Capital Gains Tax for Swiss New-Build Property Owners in Spain

Investing in a new-build property on the Costa del Sol offers an attractive lifestyle and potential for capital appreciation. For Swiss nationals considering selling their Spanish new-build home, understanding the implications of Capital Gains Tax (CGT) in Spain is crucial. This guide provides an authoritative overview of the tax landscape, focusing on the specifics for non-resident property owners from Switzerland.

The information provided herein is based on Spanish tax legislation and the Double Taxation Treaty between Spain and Switzerland, aiming to equip you with the knowledge to navigate the process effectively. While we recommend various high-quality new-build developments across the Costa del Sol, we do not provide tax advice. Always consult with a qualified tax advisor for personalised guidance.

Understanding Capital Gains Tax in Spain for Non-Residents

Capital Gains Tax (Impuesto sobre la Renta de No Residentes – IRNR, in its capital gains modality) is levied on the profit generated from the sale of an asset, such as real estate. For non-residents in Spain, this tax is applicable when the asset sold is located within Spanish territory.

Tax Rate for Swiss Owners

As a non-resident individual selling a property in Spain, any capital gain realised is subject to Spanish CGT. For individuals, the current tax rate applied to capital gains from the sale of Spanish property by non-residents is 19% on the net gain. This rate applies uniformly to all non-residents on gains from property sales, irrespective of their country of residence for this specific type of income.

Calculating Your Capital Gain on a New-Build Property

The capital gain is calculated as the difference between the acquisition value and the transfer (selling) value of the property.

1. Acquisition Value

The acquisition value includes the actual price you paid for the new-build property, plus any costs and taxes associated with its purchase. These typically include:

• The price of the property as stated in the public deed (escritura).
• Value Added Tax (IVA) paid on the new-build purchase, which is generally 10% of the purchase price for private residences.
• Stamp Duty (Impuesto sobre Actos Jurídicos Documentados – AJD) paid on the new-build purchase, which in Andalusia is typically 1.2% of the purchase price.
• Notary fees.
• Property Registry fees.
• Legal fees for the purchase.
• Any costs of essential improvements or extensions to the property, provided they are properly documented and increase the property’s value or habitability, not merely maintenance or repair costs.

2. Transfer (Selling) Value

The transfer value is the actual sale price of the property, minus any expenses and taxes incurred during the sale. These may include:

• The sale price stated in the public deed.
• Real estate agency fees.
• Legal fees for the sale.
• The Plusvalía Municipal (local capital gains tax on urban land value increase), if paid by the seller (which is common, but legally it’s the seller’s obligation unless otherwise agreed, and if the seller is a non-resident, the buyer is the substitute taxpayer).

The net capital gain is calculated by subtracting the adjusted acquisition value from the adjusted transfer value.

The 3% Retention for Non-Resident Sellers (Modelo 211)

A distinctive feature of selling property as a non-resident in Spain is the 3% retention. When a non-resident sells a property, the buyer is legally obligated to withhold 3% of the agreed sale price. This amount must be deposited with the Spanish Tax Agency (Agencia Tributaria) within one month of the sale date, using Modelo 211.

This 3% is not the final tax; it acts as an advance payment towards the seller’s Capital Gains Tax liability. The buyer must provide the seller with a copy of Modelo 211 as proof of this payment, which is essential for the seller’s subsequent tax declaration.

Declaring the Capital Gain: Modelo 210

After the sale, the non-resident seller must file Modelo 210 (Impuesto sobre la Renta de No Residentes) to declare the actual capital gain and settle their tax obligations. The deadline for presenting Modelo 210 and, if applicable, claiming a refund or paying any outstanding amount, is within four months from the date of sale.

In this declaration, the seller calculates the precise Capital Gains Tax due. If the 3% retention paid by the buyer exceeds the actual tax liability, the seller can request a refund of the difference. Conversely, if the tax due is higher than the 3% retained, the seller must pay the additional amount. Should there be a loss on the sale, the seller can apply for a full refund of the 3% retained.

The Spain-Switzerland Double Taxation Treaty

Spain and Switzerland have a Double Taxation Treaty (DTT) in place to prevent income from being taxed in both countries. For immovable property, the DTT specifies that income and capital gains derived from property located in one contracting state (e.g., Spain) may be taxed in that state.

This means that as a Swiss resident selling a property in Spain, you will pay CGT in Spain according to Spanish law. To avoid double taxation, Switzerland will typically provide a credit or deduction for the tax paid in Spain against any similar tax liability in Switzerland, in accordance with the provisions of the DTT. It is advisable to consult with a Swiss tax advisor regarding the specific method of avoiding double taxation in your home country.

Other Relevant Taxes for Property Owners

Impuesto sobre Bienes Inmuebles (IBI)

The IBI is an annual municipal property tax levied by the local council where the property is located. It is calculated based on the cadastral value of the property, which is an administrative value set by the Directorate General of Cadastre. Each municipality sets its own tax rate (tipo impositivo) within national limits, so the amount of IBI can vary significantly across different locations on the Costa del Sol. The individual who is the registered owner of the property on January 1st of any given year is liable for the IBI for that entire year.

Plusvalía Municipal (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana – IIVTNU)

The Plusvalía Municipal is a local tax that applies to the increase in value of urban land when a property is transferred. This tax is distinct from CGT as it only considers the value of the land, not the building, and is paid to the local Town Hall. While generally the seller is liable for this tax, if the seller is a non-resident, the buyer becomes the substitute taxpayer and is obligated to pay it to the local authority. This tax must be declared and paid within 30 working days from the date of the sale.

Conclusion

Selling a new-build property on the Costa del Sol as a Swiss non-resident involves several tax considerations, primarily the 19% Capital Gains Tax on the net profit, the 3% retention system, and the obligation to file Modelo 210. Additionally, understanding the roles of IVA and AJD in your initial acquisition value, and the implications of IBI and Plusvalía Municipal, ensures a comprehensive approach to property ownership and sale in Spain. The Double Taxation Treaty between Spain and Switzerland is designed to mitigate the burden of being taxed twice on the same income. We encourage all property owners to seek professional tax advice to ensure full compliance and optimise their tax position, allowing them to fully enjoy the lifestyle benefits of the developments we recommend across the Costa del Sol.