Investment approach
IRNR on a property sale in Spain: 19% on the gain for any non-resident
A non-resident selling Spanish property pays a single 19% rate on the capital gain, whether they live in the EU or not. The 24% rate applies to other kinds of income.
A non-resident who sells property in Spain pays Impuesto sobre la Renta de No Residentes (IRNR), the non-resident income tax, on the capital gain at a flat 19%. The rate is the same for residents of the EU, the European Economic Area and any other country: it follows directly from Article 25.1.f of the IRNR law and is confirmed in the guidance published by the Agencia Tributaria. A resident is taxed on a progressive scale; a non-resident is not.
Where the 24% confusion comes from
IRNR really does have separate 19% and 24% rates, but that split applies to other income – rent, for example, or the imputed income on an empty property. On that income EU and EEA residents pay 19% and residents of every other country pay 24%. Expenses can be deducted only from rental income, and only by EU and EEA residents; everyone else pays 24% on the gross rent. Imputed income is a fixed percentage of the cadastral value, so there is nothing to deduct from it. That distinction does not apply to the capital gain on a sale.
How the taxable base is calculated
The gain is the sale price, net of the costs of selling, minus the acquisition cost. The acquisition cost is made up of the purchase price, the costs of buying (ITP, notary, registration) and any documented improvements to the property.
A non-resident cannot offset a loss on the sale of one property against a gain on another. Each sale is declared separately, on Modelo 210.
The 3% withholding on the sale
The buyer withholds 3% of the price and pays it to the tax authority as a payment on account of the seller's IRNR. If 19% of the actual gain comes to less than that 3%, the difference can be reclaimed. We explain how this works in our article on the 3% withholding.
Tax and project profit
The after-tax amount is not the same thing as DNPI Capital's project profit, which is split 50/50 between the investor and us. How the two figures relate is set out in our article on the project budget.
Questions and answers
I'm a British citizen living in London. What rate do I pay on the gain when I sell?
19%, the same as any other non-resident. Brexit changed the tax on rental and imputed income: the rate there is now 24% instead of 19%, and expenses can no longer be deducted from rental income. The rate on the capital gain from a sale was not affected.
Is IRNR paid instead of plusvalía municipal, or on top of it?
On top of it. They are separate taxes with different bases: IRNR is a national tax on the seller's capital gain, while plusvalía municipal is a municipal tax on the increase in the value of the land.