Selling property in Spain as a non-resident may give rise to capital gains subject to Spanish Non-Resident Income Tax (IRNR). However, calculating the taxable gain involves more than simply subtracting the purchase price from the selling price. Eligible acquisition costs, capital improvements, expenses and depreciation must also be considered.
A ruling by Spain’s Central Economic-Administrative Tribunal (TEAC) dated 24 September 2026 clarifies the evidence required to support these amounts. We examine what foreign companies should consider when selling property in Spain and how to avoid errors when calculating taxable capital gains.
How to Calculate Capital Gains on Property Sales by Non-Residents in Spain
When selling property in Spain, non-resident owners may be subject to Spanish Non-Resident Income Tax (IRNR) on any capital gain arising from the transaction.
As a general rule, the taxable gain is calculated as the difference between the transfer value and the acquisition value, taking into account the adjustments required under Spanish tax legislation.
Although the calculation may seem straightforward, determining these values correctly requires careful consideration of the property’s acquisition history, associated expenses and any applicable depreciation.
Capital gain = Transfer value – Acquisition Value
What Is Included in the Acquisition Value?
The acquisition value generally includes the original purchase price, qualifying capital investments and improvements, and certain taxes and expenses directly associated with the acquisition, excluding interest.
Where applicable, this value must also be adjusted to reflect tax depreciation.
For non-resident companies, particular attention should be paid to whether the entity actually incurred the costs being claimed.
What Is Included in the Transfer Value?
The transfer value is generally based on the selling price, less certain eligible expenses and taxes directly related to the transaction and borne by the seller.
However, the amounts stated in the property deeds are not necessarily sufficient evidence of their tax treatment. Supporting documentation may be required to establish which costs can legitimately be included in the calculation.
This is particularly relevant when the property is owned by a foreign company or when shareholders or other related parties have been involved in its acquisition or construction.
Acquisition Costs and Capital Improvements: What Can Be Included?
In non-resident property sales, the costs included in the acquisition value can have a significant impact on the final capital gains calculation.
Under Spanish tax rules, qualifying investments, property improvements and certain acquisition-related expenses may increase the acquisition value, potentially reducing the taxable gain.
However, evidence that construction work was carried out is not necessarily proof that the property-owning company paid for it. This distinction is particularly important when shareholders or related parties have financed the work.
The TEAC’s Position on Construction Costs
In its ruling of 24 September 2026 (RG 7794/2023), Spain’s Central Economic-Administrative Tribunal (TEAC) examined a case involving a non-resident company that sought to include construction costs in the acquisition value of a Spanish property.
The construction work had been commissioned and paid for by a shareholder before the company was incorporated. Although a formal deed declaring the new construction existed, the company could not demonstrate that it had subsequently borne those costs.
The TEAC therefore rejected their inclusion in the acquisition value.
The key principle is that a notarised declaration of construction does not, on its own, establish who actually financed the work.
Construction costs and capital improvements should be supported by invoices, payment records, contracts or other relevant evidence. A property deed alone may not be sufficient to establish that the selling company incurred those expenses.
Depreciation: Can the Spanish Tax Authorities Assume a Property Was Rented Out?
In non-resident property sales, tax depreciation can affect the acquisition value of a property and, consequently, the capital gain subject to Spanish taxation.
Where depreciation adjustments are required under Spanish tax law, they may reduce the acquisition value and increase the taxable gain. However, their application must be supported by the relevant facts, including how the property was actually used.
Company Ownership Does Not Automatically Establish Rental Use
In its ruling of 24 September 2026 (RG 7794/2023), the TEAC examined a situation in which the Spanish tax authorities had applied depreciation adjustments based on the assumption that a property owned by a non-resident company had been rented out or made available to its shareholders or directors.
The Tribunal rejected the idea that such use could be presumed solely because the property belonged to a company.
Corporate ownership alone is not sufficient evidence that a property has been rented out, occupied or made available to third parties.
Where the tax authorities rely on alleged rental or other use to justify a depreciation adjustment, they must provide sufficient evidence to support that position.
What Did the TEAC Decide in This Case?
The tax authorities had not established that the property had been used in the manner alleged throughout the entire period under review.
However, the company itself had acknowledged that the property had been used for 1,500 days.
The TEAC therefore accepted the depreciation adjustments corresponding to that specific period, rather than the longer period initially assumed by the tax authorities.
This decision highlights an important distinction: tax adjustments must be based on established facts, not unsupported assumptions.
It also reinforces the importance of maintaining reliable records of a property’s use, particularly when it is held through a foreign company.
Where a property has generated rental income, non-resident owners should also consider the tax obligations arising from that income. Our article on rental income taxation for non-resident property owners explores the main considerations under Spanish tax law.
Selling Property with Furniture: How to Support Its Valuation
In some non-resident property sales, the agreed purchase price covers both the property itself and furniture or other movable assets included in the transaction.
For tax purposes, distinguishing between the value of the property and that of its contents may be relevant, as different assets can be subject to different tax considerations.
Is a Separate Furniture Valuation in the Sale Deed Sufficient?
The TEAC ruling of 24 September 2026 also addressed a transaction in which a non-resident company sought to exclude an amount attributed to furniture from the property’s transfer value.
However, simply stating a separate price for furniture in the sale deed does not automatically establish that the items were transferred independently or that their valuation is justified.
To support this distinction, sellers should retain appropriate evidence, such as purchase invoices, furniture inventories, valuation documents and records confirming which items were included in the transaction.
The Tribunal’s decision highlights the importance of ensuring that any allocation of the sale price between the property and its contents is supported by reliable documentation, particularly when it affects the calculation of taxable capital gains.
Essential Documentation to Avoid Tax Issues When Selling Property in Spain
For non-resident property sales, maintaining accurate documentation is essential to support the capital gains calculation and reduce the risk of disputes with the Spanish tax authorities.
The TEAC ruling highlights that claiming expenses or capital improvements is not enough. Sellers must be able to demonstrate the nature and amount of those costs, as well as their connection to the property.
What Documents Should Non-Resident Property Owners Keep?
Before completing a property sale, it is advisable to review and retain the following documentation:
- Purchase and sale deeds: establish the terms of the transactions and the amounts declared.
- Construction and improvement invoices: provide evidence of qualifying investments and their associated costs.
- Bank statements and payment records: help demonstrate who actually incurred and paid the relevant expenses.
- Rental and occupancy agreements: help establish how the property was used during the ownership period.
- Furniture inventories and valuations: support any separate allocation of the sale price to furniture or other movable assets.
For foreign companies, it is also important to review accounting records and transactions involving shareholders or directors that may affect the property’s acquisition value.
The objective is to ensure that every amount included in the capital gains calculation can be supported by reliable evidence.
Frequently Asked Questions About Non-Resident Property Sales in Spain
As a general rule, capital gains are calculated by subtracting the adjusted acquisition value from the transfer value. Eligible acquisition expenses, capital improvements and applicable depreciation adjustments must be taken into account under Spanish tax law.
Yes, provided they meet the relevant tax requirements and are supported by sufficient evidence. For non-resident companies, it is particularly important to demonstrate that the company actually incurred the costs. A notarised declaration of construction alone may not be sufficient.
The tax authorities cannot assume that a property was rented out or made available to others simply because it is owned by a company. Under the TEAC ruling discussed in this article, depreciation adjustments based on alleged use must be supported by sufficient evidence.
Yes, where a separate transfer of furniture can be properly substantiated. However, stating a separate furniture value in the sale deed is not enough on its own. Sellers should be able to demonstrate the existence, transfer and reasonable valuation of those items.
Relevant evidence may include purchase and sale deeds, construction invoices, bank statements, rental agreements, furniture valuations and accounting records. These documents help establish whether the amounts used in the capital gains calculation are justified.
Conclusion: Why Proper Documentation Matters When Calculating Capital Gains
Non-resident property sales in Spain require careful consideration of acquisition costs, capital improvements and depreciation adjustments when calculating taxable capital gains.
The TEAC ruling of September 2026 highlights the importance of maintaining sufficient supporting evidence, particularly when a property is owned by a foreign company. Claiming an expense or declaring a particular value is not enough: the amounts must be properly substantiated.
Careful tax planning and specialist real estate tax advice can help international property owners identify potential tax risks, assess their obligations and approach the sale with greater confidence.
