When selling a property in Spain with furniture, it is important to distinguish clearly between the property itself and any furniture sold separately. Both the agreed prices and the supporting documentation should accurately reflect the transaction.
At Fuster & Associates, we would like to highlight an important issue for property owners and estate agents following recent requests from the Spanish Tax Agency (Agencia Estatal de Administración Tributaria, AEAT) concerning the refund of the 3% withholding tax applied to certain property sales by non-residents.
These requests concern transactions in which the furniture was assigned a separate value from the property, with the furniture sale documented separately. The cases brought to our attention highlight the importance of being able to demonstrate the existence, acquisition and value of the furniture included in the transaction.
Why Is the Separate Valuation of Furniture Important?
Under Article 25.2 of Spain’s Non-Resident Income Tax Law and Article 14 of its implementing regulations, the purchaser of a property from a non-resident seller who is subject to this withholding obligation must generally withhold 3% of the agreed consideration and pay it to the Spanish Tax Agency as an advance payment towards the seller’s tax liability. The purchaser reports this payment using Form 211. If the withholding exceeds the tax ultimately payable, the seller may be entitled to a refund of the excess.
Official source: Spanish Tax Agency.
In recent cases communicated to us, the AEAT has questioned the separate valuation of furniture where sufficient supporting evidence was not provided. The concerns raised include whether the furniture existed as a separate set of assets, whether it was already included in the original property purchase price and whether the amount attributed to it could be justified.
Where the existence and valuation of separate movable assets cannot be substantiated, the authorities may treat the amount received as part of the consideration for the property transaction.
The final tax treatment depends on the circumstances of the transaction and the evidence available. The example illustrates the issue raised in the recent cases brought to our attention; it should not be understood as an automatic outcome in every sale involving furniture.
What Documentation Should Be Prepared?
When furniture is sold separately from a property, the parties should prepare supporting documentation from the outset. This helps establish what is being sold, when the furniture was acquired and how its value has been determined.
We recommend gathering the following evidence:
01 — Photographs of the furniture
Take clear photographs of the furniture included in the sale. These help identify the items being transferred and support the inventory.
02 — A detailed inventory with an agreed valuation
Prepare an inventory describing the furniture and assigning a value to each item or group of items. Both the seller and the buyer should sign it.
The inventory and the agreed values should be incorporated into, or appropriately referenced in, both the sale contract and the public deed of sale, as applicable.
03 — Purchase invoices
Retain the original purchase invoices wherever available. These can help establish the items purchased, their original cost and the date of acquisition.
04 — Proof of payment
Keep bank transfer records, receipts or other evidence showing that the furniture was paid for.
Purchase invoices and payment records are particularly useful because, together, they can help demonstrate the acquisition date and original purchase price.
05 — Evidence that the furniture was not included in the original property purchase
The seller should be able to explain and, where possible, document that the furniture was acquired separately and was not already included in the original property purchase price.
The original purchase contract, public deed, inventory or other relevant records may help establish this distinction.
06 — Evidence supporting the resale valuation
The value assigned to the furniture in the new transaction should be justifiable and consistent with the items actually being sold. The original purchase price alone does not necessarily establish the furniture’s value at the time of resale.
Taken together, these documents can help demonstrate that the furniture is separate from the property and that the agreed allocation reflects the actual transaction.
What Should Estate Agents and Property Owners Do?
To help avoid difficulties during the subsequent tax process, we recommend addressing the furniture valuation before the sale contract and public deed are finalised.
For sellers
- Gather invoices and proof of payment for the furniture, where available.
- Prepare photographs and a detailed inventory.
- Ensure that the agreed furniture valuation is properly documented.
- Keep copies of the original property purchase documents and any other evidence showing whether the furniture was included in that purchase.
For estate agents
- Raise the issue of furniture valuation early in the sales process.
- Encourage both parties to prepare and sign a detailed inventory.
- Ensure that the agreed allocation between the property and the furniture is communicated to the relevant legal professionals.
- Recommend that the parties obtain legal and tax advice where necessary, particularly when the seller is a non-resident and a refund of the 3% withholding may be requested.
For buyers
- Check that the inventory accurately describes the furniture included in the transaction.
- Ensure that the agreed valuation is consistent with the contract and the public deed.
- Retain a copy of the signed inventory and the relevant transaction documents.
A separate amount stated in a contract or deed should not be regarded as sufficient evidence on its own if the underlying transaction and valuation cannot be substantiated.
What Is the Spanish Tax Agency’s Official Position?
The AEAT’s published guidance confirms the general obligation to withhold 3% of the agreed consideration when a non-resident sells a property in Spain in circumstances covered by the Non-Resident Income Tax rules. Its guidance also explains how the property sale gain is calculated for tax purposes, generally by comparing the transfer value with the acquisition value and applying the relevant statutory rules.
However, the official guidance cited here does not establish a specific general rule stating that every separately valued furniture sale must automatically be treated as part of the property price whenever a particular document is missing.
For this reason, it is important to distinguish the established legal rules on withholding and taxation from the interpretation being applied in the individual cases currently under review.
How Can Fuster & Associates Help?
At Fuster & Associates, we understand the importance of preparing property transactions carefully, particularly when non-resident owners are involved and subsequent tax filings or refund applications may be required.
If you are planning to sell a property in Spain with furniture valued separately, contact Fuster & Associates before completing the transaction. Our team can help you understand the relevant legal and tax considerations and identify the documentation that should be reviewed for your particular circumstances.
We want to help you navigate all the legal complexities that come with your home buying in Spain, but this article is legal information and should not be seen as legal advice.
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