Capital Gains Tax and Investment Income?

The capital gains tax is a tax imposed on income gained from the selling of some form of assets, such as a home or property, or from an investment in Spanish territory in a given fiscal year. When the selling price of an investment/asset is higher than the price you paid for it when you bought it, capital gains tax is due on the difference, or benefit.

When you sell a property or an investment for a higher price than you paid for it, Spanish law allows you to pay capital gains tax on the benefit from the sale. When selling a property or land within Spain or its territories, everyone is liable to pay this charge, regardless of whether they are a Spanish citizen or not.

Taxation amount.

The percentage of the price you must pay varies depending on a number of factors, and it is set differently for Spanish citizens than for those who do not live in Spain. Anyone who spends more than 183 days a year in Spain is considered a fiscal citizen.

Any benefit on a property sale up to €6,000 is subject to a 19 percent penalty. Profits of €6,000 to €50,000 are taxed at a rate of 21%, while profits of more than €50,000 are taxed at a rate of 23%.

Non-resident taxpayers in Spain, which in this case means someone who spends fewer than 183 days in the country in a given year, pay a 19 percent tax rate regardless of the amount of profit made.

What kinds of assets are subject to capital gains tax?

Your house isn't the only asset that's subject to capital gains taxes. The tax also applies to the following items:

• Company shares

• Land

• Buildings

• Government bonds

• Precious metals

• Houses

• Flats and apartments

• Other investments and assets

How to figure out how much tax you owe.

Although the percentages mentioned in this article provide you with some rough guidelines, there are a few more specifics to include in your calculations. To begin, your true purchase price is calculated using the price listed on your title deed, as well as costs incurred during the purchase of that property, such as:

• VAT

• Land registry fees

• Notary fees

• Solicitor fees

• Transmission tax

• Any legal fees you paid

This balance is then subtracted from the current purchase price, minus any expenses incurred during the transaction, such as the legal fees. If you made some structural changes to the property when you were the owner, the costs of these can be deducted. Any work of this type, however, would need to be recorded with receipts for supplies and labour.

If these changes aren't reflected in the title deeds, they'll have to be addressed at the time of sale. When you have all of these numbers, deduct the actual selling price from the final sales figure to get your net profit. This is the rate for which you will be charged.

Selling a property in the United Kingdom or another EU country?

If you live in Spain and sell a property in another EU country or the United Kingdom, you must pay tax on all of your worldwide income, including capital gains tax in Spain. The income (profit) from any property sale must be reported on your annual resident tax report under Spanish law. However, keep in mind that this declaration only applies to the previous year. Any property sold in the summer of 2019 will, for example, not be reported until the 2020 annual tax declaration.

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