3% retention

Hi, 

I’m in the process of selling my property in Spain and understand that the buyer will withhold 3% in case of taxes owed, as I understand it I owe several years non residents tax and it’s being suggested that I should employ a lawyer to pay what I owe beforehand. Am I wrong in thinking that this might be throwing good money after bad given the reported cases whereby the 3% is never returned, and if the 3% is returned would the tax office not have deducted what I owe before returning the remainder thereby negating the need for a lawyer?

Since the 3% is held essentially in lieu of any capital gains tax due from the sale, it would be useful to know if you are selling at a loss, or if there will be a taxable gain.

Point being, if there is a gain which results in CGT equal to or greater than the 3%, you won't be getting it back anyway.

It's not the buyer that withholds the 3% it's the Spanish government ..you can claim this back approximately 6 months after the sale of the property provided you didn't leave any unpaid Taxes / IBI / and so forth...I sold a property back in November 20 my solicitor has pre charge me for the claim from the government .I have been informed it could take up to 12 months to get the 3% back.

The buyer retains 3% of the sale price, and then has 1 month from the date of the transaction to pay it to the tax department, submitting a form 211. 

The seller has 3 months from the date the 211 was submitted, to file their own declaration using form 210, and to pay any outstanding tax due.

If a rebate is due, the tax department have 6 months from when a correctly filed 210 is received, to pay the rebate. Any delay paying will accrue interest. 

I have no hard evidence to support this, but I suspect that most of the incidences one hears about of rebates taking years are due to either incorrectly completed applications, or the seller's representative receiving the funds and hanging on to them. In some cases it may be because there were other outstanding taxes due (such as non-resident tax), which have been calculated (with interest & fines) and deducted. 

Thanks for the replies. Definitely not making a gain from the sale, when all said and done probably a 50% loss.
What I’m trying to find out: as I owe 4 years non residents tax (which won’t amount to the 3% withheld) which is all I owe, is it normal to pay the non residents tax before the 3% is taken which is what my lawyer (for a fee) is suggesting, given that the 3% is held in order for the tax office to reclaim any taxes I owe, seems to me that I would be paying my lawyer to do the job of the tax office.

Or am I missing something?

It took me 2 years to get mine back £5k apx. I had to get another solicitor on the case because the first one was useless. So I paid £200 , and I had it with a month . I hadn't paid non resident tax and I made a loss also . 

I wonder if the lack of replies is down to my asking the question in a confusing way so if allowed I’d like to try something else, and hopefully someone will know.

When the 3% is taken is it held until all taxes/fines owed are paid then the full 3% is refunded, or do they take what’s owed from the 3% then refund the difference?

Just a small point

The 3% retained by the buyer, when the seller is not tax resident in spain,  must be paid into a government bank account.  

I have done that just once.  I gave the seller the proof that I had done that.

I don't know how the seller recovered the amount due to him.

"I gave the seller the proof that I had done that." - form 211

"I don't know how the seller recovered the amount due to him." - form 210

J.t, as far as I know, if past non-resident taxes have not been paid the retention will not be repaid. Hacienda (the tax department) is unlikely to notify you, the onus being on you to have paid all your taxes up to date. Apologies for not answering your specific question originally. 

Thanks for clearing it up Roberto, much appreciated