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Everything you need to know about the taxes paid by non-residents with real estate in Spain.
 16

  FEB

Everything you need to know about the taxes paid by non-residents with real estate in Spain.

Non-resident or Spanish foreigners residing abroad must pay taxes on properties acquired in Spain.

For the income obtained in Spain, non-residents are taxed by the Non-Resident Income Tax and also the Property Tax and in some cases the Wealth Tax. But the first thing to clarify is the tax concept of residence.
 

1. Tax residence in Spain

 A natural person is considered a resident in Spain when:

  • Reside in Spain 183 days or more throughout the year.

  • That he has the center of his vital interests in Spain.

Otherwise, he is considered a non-resident when these circumstances DO NOT apply.

 

2. Non-Resident Income Tax

Natural persons and non-resident entities will be taxpayers of the Non-Resident Income Tax (IRNR) if they obtain income in Spain such as the possession, leasing and / or transfer of non-resident properties:

 
A) Property for own use

If the property located in Spanish territory is not rented, it must be declared by imputation of income. This is a return for keeping an empty property. The Tax Agency considers that any property that is not a habitual residence allows obtaining an income (a rent for it) and therefore an income is imputed for owning a home even if it is empty.

The income to be declared will be 2% of the cadastral value of the property if said value has not been reviewed in the last 10 years (otherwise 1.1%).

The tax rate applied is 24%. For residents of the European Union, Norway or Iceland it is 19%.

Income must be declared in form 210 during the entire calendar year following the year in question.


B) Leased property 

But in the case of income from leased or subleased properties not subject to withholding, they may be grouped by quarter in a single model 210 for each property.

 

The taxation of real estate income is very different depending on the country of residence:

 

i) Residents of the European Union, Norway and Iceland

Deductible expenses may be subtracted from the full returns.

They are expenses that are proven to be directly related to the returns obtained in Spain.

Residents of the European Union, Iceland, and Norway are taxed at 19%.

ii) Residents outside the European Union, Iceland or Norway

These taxpayers cannot deduct any type of expense. And the tax rate applied to them is 24%.

 

-> The income will be declared in form 210. If it goes out to pay, the term of presentation and entry will be the first 20 days of the months following the end of the quarter in relation to the income accrued in the previous calendar quarter.

 

C) Transfer of non-resident property

When a non-resident transmits a property located in Spain, the buyer is obliged to make a withholding of 3% of the value of the sale and pay it to the Tax Agency within 1 month from the date of the sale, using form 211. Said withholding is considered a payment on account of the tax that the non-resident must pay for the gain (difference between the transfer value and the acquisition value) obtained in the transfer.

The tax rate is 19%.


The buyer must deliver to the non-resident seller a copy of form 211 so that the withholding tax can be deducted from the resulting full installment. If the amount withheld is higher than the amount to be paid, the excess may be requested to be returned.

The deadline for submitting form 210 in the event of the sale of non-resident properties is 3 months.

 

-> Finally, it is important to know that in the Non-Resident Income Tax a declaration must be submitted for each type of income and each payer.

 

D) Double taxation

Residents in a country with which Spain has signed an agreement to avoid double taxation, will have to comply with what is provided in it.

Normally, the agreements signed by Spain consider that income from real estate can be taxed in the State where they are located. In the event of double taxation, the other State will have to eliminate it. If you wish, our lawyers from the I-VEO Synergy group will consult you about the agreements

 

 

3. Real Estate Tax

It is a municipal tax that must be paid by owners of real estate. A tax rate is applied to the cadastral value established by each City Council. A receipt is issued annually to make the payment of the Real Estate Tax, also known as IBI. The payment term varies in each municipality. More information about the IBI in one of our articles on the website www.I-VEO.com

 

4. Wealth Tax 

If the assets and rights of which they are holders in Spanish territory exceed the exempt minimum of 700,000 euros, non-resident natural persons are subject to Wealth Tax. The tax is accrued on December 31 of each year. It is declared through form 714. 

The filing period is the same that applies to residents in the rental campaign. They should only declare when the fee is to be paid or if the value of the goods and rights is greater than 2 million euros, even if the fee is negative. 

 

If you want more information about the taxes paid by non-residents with real estate in Spain, it is with pleasure that our I-VEO agents will inform you. 

I-VEO Synergy SC also has tax specialists who advise you according to your personal situation.


 
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