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Under legislation introduced in 1997 with subsequent amendments, it is necessary for 3% of the declared purchase price of a property to be retained by the purchaser, or his representative, and for the money to be paid to the Spanish Inland Revenue (Hacienda) within 30 days of signing the Escritura de Compraventa.
This retention is made whenever the vendor is a non-resident of Spain in order to ensure that any taxes he may owe to Hacienda are paid before he disappears into the sunset.
The responsibility for ensuring that the money is retained and paid to Hacienda is placed on the buyer and it is then up to the seller to instruct his fiscal representative to claim the money back if part or all of the tax is not due.
If the seller is a resident of Spain and paying income tax here, then there is no need to retain the 3% as the seller would be expected to be making his own tax returns on a regular basis.
