When you buy a property from a non-resident, the plusvalía (the capital gains tax realised by owners on sale of property) is paid in the name of the buyer.
The plusvalía is paid by the seller, so why does the tax come in the name of the buyer and what are the implications of this title in the tax?
What is the substitute taxpayer?
When a property is sold, the seller is liable to pay the plusvalía. To ensure that the plusvalía is collected, the municipality will appoint a substitute taxpayer to be liable for payment. This is similar to the standard 3% withholding tax that the buyer must withhold on a sale from a non-resident seller. In other words, the buyer replaces the seller when it comes to paying the tax.
If the buyer replaces the seller, does this mean that the buyer is the one who has to pay the plusvalía? No, this is not the case. The seller is still obliged to pay the plusvalía as stipulated in the deed of sale. One thing is the responsibility to pay and another is the person who actually pays.
In reality, the buyer pays on behalf of the seller. To ensure that the municipality can collect from the buyer, the levy is put in the buyer’s name.
What are the consequences if you are a deputy taxpayer?
When you are a substitute taxpayer, you are liable for payment, as explained above. This means that if the plusvalía is not paid, it can be claimed from you and the house you bought can even be repossessed if it is not paid.
Therefore, when buying today, it is very important to retain the calculated plusvalía. This ensures that you do not have to bear the cost of the plusvalía and that it is paid by the seller.
If, for whatever reason, the plusvalía was not retained and the levy was put in your name, you can claim payment from the seller based on the deed of sale. This does not mean you can tell the municipality to wait for payment because you have to claim the money from the seller. The municipality will want you to pay upfront and then reclaim it from the seller if you want to.
If you don’t pay, the municipality will follow the procedure of “apremio” and may even seize the property or Spanish bank account.
What are the implications for the plusvalía claim?
If there is a substitute taxpayer, this can create problems for the seller when claiming plusvalia. The town hall will determine that the seller is not a taxpayer under the law and will therefore reject the claim. In our opinion, this is a mistake.
As we said earlier, one thing is the obligation to pay and another thing is who is the person who actually has to pay. The law distinguishes between the substitute taxpayer and the taxpayer. The taxpayer is the person who actually has to pay, which is the seller. Therefore, the seller can claim the plusvalía even if the levy is in the name of the buyer.
This is especially important when recovering the payment, as the municipality does not want to refund the money to the seller, but only to the taxable buyer.
Selena Escandell Beutick