The 3% retention when selling Spanish property: what buyers and sellers need to know

When a non-resident sells a property in Spain, Spanish law places a specific obligation on the buyer: withhold 3% of the agreed sale price at the moment of signing before the notary and pay it directly to the Agencia Tributaria within one month. This retention is an advance payment of the seller’s capital gains tax liability — but it is the buyer’s obligation, not the seller’s.

Most buyers and sellers understand that the retention exists. Far fewer understand the detail: what happens if it is not paid, how the base for the calculation is determined, when a seller’s claim of residency can be accepted, and what the consequences are of getting any of these points wrong.

How the 3% retention works

When the sale is completed at the notary, the buyer pays the seller 97% of the agreed price. The remaining 3% is retained by the buyer and must be paid to the Agencia Tributaria within one month of the signing date, using Modelo 211.

Once paid, the buyer receives a stamped receipt confirming payment. This receipt must be passed to the seller — it is essential for the seller’s own CGT return (Modelo 210), which must be filed within four months of the sale.

The retention applies to any immovable property sale in Spain where the seller is a non-resident — residential, commercial, land, parking spaces. The buyer’s own residency status is irrelevant: whether the buyer is Spanish, EU or non-EU, the obligation is identical.

The buyer’s liability if the retention is not paid

If the buyer fails to withhold and pay the 3% retention, two separate consequences follow.

First, the buyer becomes jointly and severally liable for the seller’s capital gains tax — up to the amount that should have been withheld. If the seller subsequently fails to pay their CGT, Hacienda can pursue the buyer directly for up to 3% of the sale price. The buyer cannot avoid this by claiming ignorance of the seller’s non-resident status.

Second, and independently, the buyer faces a separate penalty for the failure to withhold itself. This is not the same as the CGT liability — it is a penalty assessed on the buyer for non-compliance with the withholding obligation, regardless of whether the underlying CGT is ever paid by the seller.

The practical consequence is that buyers have no discretion. Even if the seller verbally asserts they are a Spanish resident, the buyer cannot take that assurance at face value without the specific document described below.

When the seller claims to be a Spanish resident

A seller who is genuinely a Spanish tax resident is not subject to the non-resident CGT retention — their gain is taxed under IRPF, and the 3% mechanism does not apply. Sellers sometimes assert this to avoid the retention.

However, an informal claim of residency is not sufficient to protect the buyer. The following documents, commonly presented as proof of Spanish residence, are not accepted for this purpose:

• Certificate of municipal registration (empadronamiento)
• Utility bills or bank statements in Spain
• NIE card or Spanish driving licence
• Rental contract or property deeds

The only document that constitutes adequate proof is a certificado de residencia fiscal issued by the Agencia Tributaria itself — a document that specifically confirms the person is treated as a Spanish tax resident for the relevant tax year. If a buyer accepts informal assurances, does not retain, and the seller is subsequently found to be a non-resident, the buyer remains fully liable.

The safe position is clear: require the fiscal residence certificate before agreeing not to retain, or retain in all cases where it is not provided.

What is the 3% calculated on?

The 3% is calculated on the total agreed sale price of the property as declared in the deed. This is straightforward when the sale covers only the property itself — but a common and important complication arises when the sale includes furniture.

The furniture allocation trap

It is common in Spanish property sales — particularly holiday homes sold with contents — for the total agreed price to be split between the property and the furniture and fittings. The motivations typically include reducing ITP transfer tax — second-hand furniture is generally subject to ITP at a lower rate than the property itself — and lowering the base for the 3% retention.

The AEAT’s position is clear and strictly applied: a separate furniture allocation is only accepted if the furniture is individually itemised and properly valued in the sale documentation — with an inventory detailing each item and its assigned value, attached to the deed or as a separate annexe. A round-figure allocation with no supporting detail is not accepted. Without proper documentation, Hacienda treats the entire sale price as the property price and the 3% applies to the full amount.

In practice, many sales include a furniture line such as “€20,000 for furniture and contents” with no itemised list. This is precisely what the AEAT disallows. If challenged, the buyer is potentially liable for the additional retention on the furniture amount, plus penalties.

There is a further point worth noting for non-resident sellers covered by a double taxation treaty: under many treaties, gains on the sale of movable property — furniture and fittings — are taxable in the seller’s country of residence, not in Spain. Where this applies, a properly documented furniture allocation does not generate a capital gain in Spain for the non-resident seller; the gain on the furniture element falls outside the Spanish CGT base under the treaty. This is an additional legitimate reason to separate furniture value correctly — but it only works if the allocation is properly documented and commercially reasonable. An inflated furniture figure without proper justification will be challenged by the AEAT regardless.

A note for sellers: the retention and your CGT

From the seller’s perspective, the 3% retained by the buyer is an advance payment of your CGT liability. If your actual CGT is lower — or if you sell at a loss — you are entitled to a refund by filing Modelo 210 within four months. The Modelo 211 receipt from the buyer is essential for this filing. Keep it and ensure the buyer provides it promptly.

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