Everything you need to know about non-resident taxes in Spain
Making sure you are property tax compliant........All you need to know about non-resident property taxes in Spain
As the deadline for the non-resident tax declarations (December 31st) approaches, many non-residents with property in Spain have been coming to us with their questions. Here, we summarise the answers.
Am I a resident or a non-resident
If you live in Spain for more than 183 days a year then you are a resident here. Any less and you are a non-resident.
As a non-resident you must pay two non-resident property taxes.
What property taxes must I pay?
You must pay two taxes:
IBI (Impuesto Sobre Bienes Inmuebles) or council tax
Imputed income tax or rental tax (in some cases a combination of the two)
What is IBI?
IBI (Impuesto Sobre Bienes Inmuebles) is a council tax that must be paid by every home owner. IBI is:
Paid directly to the town hall or the SUMA offices
Collected at different times of the year according to the area
Based upon the rateable value of your property or valor catastral
When should rental tax be paid?
If you rent out your property then you will need to pay rental tax in Spain. This is collected quarterly:
Why do I have to pay income tax in Spain when I don’t live there?
The imputed income tax is payable by non-resident property owners who do not rent out their property and so do not pay rental income tax. The idea is that you could rent out your property if you wished.
Imputed income tax:
is paid on a second home that is not rented out
is declared in the non-resident annual tax declaration
is paid to the Spanish Tax Authority
Why haven’t I heard about imputed income tax before?
The system of collecting taxes is different to that in many other countries. For example:
you will not necessarily be reminded that you owe tax
it is your responsibility to make sure your tax is paid
overdue taxes must be settled before you sell or inherit
What happens on the 31st December?
The 31st December is the deadline every year by which time non-residents must have made their annual non-resident tax declaration. The non-resident tax declaration:
covers the previous year
is when your imputed income tax is calculated
is the means by which income of interest to Spain is declared
What happens if I don’t pay?
If you miss paying one or both your non-resident taxes then:
the debt is held against your property until it is either sold or bequeathed
you cannot change the names on the Title Deed until the debt is settled
you may have to pay late payment interest as well as sanctions
you might be caught out through one of the Spanish Tax Authority’s anti-tax fraud campaigns
your bank account can be embargoed leading to missed utility bill payments
How will they know?
The Spanish Tax Authority are increasingly cross-referencing information to identify where there are irregularities. This includes:
monitoring electricity consumption
comparing your details as logged on the Land Registry with utility usage
Won’t they warn me?
A letter may be sent to your Spanish address. If you are not there to receive it then:
the letter will be returned to the Spanish Tax Authority
a notification will be placed on the BOE (Boletín Official del Estado) - you are then considered to have been informed
if you do not respond to the notification your bank account might be embargoed
What should I do?
We recommend that non-residents have a fiscal representative. A fiscal representative will:
make sure your non-resident taxes are paid on time
represent you to the Spanish Tax Authority
be in a position to receive notifications
alert you to changes in the tax law
answer any queries you might have throughout the year