions and the recipients.
• A person responsible and a calendar for each formality.

Keep the returns, the receipts and the settlement of the amounts withheld. That way you can confirm that the transaction is also closed from a tax perspective.

Are you buying from a non-resident seller?

At MH Legal & Seguros we help you review the buyer’s obligations, prepare the agreements and coordinate the payments and formalities of the purchase.

Contact our team and tell us the municipality of the property and the planned signing date.