Taxation applicable to non-residents owning a property in Spain

Golden Visa holders can avoid the tax residency if they don´t expend more than 183 days per calendar year in Spain, and they will therefore be considered as non-residents in our country.

However and as a general rule, non-residents in Spain will be subject to taxation for the income obtained in our country. If you want to know more about the tax residency rules in Spain you can visit our post “Golden Visa & Tax Residence“.

Let´s see which are the taxes applicable to non-residents owning a property in Spain:

IRNR (Non-resident income tax return). Annual return, form 210. This tax is related to the fact of owning a property for private use. It is due the 31st December each year (to be paid along the next year), and for non-European residents it is usually calculated on the 24% of the 1,1% of the Cadastral Value of the Property if the cadastral value has been updated in the previous 10 years (otherwise it will be calculated on the 2% of the Cadastral Value). For European residents, and residents in Norway and Iceland the tax rate is reduced to the 19%.

The cadastral value is the value established by the Tax Office for each property, and it is shown in the IBI receipt (Property Tax).

In case the tax payer has not owned the property the whole year, the amount will be apportioned according to the days he or she has owned the property.

Rental Tax. Quaterly return, form 210. If the property is rented, non-residents should also pay for the income received of the leases, on the 24% tax rate for non-European residents and 19% for residents of the EU, Norway and Iceland. It should be paid on a quaterly basis, between the 1st and the 15th of April, July, October and January each year.

European residents, and residents in Norway and Iceland, can deduct from the income all the expenditures related to the rental of the property (including mortgage interests), whilst non-European residents can not apply any deduction to the income received from the leases.

In case the property has been leased for some periods, and also used by the owner during other periods, the tax payer should submit two different tax returns: one for the own use (IRNR) and another for the Rental Tax.

IBI Tax (Property Tax). It is a local tax that all owners should pay between June and September each year, and it is also calculated at sight of the Cadastral Value of the property. This is usually direct debited and paid to the municipality together with the Rubbish Collection.

Successions and Donations Tax. This tax should also be considered when owning a property in Spain, and it is highly recommendable to grant a Spanish Will to avoid high expenses and paperwork in the future to the heirs.

In some cases, Wealth Tax should be paid for assets valued over 700.000 € (under that amount it is exempted), calculated on the highest of the cadastral value, the purchase price, or the value established by the Tax Office, on a progressive scale of 0,2% to 2,5%, and also some deductions might be applied.

Finally, all property owners need a Spanish NIF (tax code) in order to submit tax returns. The NIF is the same number as the NIE number, but registered at the Tax Office. And in case of joint ownership each owner is required to submit a separate tax return for each tax.

The above mentioned taxes are related to the ownership of a property in Spain, but other income such as income from investments or earnings from equity, might also be taxed in Spain under certain circumstances.

It is important to be assisted by an expert, to make sure the taxation is known in advance and that the tax obligations are fulfilled. In ITURBE PROPERTIES we always inform our clients about the taxes and expenses involved when purchasing a porperty in our country (in which case Transfer Tax or VAT + Stamp Duty should be considered, together with the Notary and Land Registry fees), as well as the taxation to face once they become owners of the property.

For more information about the costs involved in the acquisition of a property, please visit our post “Taxes and Expenses of the Purchase Process“.

In ITURBE PROPERTIES we would be happy to assist you with any Real Estate or Immigration matter in Spain, and don´t hesitate to get in touch.

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