Selling a property located in Spanish territory while remaining a tax resident in Italy is a common transaction, but one that requires clarity on bureaucratic steps and tax costs. Spanish legislation distinguishes clearly between residents and non-residents, applying specific rules at the time of the sale. 

Below we analyze in detail what taxes are to be paid in Spain, the 3% withholding tax, ancillary costs, and subsequent tax management in Italy to avoid double taxation. 

1. Taxes to be paid in Spain

Anyone selling a property in Spain as a non-resident is subject to two main taxes: the IRNR (state level) and the Plusvalía Municipal (municipal level). 

A. IRNR (Non-Resident Income Tax / Impuesto sobre la Renta de No Residentes)

The IRNR is the state tax on income generated in Spain by non-residents. In the case of a real estate sale, the IRNR applies to the capital gain (ganancia patrimonial), which is the net profit obtained from the transaction. 

• Capital gain calculation: it is calculated as the difference between:
  • Net transfer value: actual selling price minus expenses incurred by the seller (e.g., real estate agency commissions, certification costs, municipal taxes). 
  • Net acquisition value: original purchase price plus expenses and taxes incurred at the time (e.g., ITP or VAT, notary and registry fees) and any documented renovation work. 
• Applicable rate for Italians: being residents of a European Union country (Italy), the IRNR tax rate on the capital gain is 19% (compared to the 24% provided for non-EU residents). 

B. IIVTNU (Tax on the Increase in Value of Urban Land / Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana)

Commonly known as “Plusvalía Municipal”, it is a tax under the jurisdiction of the local Municipality (Ayuntamiento) where the property is located. 

• What it taxes: it taxes exclusively the increase in value of the urban land on which the property stands during the years of ownership (from the purchase date to the sale date). 
• Calculation criteria: it can be calculated through the objective method (cadastral value of the land and municipal coefficients) or based on the real capital gain from the sale. 
• Sale at a loss: if the sale closes at an actual loss (meaning the value of the land has not increased compared to the purchase), according to Spanish case law, the tax is not due, subject to the presentation of the relevant certified documentary proof. 

2. The 3% Withholding Tax (Retención del 3%)

One of the most important mechanisms for non-residents is the withholding tax at source provided for by Spanish law. 

1. The mechanism: at the time of signing the deed of sale (escritura de compraventa), the buyer has the legal obligation to withhold 3% of the total purchase price and pay it directly to the Spanish Tax Agency (Agencia Tributaria / AEAT) using Modelo 211 within 30 days. 
2. The purpose: this withholding serves as an advance payment/guarantee for the payment of the IRNR on the capital gain. 
3. Final tax settlement (Modelo 210): within 4 months of the sale, the Italian seller must file the final tax return (via Modelo 210):
   • If the tax due is higher than 3%: the seller must pay the remaining amount to Hacienda. 
   • If the tax due is lower than 3% (or in case of a loss): the seller is entitled to request a refund from Hacienda for the excess amount withheld. 

3. Ancillary expenses and obligations in Spain

In addition to direct taxes, the sale involves a series of administrative and bureaucratic costs borne by the seller: 

• Energy Performance Certificate (CEE): mandatory document required to execute the deed. 
• Occupancy Certificate / Second Occupation License (Cédula de Habitabilidad / Licencia de Segunda Ocupación): mandatory in many Autonomous Communities to certify habitability compliance. 
• Mortgage Cancellation: if there was a mortgage on the property, it is necessary to pay the notary and registry cancellation fees. 
• Real Estate Agency Fees: any commission owed to the broker (including the relevant Spanish VAT at 21%). 
• Community of Owners Certificate and IBI: proof of regular payment up to the day of the deed execution is required. 

4. What happens in Italy? (how to avoid double taxation)

A citizen who is a tax resident in Italy must declare income earned abroad, including capital gains resulting from the sale of real estate located outside national borders. 

A. Taxation in Italy

• According to Italian regulations (Art. 67 of TUIR), real estate capital gains realized abroad are taxable in Italy only if the property is sold within 5 years of acquisition. If the property has been held for more than 5 years (or if it was acquired by inheritance/donation), the capital gain is not subject to IRPEF taxation in Italy. 

B. Double Taxation Convention (Italy – Spain)

Under Article 13 of the Double Taxation Convention signed between Italy and Spain: 

• Capital gains derived from the sale of real estate located in Spain may be taxed both in Spain and in Italy. 
• To prevent the seller from paying the same tax twice, the foreign tax credit mechanism applies (Art. 165 of TUIR): the tax already paid on a final basis in Spain (19% IRNR) can be deducted from the taxes owed in Italy on the same capital gain. 

Do you need assistance selling your property in Spain?

Managing a cross-border real estate transaction requires accurate legal and tax planning in both Spain and Italy to protect your assets and avoid penalties or disputes with tax authorities. 

Thanks to our presence with operational offices in both Italy and Spain, our Law Firm offers complete and integrated assistance in Italian and Spanish during every phase of the process: from document verification to the signing of the notary deed, through tax calculation, recovery of the 3% withholding tax, and management of the tax return in Italy. 

Contact our Law Firm today by writing to: info@fiatlux.legal to schedule an initial detailed consultation and entrust the management of your property to professionals specializing in Italian-Spanish real estate and tax law.