Mallorca.com
property

3% withholding tax in Spain: How non-residents get their money back

Responsible for this content: Frank Menze

Anyone who, as a non-resident, sells a property in Mallorca notices it at the latest at the notary appointment: the buyer does not transfer the full purchase price but withholds 3 % and pays it directly to the Agencia Tributaria. This payment is not an additional tax but an advance payment on capital gains tax – and in very many cases this means you simply pay too much. In this guide you'll learn how the 3 % withholding works, which deadlines apply to which forms (Modelo 210 and 211), when you're entitled to a refund, what happens if you sell at a loss, and why outstanding tax returns from previous years can reduce your refund.

3% withholding Spain: securing your refund

Is your sale coming up, or has the notary appointment already taken place – and you're unsure whether you're entitled to a refund?

What exactly is the 3 % withholding?

The withholding (Spanish retención) is a security measure taken by the Spanish tax authorities against non-resident sellers. Since these individuals are often no longer reachable in the country after the sale, the legislator obliges the buyer to withhold 3 % of the agreed purchase price and pay it to the Agencia Tributaria within one month – regardless of whether a profit was made at all. Only afterwards is it determined whether this advance payment was too high, too low, or exactly right.

The rate of 3 % has applied since January 2007; before that, the withholding was 5 %. At the same time, capital gains tax for non-residents was reduced to a flat 19 % in January 2010 – previously, rates of up to 35 % could apply. These two figures form the foundation of the entire calculation: if the actual tax on your profit is lower than the amount withheld, you get the difference back.

Key figure Value Since when
Withholding upon sale 3 % of the purchase price January 2007 (previously 5 %)
Capital gains tax for non-residents 19 % on the sale profit January 2010 (previously up to 35 %)
Affected group Sellers without tax residency in Spain permanently

Note: Sellers and companies with tax residency in Spain are not subject to this withholding. It applies exclusively to non-residents.

Who does what: buyer and seller obligations

The process is divided into two separate forms with different deadlines and different responsible parties. If either deadline is missed, surcharges may apply or – in the worst case – the entire refund claim for this transaction may be lost.

Step Responsible party Form Deadline
Withholding & Payment to Hacienda Buyer Modelo 211 within 1 month of the notary appointment
Copy of Modelo 211 to the seller Buyer Modelo 211 (copy) immediately after submission
Declaration of capital gain / loss Seller Modelo 210 within 4 months of the sale date
Application for refund of the difference Seller Modelo 210 within the same 4-month period

Without the copy of Modelo 211 from the buyer, you as the seller cannot properly document your own declaration – so actively ask for it, don't rely on it arriving automatically.

The three possible outcomes after the review

Hacienda compares the profit you actually made with the amount withheld. This generally results in three possible scenarios:

Scenario Outcome What you need to do
Actual tax < 3% of the purchase price Entitlement to a partial refund of the difference Submit Modelo 210 on time and apply for a refund
Actual tax > 3% of the purchase price Outstanding balance of the difference is due Pay the shortfall yourself via Modelo 210
Sale at a loss (sale price < purchase price) Entitlement to a full refund of the 3% Proving a loss on Modelo 210

Note: If no tax return is filed at all, the withheld 3 % does not automatically become the final settlement. If the return is omitted and the matter is later discovered by the Hacienda, sanctions under Spanish tax law may follow.

Why you almost always owe less than was withheld

The 3 % is calculated as a flat rate on the entire purchase price – not on your profit. Since, when selling a property in Spain, you are legally entitled to deduct allowable expenses and taxes from the capital gain (such as purchase-related costs, notary and registry fees, or documented renovations), the actual assessment basis for the 19 % is often significantly lower than the full purchase price. This is precisely why many non-resident sellers effectively overpay the Hacienda with every sale – without realising it, because the refund is not issued automatically but must be actively applied for.

You can find details on deductible items and the exact calculation of the gain in the guide Taxes on selling property in Spain.

Step by step: how to apply for the refund

  1. Wait for the notary appointment and request a copy of the Modelo 211 from the buyer. Without this document, you lack proof of the 3 % that was paid over.
  2. Calculate the capital gain or loss – sale price minus purchase price and deductible costs.
  3. Fill in the Modelo 210 and declare the actual gain or loss.
  4. Meet the 4-month deadline from the date of sale – after this, the Agencia Tributaria will no longer accept the return as filed on time.
  5. Apply for the refund, provided the calculated tax is lower than the amount withheld.
  6. Wait for processing. On average, the refund takes less than 6 months. If the process drags on beyond a year, the tax office also pays default interest on the outstanding amount.

The trap: offsetting against old tax debts

One point is often overlooked: the Hacienda is not obliged to simply pay out a legitimate refund if the same taxpayer still has outstanding tax debts. Under Art. 73 of the Ley General Tributaria (Ley 58/2003), the tax authority can offset due refund claims ex officio against existing tax debts (compensación de oficio), as specified in more detail by Art. 58 of the Real Decreto 939/2005.

. This becomes particularly relevant if, as a non-resident, you used the property yourself in previous years and failed to file the due Modelo 210 returns (for example, for deemed income from personal use). These gaps become visible during the refund review and are offset against your refund claim. The review period is based on the four-year limitation period under Art. 66 LGT.

Note:Before submitting the refund application, check whether all Modelo 210 returns for the property in question have been fully filed for the past years. This will save you a nasty surprise when it comes to payout.

Sale at a loss: full refund possible

If you sold the property below the original purchase price, no capital gains tax is due – the entire 3% withheld amount can be reclaimed. Here too, the entitlement does not arise automatically; it must be claimed via Modelo 210 within the 4-month deadline, with the loss demonstrated through calculation.

Overview of deadlines and limitation periods

Deadline Meaning Legal basis
1 month after the notary appointment Buyer must file Modelo 211 –
4 months after the sale date Seller must file Modelo 210 –
4 years Limitation period for tax claims and refunds Art. 66 LGT (Ley 58/2003)
Up to 6 months (average) Typical processing time for the refund –

If you miss the 4-month deadline for Modelo 210, the entitlement is not immediately lost – the general four-year limitation period remains the outer framework within which a refund may still be possible. However, anyone who fails to file any return for years risks having outstanding demands and unpaid amounts from previous years overlap with, and be offset against, the actual refund claim.

Most common mistakes with the 3% withholding

  • Modelo 211 not requested from the buyer – without this copy, there is no proof of the declaration.
  • Letting the 4-month deadline lapse, because the sale is mentally considered 'settled' once the notary appointment has taken place.
  • Overlooking old Modelo 210 returns from years of personal use, which come to light during review and reduce the refund.
  • Deductible costs not fully documented, resulting in a higher profit and a lower refund than would otherwise be possible.
  • Loss-making sale not declared, because it is wrongly assumed that without a profit there is no obligation to act.

What comes next?

With the refund – or additional payment – of the capital gains tax, the tax side of the sale is usually not yet fully concluded. In parallel, the municipal capital gains tax (plusvalía) generally also appliesPlusvalía Municipal applies, independently of the 3% withholding. The ongoing property tax IBI for the year of sale is often, in practice, split proportionally between buyer and seller, although this must be contractually agreed and is not a legal obligation. You can find a complete overview of all taxes due on a property sale in our guide Taxes when selling property in Spain, and details on the capital gains tax in the guide Plusvalía Municipal.

Checklist: reclaiming the 3% withholding

  • Copy of Modelo 211 received from the buyer
  • Purchase price, sale price and deductible costs documented
  • Check: profit, loss or break-even?
  • Outstanding Modelo 210 declarations from previous years (e.g. personal use) resolved
  • Modelo 210 submitted within 4 months of the sale date
  • Correct bank details provided for the refund
  • Processing status followed up after around 6 months

Conclusion

The 3% withholding is not a final tax liability but an advance payment – and in many cases it means you pay more than you actually owe. Anyone who knows the deadlines for Modelo 211 and Modelo 210, documents their costs properly and clears up any outstanding declarations from previous years beforehand can reclaim the difference between the amount withheld and the actual 19% tax – or even get the full 3% back in the case of a loss-making sale. On the other hand, anyone who misses the 4-month deadline or ignores old tax obligations risks having the refund offset, wholly or partly, against outstanding liabilities.

Official sources

What exactly is the 3% withholding on property sales in Spain?
It is an advance payment towards capital gains tax, which the buyer withholds when purchasing a property from a non-resident and pays to the Agencia Tributaria via Modelo 211.
Who must submit the Modelo 211, and by when?
The buyer submits the Modelo 211 within one month of the notary appointment and must send a copy to the seller.
What is the deadline for the seller to apply for a refund?
The non-resident seller must submit the Modelo 210 within 4 months of the sale date, in order to declare the actual gain or loss.
Will I get the full 3% back if I sold at a loss?
Yes, if the sale price was below the original purchase price, no capital gains tax arises and the entire withheld amount can be reclaimed via the Modelo 210.
How long does processing the refund take?
On average, it takes less than 6 months. If the process drags on for longer than a year, the tax office also pays late-payment interest on the outstanding amount.
Can the Hacienda offset my refund against old tax debts?
Yes, under Art. 73 of the Ley General Tributaria, the tax administration can offset due refunds ex officio against existing tax debts of the same taxpayer, for example in cases of unfiled Modelo 210 declarations for years of personal use.
How far back can I retroactively apply for a refund of the 3% withholding?
Under Art. 66 LGT, the general limitation period for tax claims and refunds is 4 years.
Does the 3% withholding also apply to sellers who are tax resident in Spain?
No, the withholding applies exclusively to sellers without a tax domicile in Spain; residents and Spanish companies are not subject to this rule.