Deductions from 3% retention in Spain

Last updated on March 17th, 2020 at 05:40 pm.

The 3% retention is the amount that is kept back by the Spanish Tax Authority after the sale of a property by a non-resident. It is used to pay the Spanish Capital Gains Tax and ensures that funds remain available.

Ábaco sometimes receive notifications from the Spanish Tax Authority of retentions that are being returned. Sue Partridge, tax adviser, noticed that there was something rather unusual about some of these notifications. ‘I could see that a list of items had been subtracted from the 3% retention in addition to the Spanish Capital Gains Tax. There was very little to indicate what these deductions were for,’ explains Sue.

In true detective style, Sue and colleagues investigated further to discover that these were deductions from different Spanish administrative departments. Complementary tax, missed social security payments, health service charges had all been taken off the 3%.

One recurring deduction was for the amount of 105€. Why should so many people mysteriously owe the same amount? ‘It turned out that the 105€ was a traffic fine,’ says Sue, ‘Trafico, like the other departments, had got wind of the fact that these non-residents had sold their property in Spain, that money was available and were busy reclaiming the money they were allegedly owed in fines.’

Sue uses the word ‘allegedly’ because at this late stage it is difficult to check their authenticity. ‘I’m afraid there is no appeal at this stage. The money has been deducted and the case is closed as far as these Spanish government departments are concerned.’

In some cases it was just a small deduction. In others it was a significant proportion of the anticipated 3% retention. In one case a non-resident was due 3,000€ but ended up with 800€. Over 2,000€ had been deducted for a complementary tax payment when the property was first purchased.

Particularly worrying is that there is no means of checking whether you are likely to be similarly ‘hit’ by government departments swooping on your 3% retention. You just have to wait. Sue does have some advice though, ‘Just be conscious of the fact that they are sharing information. Don’t expect your debts to go unnoticed, whatever department it is.’

To help navigate the bureaucracy of the Spanish tax system, our dedicated advisers are on hand to help at every step of the way. Contact us and we will offer you a free consultation without obligation.