Pierre Morel, a French engineer, lived with his family in Estepona from 2016 to 2024, as a tax resident in Spain. In September 2024 he went back to Lyon for work and has lived there ever since. In May 2026 he sells the flat in Estepona for 400,000 €; the costs of the sale add up to 12,000 € and he had bought it in 2016 for 290,000 € with all costs. He has no mortgage. With the money he has bought a flat in Lyon, where he lives with his family, for 300,000 €. At the signing before the notary, the buyer withheld 12,000 € from him. Pierre asks whether, now that he is a non-resident, he can apply the reinvestment exemption and how he gets back what was withheld.
The rule is in the non-residents' law
The reinvestment exemption in article 38 of the law on IRPF (Spanish personal income tax) is, in origin, for taxpayers of that tax, that is, residents in Spain. For someone who no longer is, the legal basis is the seventh additional provision of the consolidated text of the Non-Residents' Income Tax Law. Its section 1 allows gains obtained by taxpayers resident in a Member State of the European Union "on the transfer of what has been their main home in Spain" to be excluded from tax, provided that the total amount obtained is reinvested in a new main home.
Section 2 refers to article 38 of the IRPF Law and its implementing rules: the same concepts of main home, amount obtained, time limits and proportionality apply as for a resident. And section 4 extends the rule to residents of a State in the European Economic Area with which there is an effective exchange of tax information. That condition is the one to check when the seller lives in Iceland, Norway or Liechtenstein.
Who can apply it and who cannot
| Seller's residence | Does the law provide for the exemption? |
|---|---|
| Member State of the European Union | Yes, seventh additional provision, section 1 |
| Iceland, Norway or Liechtenstein | Yes, if there is an effective exchange of information (section 4) |
| United Kingdom, United States, Switzerland and all other States | The provision does not include them |
For someone resident outside the Union and the European Economic Area, the law does not provide for the exemption. It has been debated whether that difference is compatible with the free movement of capital, but it is not a route we can treat as safe, and the sale is taxed under the general rules for non-residents.
What has to be proved
Pierre needs to prove four things:
- That he is resident in France. This is proved with the tax residence certificate issued by the French tax authorities; the guide on the residence certificate for Modelo 210 explains what requirements it must meet.
- That the flat in Estepona was his main home. The evidence of his eight years of residence serves here: the padrón (the town hall's register of residents), IRPF returns as a resident, utilities, the children's school.
- That he is selling within the margin of article 41 bis.3 of the IRPF Regulations: the flat stopped being his residence in September 2024 and he is selling it in May 2026, before two years have passed.
- That the flat in Lyon is his new main home and that he invested in it within the time limit. This evidence comes from France: purchase deed, proof of payment and documents showing that he lives there.
We do not give an opinion on how the purchase in France is documented or how the transaction is taxed there: that is confirmed by the client's adviser in France. Our work is the Spanish side, and we receive the French evidence as it is provided to us.
The 3 % withholding and declaring the sale
Article 25.2 of the non-residents' law requires the buyer to withhold and pay over 3 % of the agreed consideration when the seller is a non-resident. The seventh additional provision, in section 3, keeps that withholding and the obligation to file a return even if the exemption is applied. At the same time, it provides that, if the reinvestment has been made before the date by which the return must be filed, it can be taken into account in determining the tax due. If it is made afterwards, any refund due is requested under the conditions laid down in the regulations.
A non-resident's sale is declared on Modelo 210. The specific deadlines and the whole process are in the guide on selling as a non-resident, step by step and in the one on time limits for a non-resident's sale.
Pierre's figures
- Sale price: 400,000 €.
- Buyer's withholding: 400,000 × 3 % = 12,000 €.
- Transfer value, after deducting costs: 400,000 − 12,000 = 388,000 €.
- Acquisition value: 290,000 €.
- Gain: 98,000 €.
- Total amount obtained, with no mortgage: 388,000 €.
- Reinvestment in Lyon: 300,000 €.
- Exempt gain: 98,000 × 300,000 ÷ 388,000 = 75,773.20 €.
- Taxable gain: 98,000 − 75,773.20 = 22,226.80 €.
- Tax at the 19 % rate that article 25.1.f) of the non-residents' law applies to capital gains: 4,223.09 €.
- Withholding already paid over: 12,000 €.
- Difference to be refunded: 12,000 − 4,223.09 = 7,776.91 €.
The 12,000 € of sale costs and the 12,000 € of withholding coincide in this example by chance: they are different concepts. The costs reduce the transfer value; the withholding is a payment on account of the tax.
If Pierre had reinvested 388,000 € or more, the whole gain would be exempt and he could ask for a refund of the full 12,000 €. And if he had reinvested nothing, he would be taxed on the 98,000 € and, in that case, the withholding would not be enough to cover the tax. The procedure for recovering what was withheld is in the guide on how to recover the 3 % withheld.
Requests for a refund of the 3 % with the reinvestment exemption usually lead to requests for documents: residence certificate, proof of the main home in Spain, deed of the new home and proof of payment. If anything is missing or unconvincing, the refund is refused in whole or in part. We do not guarantee timescales or results; what reduces the risk is submitting the request with the whole file prepared from the start.
The new home can be outside Spain
The seventh additional provision speaks of reinvesting in "a new main home", without requiring it to be in Spain, and it is logical for a resident of France to have it in France. The requirements for the new home are the same as in the IRPF Regulations: moving in within twelve months and living there for three years. If Pierre moved out of Lyon after two years without a cause to justify it, the exemption on the Estepona sale could be called into question.
If you are in a similar situation, you can send us the residence certificate, the deeds and the proof of withholding through the reinvestment form so that we can prepare Modelo 210 or the refund request.
Other non-residents selling in Spain
The situation changes a great deal if what was sold was never your main home, for example a holiday home. In that case there is no reinvestment exemption, and what applies is the general regime for sales by non-residents that we describe in I am selling my flat in Spain and I do not live here. Nor is the over-65 exemption in the non-residents' law, as we explain in I am over 65: do I need to reinvest?.
The sale of the former main home by someone who now lives in another EU country, with Modelo 210 and the recovery of the withholding, is covered in the Salama Tax service for selling your main home.