3% retention tax

 I sell my property and the buyer retains and sends to appropriate authority this tax.  Correct?

What concerns me is ,unlike UK where the various utility companys et al ,organise meter readings and final account of rates bill, knowing the slow pace of changing paperwork over into new owners name I have a feeling that one could possibly be paying ALL the bills for some considerable time and end up with little or no money returned. 

So wondering is it possible in Spain to get final payments of utilities etc. organised on the day of visiting the Notory so a seller only pays their outstanding debts and not those of the new owners.

Cheers

The 3% they pay , in your name , to the Hacienda. It cannot be used to pay utility bills.

 When we purchased , after the notary we just went to the water co; electric co; & the seller paid up to the current reading & we changed both into our name. telefonica was done by ringing up.

Thanks for the reply Gus.  

So is the retention  of 3%  for IBI and basura then or are there other Goverment taxes / fines ?  Seems an awful lot of money just for the former especially as the money is held for often more than a year.

Cheers

No it is for Capital gains tax ( CGT ). The retention is taken regardless of whether you are selling at a profit or not.

If you are a resident & make tax declarations then there is no retention. Neither is there one if you are over 65 .

The 3% is an averaged figure based on what most people normally pay. It is based on the full selling price .The actual tax is 18%.

For example if you bought for 100k & sell for 200k then the profit is 100k less the costs of buying & selling & any improvements done for which you must have facturas.

Assuming no improvements then the 100k profit is taxed at 18% leaving you with an 18k CGT bill. The 3% retencion would only have been 6k so they'll be looking for the rest !

If you bought for 100k & sold for 90k then the 3k retencion will eventually be returned. the only deductions from it would normally be to do with unpaid income taxes.

I think the tax is now 19% ?

"I think the tax is now 19% ?"

Think again, and think, austerity measures.

First 6000 @ 21%, next 18k @25%, everything over 24k @ 27%.

But don't take my word for it. I have had three different versions recently. One from a gestor, one direct from Hacienda, neither of which corresponded to these figures, which nevertheless I believe are the correct one.

Hardly encourages anyone to sell, does it? Result: stagnated market, shot in the foot for the gubberment.

 Roberto, are you absolutely sure of the rates you are giving?

According to the legislation on special measures published at the end of December by the new Government, the capital gains tax of non-residents, which is normally 19%, has been increased for gains obtained in 2012 and 2013 to 21%.  For 2014 the tax rate is supposed to be back to 19% although, of course, we shall see if the extraordinary increase is not extended further.

There is no mention of the rates varying for different tax bases like you mention.

 It would be helpful if you could tell us why you think the rates you have given in your post are the correct ones.

 The figures I got from solicitors was 19% on the first €6,000 and 21% above that.  Maybe I should go back and ask them to double check.  

I think I'll also try to last out until I'm 65 and have lived in the house for more than 3 years but they'll probably change the rules just before then.

Thinking along the same lines as you, Bob.

Hacienda gave me 19% on the first 6k and 21% on any amount above that. But that was only after I pushed the jobsworth slouched behind his desk. To begin with, he just told me a flat 19%. But I think the 19 / 21 is for gains made in 2011. If you sell in 2012 it may be different. My gestor, who does my tax return every year, told me a flat 21%. Of course, if you reinvest the sale proceeds within two years, you don't pay anything.

I will try to obtain some verification of the figures I quoted....I am assuming the rates are the same for residents and non-residents, since Spain got slapped on the wrist not long ago for discriminating (thanks non-residents - it used to be 15% for residents until you lot complained!)

We sold our property in June 2011 at a considerble loss, both of us had owned the property since 2006 - we are both aged 65 +.  However, our solicitor retained 3% of the selling price and we are still waiting for this to be refunded to us  Incidentally, we paid and have a receipt in the sum of 250 euros which he charged us for claiming back the retention fee..  Am I to understand from the above comments that the retention should not have been taken on the grounds that a) we owned the property for over 5 years and b) we are both over 65.  

Some clarification would be welcome on this point.

We are back in the Uk now and have written to the solicitor asking when we might receive the retention fee back.  We have not received an acknowledgement  or have had no communication from him since we sold the property.  Any suggestions on how we proceed would also be useful

Your solicitor shouldn't have retained anything ! It is nothing to do with him but is the reponsibility of the buyers & their solicitor to retain & pay to the Hacienda in your name.  Your solicitor should only have checked with the Hacienda that the buyers had paid it in. If there was a retencion then the buyers would have paid at the notary the agreed price less 3% .

Being over 65 there shouldn't have been any retencion by the buyers. I think your solicitor might have been pulling a fast one.

 Unfortunately, on this occasion, the solicitor was acting on behalf of the vendors and the purchasers.  So we are assuming that the solicitor would have paid the retention fee to the local Hacienda.    If what you say is correct about the fact that as we are both over 65 and therefore would not be subject to this retention,  what do you suggest we do to get this money back or who do you suggest we contact.

Any helful advice would be appreciated 

 patally, were you residents in Spain?  (Before johnzx comes on and tells me there is no "residency", I know but it's easier than typing on the Central Register of Foreign Nationals every time).

The retention tax is paid by all non-residents.  Only those who have taken out residency are exempt CGT if they are over 65 and have lived in the property for more than 3 years.  Non-residents still have to pay the retention tax which they will get back once it has been shown there are no outstanding taxes on the property but this can take a couple of years or so.

If you were residents, then you shouldn't have paid the retention tax.

 Thank you for that clarification.  We were non residents whilst owning the property in Spain.  So we can assume therefore, that the age criteria does not apply to non residents, nor the 5 year ownership, and that the retention tax will be refunded to us at some time in the not too distant future

@lobin: still trying to find some official confirmation of those figures, but maybe if you have a source for yours, you can check the same. I have a feeling the rates were revised again as of February 1st, but I'm having difficulty finding a definitive source.

 Thank you for that, Roberto.

I have rechecked the legislation approved at the end of December that regulates the special tax rates supposedly in place for 2012 and 2013 in the web of the Agencia Tributaria and it just mentions the increase from 19% to 21% for capital gains obtained by non-residents from the sale of property located in Spain.

The three tiers that you mention in your earlier post at 21%, 24% and 27% seem to apply only to tax residents but apparently not to non-residents.  This is perhaps what has given rise to the confusion.

I will try to contact some people I know who specialize in this field of taxation and, if I am successful,  I will post whatever information I am able to obtain.

Again, many thanks.

OK, not sure if different rates apply to non-residents (I would be surprised, but it's entirely possible I guess).

Look at the bottom of page 53 of this official boletin: http://www.boe.es/boe/dias/2011/12/31/pdfs/BOE-A-2011-20638.pdf 

It shows the increases for the 2012/2013 period. Supposedly will revert back in 2014, but we'll see.

English explanations of above: http://www.hlbi.com/index.php/component/content/article/162-tax-updates/679-spain-introduces-new-tax-measures-to-reduce-public-deficit and http://www.taxprecision.com/2012/01/articles/domicile/new-tax-and-financial-measures-adopted-by-the-spanish-government

Does the over 65 exemption also apply to non-residents?

Thanks

 My friend, an Aesoria, told me  one has to be logged into the system as a tax resident, even if none is due, for a minimum of 3 years to qualify. 

However rules are changed constantly so always seek expert advice. 

Does anyone know how to go about speeding up the return of the 3% retention. My lawyers are saying it can take up to 18 months to 2 years!!!! This seems criminal to me especially as the euro is falling in value and likely to get worse. I am owed thousands by the Spannish government and everyone is saying there is nothing you can do about it.

This is a thread on the subject from last month

Retention Tax