Even as a non-tax resident of Spain, there are some tax obligations that you need to be aware of when you own a property in the country. It’s important to keep these in mind when buying a property, as they will form part of your annual running costs and therefore should be factored into your budget to avoid later disappointment.
When you work with FIDES Legal Services, we will ensure that you are always one step ahead of any tax payments that need to be made. Here we will describe the main taxes that you need to be aware of when you own a property.
Non-Resident Income Tax
As a non-resident property owner in Spain, you will need to pay a non-resident income tax. This main seem strange to you if your property does not generate any income, but nevertheless there will be some tax to pay.
In order for you to be set up correctly in the system and correctly process the relevant tax, you will need to first register with the hacienda (the Spanish tax office.) You will then need to file and present the tax calculations once any allowances and deductions have been made. Unless your Spanish is of a very high level, this can be quite a daunting experience, so this is where we are here to help.
The general rule is that any non-resident that owns a property in Spain should pay an annual tax. EU tax residents are charged at a rate of 19% and for non-EU residents the tax rate is 24%.
When the property is not rented out:
In this case, the income tax needs to paid on the hypothetical rental value of the property. The rental value is calculated on the cadastral or fiscal value of the property, this is multiplied by a coefficient (usually 1.1% or 2%). It is on this amount that 19% income tax needs to be paid by EU residents or 24% for non-EU residents.
When the property is rented out:
When the property is generating income through rental, the rental income must be declared each quarter. In order to accurately make the calculation we will need the actual received rental income and the respective rental dates. From the rent received, some amounts can be deducted such as insurance, community fees, any interest on a Spanish loan, local rates, agency commission- all proportional to the rented out periods. Then the tax of 19% or 24% is applied.
Speak to us if you need help filing and presenting your Non-Resident Income Tax ➞
Spanish Property Tax (IBI)
Another tax, which you need to be aware of is a local property tax, paid to your municipal town hall. Similar to what is known as Council Tax, this covers the cost of local infrastructure and public services for example roads, rubbish collection and street lights.
IBI is paid by everyone that owns a property in Spain, irrespective of whether they are resident or non-residents. The easiest way to find out how much the IBI will be on your property is to request the previous years bill from the previous owners, but in general the calculation will be made according to:
✔ The size of the property
✔ The size of the plot that it occupies
✔ The classification of the land
If you have any doubts about your Spanish Property Tax, let’s have a chat and get things organised for you to avoid any hefty fines.
Contact us about your Spanish Property Tax ➞
