If you live outside Spain and you are thinking about buying a property within the country to rent it or simply to have it at your disposal when you come on holiday, you must take into account that you will have paying taxes in Spain. I will explain how and how much you will have to pay.
Non-residents in Spanish territory must pay tax on the income they earn in Spain. This is what is known as Non-Residents Income Tax (IRNR), which is levied on income obtained in Spanish territory by non-residents of the country.
This tax is paid through the Tax Form 210, which generally only arises when a person not resident in Spain obtains income in the interior of the country without having a permanent establishment in the country's own territory and, provided that such income has not previously been subject to a withholding tax.
Also there are other cases in which this model can be submitted, as, for example, for claiming a refund of excess withholding tax that has been levied in Spain on a non-resident.
First of all, what needs to be determined is whether or not are you resident or non-resident in Spain, In some cases it is very simple to determine, in others not so simple.
Basically these are the main requirements to be considered a tax resident in Spain:
- Have stayed in Spanish territory more than 183 days in the year.
- The main nucleus must be located in Spain or the basis of direct or indirect economic activities or interests.
- The spouse who is not legally separated and the minor children habitually reside in Spain. who are financially dependent on this natural person (proof to the contrary is admissible).
If you meet any of them, you will be taxed as a normal resident, filing your income tax return each year using form 100, for all your income obtained during the year (both in Spain and outside Spain).
If, on the other hand, you do not meet any of these requirements, for tax purposes, you would be a non-resident for tax purposes in Spain and this is where the obligation to file form 210 for income obtained in national territory.
Although this tax is applicable to any income obtained in Spain by a non-resident, we are going to focus on homeowners in Spain who are not tax residents in Spain.
How does it work?
If you buy a property in Spain to rent it out, when you obtain income in Spain you will have to pay tax on this income, but be aware that if you do not rent it out you will also have to pay tax on the sole ownership of the property, this is known as imputation of real estate income.
How much will I pay?
It depends on the country in which you are tax resident and the type of income you earn.
- If you are a tax resident in a country of the European Union, Iceland and Norway, the percentage to be paid is 19%
- If you are not resident for tax purposes in any of the above countries the percentage to be paid is 24%
On what amount does this tax rate apply?
Here we must differentiate whether we have obtained rental income from the property or whether we simply have the property at our disposal to use it for holidays or any other period of the year, which is known as the income imputation.
- If we have obtained rents for your rent then the tax rate will be applied on the income we have earned in the calendar quarter (e.g. January, February and March). Here is another advantage if you are a tax resident in Europe, Iceland or Norway, because if you are a tax resident in Europe, Iceland or Norway, you will be able to deduct the expenses necessary for the rent from your gross income, but you will not be able to deduct any expenses if you live outside Europe.
- On the other hand, if the property is at your disposal the amount payable will result from applying the above percentages (19% or 24%) to 1.1% or 2% of the cadastral value of the property (depending on whether the cadastral values have been revised or modified in the last 10 years or not).
When do I have to file the tax?
Here we must also differentiate whether the property is rented or at our disposal:
- In the first case, if we have the property rented, the tax must be self-assessed quarterly in the first 20 days of the months of April, July, October and January. of each year.
- Yes, on the contrary, we have not rented out the property for the entire year, You will only have to file one annual return and you will have the whole of the following calendar year to do so.
Exim Asesores, Tax, Labour and Accounting Consultancy for the self-employed and SMEs in Tenerife, we provide you with a team of specialist advisors in each area. We manage the tax, accounting and labour area in person or remotely, by phone 680 830 406, by skype, by mail or via Facebook messenger.
Ask us for an appointment without obligation at 680 830 406 or in dromo@eximasesores.com
