Obligation to declare
All non-residents with Spanish property which is not rented out for every quarter during the year, are obliged to submit annual tax declarations. The deadline is 31st December following the end of each tax year.
For example, if you purchased a property in 2022, your first tax return will be due by 31st December 2023.
What are the repercussions if I do not declare ?
When you eventually sell your property as a non-resident, 3% of the sales value is automatically withheld from you. Because in many cases this will be more than the actual capital gains tax due, you could be due a substantial refund.
The refund process is slow and the authorities may make a detailed review of the tax history of your property. If you have not submitted annual tax declarations, this could lead to delays in issuing the refund.
In addition, you may be subject to Tax Office fines for late- or non-submission of the annual tax returns.
How is the annual tax calculated ?
Deemed income tax for non-rented properties
This is income tax on the “imaginary” rental income that you have on the property, and is calculated in reference to the rateable value (valor catastral) of the property.
The tax rate for non residents is 19% for residents of EU, Norway and Iceland and 24% for residents of other countries. The taxable amount is, in general, 1.1% of the rateable value of your property.
So for instance, if your property has a rateable value is 50,000 Euros then the annual tax payable for the tax year 2020 is 105 Euros for EU, Norway and Iceland residents and 132 Euros for others.
How does the situation change if I rent out my property ?
If your property is also rented out, you are required to make a tax declaration for each quarter in which you have rental income.
The tax rate is 19% for residents of the EU, Norway and Iceland, with all rental expenses (including mortgage interest) being deductible for tax purposes. For residents of other countries, the tax rate is 24% with the rental income received being fully taxable with no deductions.
The taxable amount is, in general, 1.1% of the rateable value of your property.
In the case of joint ownership, do we need to submit more than one tax declaration ?
Yes, each joint owner of the property is required to submit a separate return.
Do I need to be registered for Spanish tax in order to submit tax declarations ?
Yes, property owners do need to obtain a Spanish tax code (NIF).
When you purchased your property, you will have been assigned a foreigners’ ID number (NIE). The NIF will be the same number, but it is necessary to physically go into the Tax Office to register.
In the majority of cases, property owners will already be registered for tax. We will carry out an initial online check on the Tax Office database to verify this.
What are your charges to submit my tax declaration ?
Our current charges (2023 rates) for all clients, before 21% VAT, for each declaration (quarterly or annual) are as follows:
Single property owner: 79 Euros
Reduced rate for joint ownership: 100 Euros
- Drawing up your draft tax calculation and submitting to you for approval.
- Online submission of the declaration and order for the payment of the tax due directly from your Spanish bank account.
Please note that the reduced rate for joint ownership is for those who are married in which both spouses are non-residents. Otherwise, you will be charged to file two separate single tax declarations.
What information do I need to supply for you to prepare my tax declarations ?
- NIE of each owner of your property;
- The full address the property;
- The date and cost of purchase;
- The rateable value (valor catastral). This will be on your latest rates (IBI) bill; for recently purchased properties, the lawyer/ agency who dealt with the sale may also be able to provide you with this information.
- Name, nationality, date and place of birth, and current home address of each owner of the property.
If you have rental income in any quarter, please provide a schedule of the income and expenditure for the quarter. Expenditure is deductible for tax purposes for residents of the EU.
The IBAN of your Spanish bank account, for the purposes of direct debit payment of the tax due.
If you have any further questions, please do not hesitate to contact us on firstname.lastname@example.org . You will also find informative articles on non-residents’ tax on our blog and website www.spainaccountants.com .