Tax retention

Under current legislation in Tenerife 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 tax authorities (hacienda) within 30 days of signing for title deeds. This is payable whenever the vendor is a non-resident of Spain to ensure that any taxes he may owe to the Spanish Inland Revenue are paid before he disappears into the sunset.

The responsibility of ensuring that the money is retained and paid to the Spanish Inland Revenue is placed squarely on the shoulders of the purchaser and it is then up to the vendor to instruct his fiscal representative to claim the money back from the Spanish Inland Revenue if tax is not due.

If the vendor is a resident of Spain, then there is no need to retain the 3% as the vendor would be expected to be making his own tax returns on a regular basis.

Part of Tenerife Proeprty Shop's service to clients includes liaison with your lawyer for the retention and payment of this money to the Spanish Inland Revenue, together with completion of the relevant forms, so although you need to know about it, you need not be concerned about any hassle or expense.