After Sale, Taxation and other charges

If after the sale you are not going to won any other assets in Spain, it is advisable to close the Spanish account and collect any balance in the same. With the PoA your solicitor can arrange this as well.

If you are keeping the account open (because you own other properties in Spain or you wish to keep it open) then it is convenient to cancel all direct debits for the utilities / local rates / community fees, to avid that you receive any future bill in the event that the buyer does not make the necessary changes at the relevant bodies.

In any case it is compulsory to inform the community of owners of the sale (and provide them a copy of the sale Deed) and also inform the council/cadaster of the sale (although the Notary usually does this).
On completion, from the sale price, it is usual that the following amounts are held:

3% and Capital Gain Tax:

When the vendor is NON RESINDET, the buyer has the legal obligation to hold a 3% of the sale price and deposit it at the tax office, to cover the POSSIBLE Capital Gain Tax of the sale. The vendor must afterwards calculate the REAL CGT (which is 19% on the PROFIT earned on the sale) and present the FORM 210:

• If the REAL CGT is lower than the 3% held, he can claim the devolution of the difference
• If the REAL CGT is higher than the 3% held, he must pay the difference

In order to be able to receive the devolution of the 3% back form the tax office, the vendor must be aware that:

• He must be up to date in the payment of the NON RESIDNET TAX for the last 4 years
• The devolution will be made by the tax office directly into an account in the name of the vendor, so he needs to present at the devolution claim a proof of ownership of the said account (a bank statement or similar showing his name as holder and the IBAN)
• The dateline for devolution is 10 months SINCE the sale date.

The FORM 210 must be presented before 4 months since the sale date, otherwise the vendor will be charged with delay penalties.

If the vendor is FISCAL RESIDENT in Spain, then no 3% is held at the sale, but the vendor must declare the sale and the potential gain or loss in the Income tax presentation of the following year.

The calculation of the profit on the sale can be complicated so it is advisable to consult with your solicitor the potential CGT to pay (if any).

Plusvalía Tax:

The Plusvalía tax is a special local tax paid to the council where the house is located. In theory it charges the increment of value of the land where the house is built since it was acquired until it is sold but in the practice its calculations depend on complicated formulas upon the cadastral value of the land.

When the vendor is NON-RESIDENT, the buyer can be forced to pay it in the event the vendor does not pay it, so in the practice the buyer party will also hold the necessary amount to cover its payment from the sale price. If the vendor is FISCAL RESIDENT in Spain, then the buyer will not be responsible for its payment so no money will be held from the sale price, but in any case, the vendor must pay it.

Recent sentences from various court have determined that in the event that a property is sold for a lower amount than the purchase price, then the Plusvalía tax cannot be claimed by the council, but as the Plusvalía tax has not been changed yet (and it is not expected to be modified in a close future) the councils are still claiming its payment. This means that in the practice the tax must be paid without prejudice of the vendor to take the necessary actions against the council to claim the devolution of the Plusvalía tax paid.

It is convenient to peruse with your solicitor the potential Plusvalía tax to pay and if you are entitled to claim the devolution from the council.

Utilities / local rates / community fees and other amounts to hold on completion.

Although you might be up to date in the payment of the utility bills, there will be always some minor amounts to be paid (since the last bill paid up to the sale date). Because of that is quite usual that the buyer holds on completion some amount to cover the potential bills outstating for that intermediate period.

IN the same way, if here are any issues to cancel on the sale (the mortgage, en embargo, a declaration of new building) that on completion were not finished yet, the buyer will also hold the necessary amounts to ensure the proper registration and cancelation of any outstanding issue.