What are the taxes paid by non-residents with real estate in Spain? I-VEO

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

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

1. Tax residence in Spain

A natural person shall be considered resident in Spain when: 

• Reside in Spain 183 days or more throughout the year.
• That you have the center of your vital interests in Spain.

Otherwise, you are considered a non-resident when these circumstances do NOT occur.

2. Non-Resident Income Tax

Non-resident individuals and entities will be taxpayers of the Non-Resident Income Tax (IRNR) if they obtain income in Spain, such as the possession, lease and/or transfer of non-resident real estate:
 

A) Immovable property for own use

If the property located in Spanish territory is not leased, it must be declared by imputation of income. This is a statement to keep a property empty. The Tax Agency considers that any property that is not a habitual residence allows to obtain an income (an income for the same) and that is why an income is imputed for owning a house even if it is empty.

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

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

Income must be declared on form 210 throughout the calendar year following the year in question.
 

B) Leased property

But in the case of income from leased or sub-leased properties not subject to withholding, these can be grouped by quarter into a single model of 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 can be subtracted from all income. These are expenses that are proven to be directly related to the income obtained in Spain.  

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

ii) Residents outside the European Union, Iceland or Norway

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

-> Income will be declared on Form 210. If you leave to pay, the deadline for submission and income will be the first 20 days of the months following the end of the quarter in relation to the accumulated income in the previous calendar quarter.

C) Transfer of non-resident property

When a non-resident transfers a property located in Spain, the buyer is obliged to retain 3% of the value of the sale and to pay it to the Tax Agency within 1 month from the date of sale, using form 211. This withholding tax is considered a payment on account of the tax payable by the non-resident on the gain (difference between the transfer and acquisition amount) obtained on 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 of entry can be deducted from the resulting total fee. If the amount withheld is greater than the fee to be paid, the excess may be refunded.

The deadline for filing Form 210 in case of sale of non-resident real estate is 3 months. 

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

1. D) Double taxation

Residents of a country with which Spain has signed an agreement to avoid double taxation must be provided there.

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

3. Property and Territorial Tax T

It is a city tax that must be paid by homeowners. A tax rate is applied on the cadastral value established by each City Council. A receipt is issued annually to make the payment of property taxes, also called IBI. The payment term varies according to each municipality. More information about IBI in one of our articles on the website of www.I-VEO.com

4. Wealth Tax

If the assets and rights held in Spanish territory exceed the exempt minimum of 700,000 euros, non-resident individuals are subject to the Wealth Tax.

The tax is due on December 31 of each year. It is declared on Form 714. The deadline for submission is the same as that applied to residents in the rental campaign. They should only declare when the tax is paid or if the value of the goods and duties exceeds 2 million euros, even if the rate is negative.

If you would like more information about the taxes paid by non-residents with real estate in Spain, we are pleased to let you know. 

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