ALTAIR LEVANTE ASESORES
Spanish Tax Management, Non Residents, Foreign Spanish Residents
From 1st January 2008 the wealth tax disappeared, both for residents and non-residents, although it has been re-established with temporary effects from 2016.
Everyone owning a property in Spain (residents and non-residents alike) or any other asset, has to pay an annual wealth tax based on the net value of those assets in Spain after permitted deductions, such as mortgages or loans.
The tax is collected by regional governments and reported through tax form 714 to be submitted from May to June for previous calendar year.
There is a general tax-free allowance of €700,000, that may be higher or lower depending on the internal rules of each regional government.
Non-residents are obliged to declare the following income obtained in Spain:
The tax is based on the rated value of the property, the “valor catastral”, and may be 1,1 or 2 per cent of this rated value, depending if it has been revalued or not since 1994. The 1,1 or 2 % are the imaginary income for the non-resident and the tax payable is 19 %, residents of EU, Iceland and Norway, and 24 %, rest of Spanish non-residents.
If the property is not registered at “Catastro” and, in consequence does not have a “valor catastral”, the taxable base is 50% of the value declared on the purchase deeds, and the tax rate is 1,1% of this value.
If the house was rented during part of the year, the owner is liable to declare just the proportional part of the year that the house was not leased.
The income must be declared every year for previous calendar year through form 210. The deadline is on 31st December.
The tax rate is 19 %, residents of EU, Iceland and Norway, and 24 %, rest of Spanish non-residents. This percentage is applied to the net lease income. Net yield is obtained after From the income, it is possible to deduct all necessary expenses).
Only citizens of the EU, Iceland and Norway can offset all the costs necessary to obtain the rent by deducting the costs associated with the rent (insurance, renovation costs, interest, depreciation, etc.) from their taxes.
In order to be able to prove the residence, it is convenient to get, annually, a fiscal certificate of residence issued by the country of residence tax authorities
Form 210 has to be submitted monthly, within 30 days after rent is due, but, to save paperwork, it is possible to submit the forms quarterly (April 15th, July 15th, October 15th and January 15th). If the tax result is negative, form 210 may be submitted from January 1st to 20th for previous calendar year.
Capital gains obtained as a result of selling a property located in Spain, are subject to tax.
In general, net gains shall be calculated based on the difference between the acquisition price and the transfer value of the property.
The acquisition price is the real amount for which the asset was acquired, adding the sum of the costs and taxes inherent in the acquisition, excluding interest.
If the building being transferred had been rented, the acquisition value determined should be reduced by the amount of the depreciation corresponding to the rental period. This depreciation will also be updated in accordance with the year to which it corresponds.
The transfer value is the real amount for which the disposal was made, reduced by the amount of any costs or taxes related to the transfer paid by the seller.
If the property is transferred by an individual who purchased it prior to 31 December 1994, net gains may be subject to a transitory scheme and the previously calculated figure will be reduced.
If the seller acquired the property on two separate dates, or the property has been renovated, calculations must be made as if there were two net gains.
Tax rate ranges between 19 % to 26%.
The person who acquires the building, whether resident or non-resident, is obliged to withhold and deposit with the Public Treasury 3% of the consideration agreed.
For the seller this amount constitutes a payment on account for the tax. The purchaser will give a copy of form 211, used to deposit the withholding, to the non-resident seller, so that the seller can deduct this withholding from the tax to be paid as a result of the tax return including the capital gain. Should the amount retained be greater than the tax liability, it is possible to obtain a refund of the difference.
The seller is obliged to submit the tax refund ( through form 210 ) within three months from the end of the period that the person acquiring the building has to deposit the withholding (this time period is one month from the date of the sale).
Refund of excess withholding. Should there be a capital gains loss, or if the tax withheld is greater than the whole payment due, you will have the right to have the excess amount withheld refunded. The refund procedure is initiated by filing the tax return form.
Non-residents trading/carrying out an economic activity in Spain, are liable to declare their earnings arising from:
1.- operations carried out via permanent establishment located in Spain.
2.- operations carried out without permanent establishment, only in the following cases:
* Activities carried out on Spanish territory, with some exceptions ( installation or assembly of machinery or facilities coming from abroad, when these operations are performed by the supplier and their amount does not exceed 20% of the cost price, purchase/sale of goods, … ).
* In the case of the provision of services used on Spanish territory.
* They are derived from the personal action on Spanish territory of artists and sports people.
The taxable base should be calculated according to the guidelines in the General Corporate Tax System, with a possibility to compensate negative taxable bases from prior financial years. The allowable deductions will depend on whether it works or not through a permanent establishment:
– income obtained through permanent establishment:
The amount of the allowances and deductions specified in articles 30 to 44 of the Corporate Tax Law may be applied to the total tax amount under the same conditions as the corporate tax ( all expenses directly related to the income: purchases, rental, wages, social security, depreciation, interest, … ).
– Income obtained from sources other than a permanent establishment:
Only the following is deductible from the amount payable:
o Deductions for donations made under the same conditions set out under income tax law.
o Tax withholdings that have been applied to the taxpayer’s income.
Generally speaking, non-deductibility of the payments that the permanent establishment makes to the head office for fees, interest, commissions, technical assistance services and for the use or assignment of assets or rights.
Deduction of management and general administrative expenses are subject to a number of requirements.
The applicable general tax rate is 25% for tax periods starting after 1st January 2021.
The tax refund shall be submitted ( through form 200 or 220 ) within the 25 first days of July of the following year.
This is a tax charged by local Councils and paid by property owners.
All property within the Council’s area is included on a tax register ( Catastro ) and is assigned a value (Rateable Value – Valor catastral ). The amount of tax to be paid is calculated by applying the tax rate set by the Council to this Rateable Value.
A bill is sent out for payment of this tax every year for every property on the tax register. Usually, Councils accept payment of the tax by direct debit from a bank account, which facilitates payment within the time period set and thus avoids any possible surcharges.
The payment deadline depends on the Council, although it is normally around the months of September, October or November each year.
The information on this website is just guiding and not binding
Laws and tax rates change over time, so this information may be out of date
We don´t assume any professional responsibility with it, if you need to make a qualified legal inquiry, you must expressly ask for it
WHERE WE ARE
C/ Cura Garcia, 1-A local D – 03650 Pinoso. Alicante | Tel: +34 96 547 84 79 | Email: firstname.lastname@example.org