Capital Gains Tax Spain: What UK Property Sellers Pay

The Basics: Non-Resident CGT in Spain

When you sell a property in Spain as a non-resident (which includes most UK owners who live in the UK), you are liable for Spanish capital gains tax (Impuesto sobre la Renta de No Residentes, or IRNR) on any profit you make. The rate for all non-residents is a flat 19% on the net gain — regardless of whether you are from the EU/EEA or a third country like the UK.

This 19% rate applies to all non-EU/EEA residents, which has included UK citizens since Brexit. Before Brexit, UK sellers paid the same rate as EU residents, which was also 19% — so in practice, the rate hasn't changed. However, some allowances and deductions available to EU residents no longer apply to UK sellers.

Key point: You pay CGT in Spain on the profit — the difference between your net selling price and your net purchase price, including allowable deductions. If you sell at a loss, there is no CGT to pay.

The 3% Retention (Retención)

This catches many UK sellers by surprise. When a non-resident sells property in Spain, the buyer is legally required to retain 3% of the total purchase price and pay it directly to the Spanish tax authority (Agencia Tributaria) on the seller's behalf. This is known as the retención.

How it works in practice:

• You sell your property for €300,000
• The buyer retains €9,000 (3% of €300,000)
• You receive €291,000 at the notary (minus any other deductions)
• The buyer (or their lawyer) pays the €9,000 to the tax authority using Modelo 211 within 30 days of completion

The 3% retention is not the CGT itself — it's an advance payment on account of your CGT liability. Your actual CGT may be more or less than 3% of the sale price. After filing your CGT return, any difference is either paid by you (if you owe more) or refunded by the tax authority (if you owe less).

Common scenario: If you bought for €250,000, spent €20,000 on improvements, and sell for €300,000, your taxable gain is approximately €15,000 (after deducting costs). At 19%, your CGT is €2,850. The retention was €9,000. You're owed a refund of €6,150.

How to Calculate Your Capital Gain

The calculation is straightforward in principle, but the details matter. Here's the formula:

Capital Gain = Net Selling Price − Net Purchase Price

Net Selling Price

Start with your sale price, then deduct the costs of selling:

• Estate agent commission (typically 3-5% + 21% IVA)
• Lawyer's fees for the sale
• Plusvalía municipal tax (if the seller pays — this is negotiable)
• Energy certificate cost
• Cancellation of mortgage costs (if applicable)

Net Purchase Price

Start with your original purchase price, then add the costs of buying:

• ITP or IVA/AJD paid when you bought
• Notary fees
• Land Registry fees
• Lawyer's fees for the purchase
• Improvements and renovations (with invoices — this is crucial)

Critical point about improvements: Any money you spent improving the property (new kitchen, bathroom renovation, pool installation, extension, new roof) can be added to your acquisition cost, reducing your taxable gain. But you must have invoices (facturas) to prove the expenditure. Receipts and bank statements may not be sufficient — you need formal invoices from registered Spanish businesses with their NIF (tax number). If you paid cash to a builder with no invoice, you cannot deduct that cost.

Worked Example

Here's a realistic example for a UK buyer:

• Purchased in 2020 for: €250,000
• Buying costs: ITP €17,500 + notary €800 + registry €500 + lawyer €3,000 = €21,800
• Improvements: New kitchen €12,000 + bathroom €5,000 + air conditioning €4,000 = €21,000 (all with invoices)
• Total acquisition cost: €250,000 + €21,800 + €21,000 = €292,800

• Sold in 2026 for: €350,000
• Selling costs: Agent €17,500 + lawyer €2,000 + EPC €150 = €19,650
• Net selling price: €350,000 − €19,650 = €330,350

• Capital gain: €330,350 − €292,800 = €37,550
• CGT at 19%: €37,550 × 0.19 = €7,134.50
• 3% retention paid by buyer: €10,500
• Refund due: €10,500 − €7,134.50 = €3,365.50

Applying for a Refund of Excess Retention

If the 3% retention exceeds your actual CGT liability (which it often does, especially on properties owned for many years with significant improvements), you can claim a refund. Here's the process:

• Filing deadline: Within 4 months of the sale date, you must file your CGT return using Modelo 210
• Required documents: Copy of the escritura (both purchase and sale), proof of buying and selling costs, invoices for improvements, and the Modelo 211 receipt showing the retention was paid
• Refund timeline: The Spanish tax authority is notoriously slow with refunds. Allow 6-12 months for the refund to be processed. Some sellers wait 18 months or more
• Bank account: You'll need to keep your Spanish bank account open until the refund is received

Important: If you fail to file the Modelo 210 within the 4-month window, you lose the right to a refund of the excess retention. Do not miss this deadline. Your lawyer or tax advisor (asesor fiscal) should handle this filing for you. Cost: approximately €150-€300 for the filing.

UK Double Taxation Relief

The UK and Spain have a Double Taxation Agreement (DTA) that prevents you being taxed twice on the same gain. Here's how it works:

• You pay CGT in Spain (19% on the gain) — Spain has the first right to tax property gains
• You also report the gain on your UK Self Assessment tax return
• The Spanish CGT paid is credited against your UK CGT liability, so you only pay the difference (if any) in the UK

UK CGT rates for 2025/26 are 18% (basic rate taxpayers) and 24% (higher rate taxpayers) on residential property gains. Since the Spanish rate is 19%, basic-rate UK taxpayers may owe nothing additional in the UK. Higher-rate taxpayers would pay the difference: 24% − 19% = 5% additional UK CGT on the gain (after applying the UK annual exempt amount, which is £3,000 for 2025/26).

You must report the gain to HMRC even if no additional UK tax is due. Failure to do so is non-compliance.

Over-65 Exemptions

There is a valuable CGT exemption for sellers aged 65 and over, but it applies only to Spanish tax residents:

• Main home exemption: If the property is your habitual residence (vivienda habitual) and you're over 65, the entire gain is exempt from Spanish CGT. No limits. This is one of the most generous tax exemptions in Europe
• Dependency exemption: If you're over 65 and use the proceeds to purchase a renta vitalicia (lifetime annuity) within 6 months of the sale, gains up to €240,000 are exempt

For UK-based non-residents: These exemptions don't apply. If you're a UK resident selling a Spanish holiday home, you pay the standard 19% non-resident CGT regardless of your age.

Reinvestment Relief for Residents

Spanish tax residents (not non-residents) can exempt the gain on their main home if they reinvest the full proceeds in another main home within 2 years (before or after the sale). The new home can be anywhere in the EU/EEA. If you reinvest only part of the proceeds, the exemption is proportional.

Again, this relief is not available to non-resident UK sellers. It's mentioned here because some UK buyers who are considering becoming Spanish tax residents should factor this into their planning.

Practical Tips for UK Sellers

• Keep every invoice. From the day you buy to the day you sell, keep all invoices for improvements, repairs, and professional services. Store digital copies as well as originals
• Don't close your Spanish bank account immediately after selling. You'll need it to receive the CGT refund (if applicable), which can take 6-18 months
• Use a tax advisor. The CGT calculation, Modelo 210 filing, and refund application are best handled by a qualified asesor fiscal. Cost: €200-€400. This is not a DIY job for most UK sellers
• File on time. The 4-month deadline for Modelo 210 is strict. Late filing means penalties and potential loss of refund rights
• Report in the UK too. Include the Spanish property sale on your UK Self Assessment return, claiming relief for the Spanish tax paid. You may need to file by 31 January following the end of the tax year in which you sold
• Consider timing. If you're planning to become a Spanish tax resident, it may be worth doing so before selling — the over-65 and reinvestment exemptions can save enormous amounts. Take professional advice before making residency decisions based on tax

Currency Gains: An Often-Overlooked Factor

For UK buyers who purchased in euros but report their CGT in sterling, exchange rate movements can create an additional layer of complexity. HMRC calculates your gain in sterling, using the exchange rates at the dates of purchase and sale. If the pound has weakened against the euro between purchase and sale, your sterling gain will be larger than your euro gain — meaning you could owe more UK CGT than expected.

Example: You bought for €250,000 when £1 = €1.40 (cost: £178,571). You sell for €300,000 when £1 = €1.15 (proceeds: £260,870). Your sterling gain is £82,299 — even though your euro gain was only €50,000. The weakening of sterling has amplified your gain for UK tax purposes.

This is a legitimate calculation required by HMRC and cannot be avoided. However, being aware of it allows you to plan the timing of your sale and manage your UK CGT annual exempt amount effectively. Your UK accountant should be involved alongside your Spanish tax advisor to coordinate both filings and ensure you claim full double taxation relief.