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TAXATION IN SPAIN FOR NON-RESIDENT OWNERS OF REAL ESTATE

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[vc_row][vc_column][vc_column_text]If you are resident in Spain you will be subordinate to Spanish taxation on your worldwide income. In the other hand, if you are a non-resident, you will pay Spanish tax on Spanish income only, including potential income on Spanish property even if you don’t rent out your property. Other taxes include goods, and services (VAT) and investment interest.

What taxes am I liable to as a non-resident owner of Real Estate in Spain?

You will need to pay yearly:
– A local tax, known as IBI.
– Non-Resident Income Tax.
– Wealth Tax. Depending on the value of your Spanish assets, which had been abolished as from the tax year 2008, however, it has been reintroduced since 2011.

If I want to sell a Spanish property, will there be a tax to pay?

The answer is yes. On the basis, you make a gain from the difference between your original acquisition value and the sale price. The Spanish tax authorities will tax this capital gain by means of two taxes:
– Local Capital Gains Tax (which is levied by the Town Hall where the property is located and depends on local values).
– General Capital Gains Tax (the applicable rate is between 19% and 22% as a minimum base).

Spanish Non-Resident Tax

Non-Resident Property owners should submit Spanish Tax Form 210.

Spanish tax law requires that non-resident owners of property in Spain have to pay income tax even if they have no Spanish earnings such as rental income.

How much is the tax?

The tax is calculated as 24% of the “income” the Spanish authorities deem you could make renting out the property. This is calculated as 2% of the rateable value (reduced to 1,1% for areas re-rated after 1993). If you only owned the house for a short time, the tax is prorated to the period of ownership. If there are multiple owners (e.g. husband and wife), they each pay their share of the total tax but must each submit a return. The rateable value is the “valor catastral” found on the IBI (rates) bill you get every year.

When is it payable?

You must make your return for a given year by the end of the following year, so for the 2017 tax year, you are required to declare and pay by 31st December 2017.

What if I rent the house out?

Non-residents who rent out their property declare the income by submitting a Form 210 quarterly and also paying the 24.75% tax (24% in 2017) quarterly. Owners that are tax resident in another EU country can make some deductions for allowable expenses and the tax rate will be reduced to 20% in 2016 (and 19% in 2017). To take advantage of this, you must obtain a certificate of fiscal residence in your home country.

If you want to know about the prognosis for residential construction in Spain, click here.

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