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Non Resident Taxes Explained
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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 annually

    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:

    20th April

    20th July

    20th October

    20th January

 

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