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VAT registration in Spain for non-resident companies

VAT compliance for non-resident companies

Spanish VAT registration of a foreign company involves registering the company with the Spanish Tax Office (Agencia Tributaria), and obtaining a Spanish tax code (NIF).

Documentation required

It is necessary to supply the following documents.

  1. A certificate produced by the Company Registry in the country where your company was incorporated. This document should state the registered address of the company, and a list of directors.
  2. A Fiscal Representation document, the draft provided by us, to be signed by your company director before a Notary. This allows us to obtain your Spanish tax code (NIF) on your behalf and request your VAT registration with the Tax Office.
  3. The director’s application for a Spanish foreigner’s ID number (NIE) at their nearest Spanish Embassy (see below).

All documents should be legalised in your country with the Hague Apostille and translated into Spanish by a sworn translator if necessary. We will provide the Power of Attorney documents in both Spanish and English so in the event that you can find a local Spanish-speaking Notary, there will be no translation necessary for these.

We can also provide a sworn Spanish translation service at this end for a reasonable charge. We offer this service for several source languages including English and French.

New requirement for company director to obtain a Spanish NIE

As of August 2024, for all new Spanish VAT registrations for foreign companies, the company director needs to first request a foreigners’ Spanish ID number, NIE.

An NIE can be requested in person at the nearest Spanish Embassy to where the director lives. After the appointment, as long as they give your company director written confirmation that they have applied for the NIE, that is all you need for your company’s Spanish VAT registration application, and you do not need to wait for the actual NIE to be issued.

There are also several websites which offer a service to obtain the NIE in Spain on the director’s behalf. As they will likely require a Power of Attorney signed before your local Notary, this would be a good opportunity for your company director to sign our Fiscal Representation document at the same time, and therefore save time and travel costs.

If you have any further questions, please do not hesitate to contact us on returns@spainaccountants.com . You will also find informative articles on non-residents’ tax on our blog and website www.spainaccountants.com .

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Furnished tourist rentals: Registering for the full disclosure regime (Regime Réel LMNP/ LMP)

From the tax year 2024 onwards, a regular tourist rental property, registered as a Meublé de Tourisme, will benefit from only a 30% taxable income allowance under the simplified MicroBIC regime.

The increased 71% taxable income allowance is only available for properties which either have obtained a star-rating (classé) or are a bed-and breakfast (chambre d´hôte).

Another big change is that from the tax year 2024 onwards, the upper income limit to apply the MicroBIC regime has been reduced to 15k Euros. If your annual income is above 15k Euros then you can use MicroBIC for the last time for the tax year 2023, and will be required to register for the Regime Réel from next year onwards !

Therefore, we are making the following recommendations:

If your annual rental income is more than 15k Euros, you need to register for the Regime Réel and you will find details and costs below;

If your annual rental income is between 7.5k and 15k Euros and your annual expenditure is, consistently or on average, more than 30% of your rental income, then you should consider registering for the Regime Réel LMNP and you will find details and costs below;

If your annual rental income is less than 7.5k Euros, this may not justify registration for the Regime Réel but you might still consider registering if you conclude that it would be beneficial for you.

Joining the Regime Réel LMNP

In order for you to to join this regime, the annual rental income must not exceed 23,000 Euros and must also not exceed 50% of the your total income from all sources.

If your rental income exceeds either of these, then you will be required to join a different regime (LMP).

The advantages of the Regime Réel LMNP are that you can deduct all rental expenditure in calculating the taxable income, and that you can also deduct depreciation of the property. The good news is that this depreciation is not taken into account in calculating the capital gain when you eventually sell the property ! Depreciation is rather a complex calculation for this regime but in general, your total property cost would be depreciated over 30 years and the depreciable amount is 85% of the total property cost.

Once inconveniences of the Regime Reel LMNP are the extra accounting costs due to additional tax declarations having to be filed annually. Also, it is possible that you may have to pay an extra business tax called CFE, which might amount to over 1,000 Euros per annum . Registered tourist rental properties may be exempt from CFE, however this can be overruled by the local authority if they vote to do so. But even if you do have to pay CFE, the additional benefits including the deductible depreciation may compensate for this.

If you have any further questions, please do not hesitate to contact us on returns@franceaccountants.com . You will also find informative articles on non-residents’ tax on our blog and website www.franceaccountants.com .

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Registration as a self-employed small business in France: Auto-Entrepreneur

Registration as an auto-entrepreneur is effected in two parts, both of which can be completed online.

  1. Registration of your self-employed business activity in the INPI portal https://procedures.inpi.fr/ and requesting a French business tax/ VAT number, which is called a SIREN/ SIRET. Once submitted, the Tax Office can take 2-3 weeks to approve the registration.
  1. Once the above procedure is complete and you have been issued with a SIREN/ SIRET, you should register for Social Security on the website of the URSSAF, giving your bank account details for the direct payment of Social Security.

Note that in order to complete this part of the application, you must have previously obtained a French Social Security number. Non-EU citizens will likely need to obtain a residence permit first.

You can choose to make these payments monthly or quarterly and are required to upload your income and and expenditure data to your URSSAF account on the same basis.

You can opt to pay your income tax on the same basis (versement libératoire) if your annual income is below a certain threshold, which current is around 27k Euros per member of your family unit.

If you have any further questions, please do not hesitate to contact us on returns@franceaccountants.com . You will also find informative articles on non-residents’ tax on our blog and website www.franceaccountants.com

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2024 French income tax declaration for the tax year 2023- Déclaration des revenus 2023

Both residents of France, and non-residents with French income such as from property rental, are obliged to submit an annual income tax return.

The French tax year is equal to the calendar year. The presentation deadlines this year are as follows:

Non-residents

Manual returns: 20 May

Returns filed by internet: 25 May

Our annual charges, before VAT when appropriate, for the preparation and submission of the returns for a single property depends on whether your property is furnished or unfurnished, and if your property is registered formally for the full income and expenditure disclosure (Regime Réel), as follows.

Unfurnished 168 Euros

Furnished – Micro Regime 105 Euros

Furnished – Full disclosure Regime 263 Euros

SCI tax declarations 263 Euros

The full disclosure tax regime (Regime Réel) is generally favourable and economically viable to register if you have significant rental income, and your rental expenditure is more than 75% of your rental income. Our charge to register you for this regime is 150 Euros, and processing times by the Tax Office are currently around 2 weeks.

For the more simplified Micro Regime, in order to benefit from the increased tax allowance available, your property should be registered as a tourist rental (Meublée de Tourisme) at the local Town Hall (Mairie). We can also apply online for registration on your behalf, for a charge of 100 Euros.

Residents

For manual returns, the deadline is 20 May.

For returns filed by internet;

25 May: Départements 01 to 19;

1 June: Départements 20 to 54;

8 June: Départements 55 to 976.

Our charges, before VAT where appropriate, are 205 Euros for a single return, and 263 Euros for a family return. For manual filing, an additional 10-11 Euros is added to cover postal charges.

If you would like us to prepare and file your tax returns, please complete our attached tax questionnaire and return to us by e-mail.

The questionnaire is in spreadsheet format. If you do not have Excel, there are very good free equivalents available such as Open Office.

Returns can be submitted from the following dates:

Online filing: 13 April

Manual filing: The manual returns are normally released by the first week of May.

After we file your Tax Return, the Tax Office will calculate the tax due and send you a payment notice, avis d’imposition. The date of issue is by late September.

In France there are monthly payments on account of income tax which are based on the income tax bill in the previous year. Any balance of tax due is paid in August / September in your final tax assessment, and this will also be debited directly to your French bank account.

Wealth Tax on Property: Impôt sur la fortune immobilière (IFI)

Residents of France are subject to Wealth Tax on their worldwide property, with a 30% reduction to the taxable amount for the taxpayer’s main residence. There are exemptions available for the first five years of residence, please contact us for details.

Non-residents only pay Wealth Tax on their French property.

You need to declare if the net value of your owned real estate is over € 1,300,000.

Wealth Tax is now declared as part of the income tax declaration (2042C).

If you have any further questions, please do not hesitate to contact us on returns@europeaccountants.com . You will also find informative articles on non-residents’ tax on our blog and website www.franceaccountants.com

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Renta 2024 (for the tax year 2023)

It’s almost time again for the annual Spanish residents’ income tax declarations, known as La Renta !

The Spanish tax year ends on 31st December. Income tax returns for the year 2023 must be submitted by 1st July 2024. Returns can be filed online from 3rd April onwards.

Taxpayers are obliged to declare their Spanish and worldwide income, and we will apply the provisions of the relevant double taxation treaties.

The Spanish Tax Office, Agencia Tributaria, offers the possibility of payment of your tax in two instalments, the first on 1st July and the second at the beginning of November. There is no interest or penalty charge payable if you take this option.

Your tax payments can be made by direct debit, which saves you the inconvenience of having to queue at your bank during the busy period. In order to qualify for this, the return must be submitted online by 26th June.

If you have any further questions, please do not hesitate to contact us on returns@europeaccountants.com . You will also find informative articles on non-residents’ tax on our blog and website www.spainaccountants.com .

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Wealth Tax in Spain

Wealth Tax in Spain is complex because it varies from one region (Comunidad Autónoma) to another, is subject to change year-on-year and is highly affected by politics !

All taxpayers have a reduction of up 300,000 Euros against their main residence in Spain. In addition, there are exemptions and personal allowance as follows according to region:

Andalucia Wealth Tax is zero but ITSGF may apply- see below

Aragon 400,000

Asturias 700,000

Baleares 700,000

Canarias 700.000

Cantabria Wealth Tax is zero but ITSGF may apply- see below

Castilla-La-Mancha 700,000

Catalunya 500,000

Madrid Wealth Tax is zero but ITSGF may apply- see below

Comunidad Valenciana 500,000

Extremadura Wealth Tax is zero but ITSGF may apply- see below

Galicia 700,000. 50% reduction in tax payable and ITSGF may apply.

La Rioja 700,000

Navarra 550,000

Murcia Wealth Tax is zero but ITSGF may apply- see below

By law, the maximum total income tax and Wealth taxes payable is 60% of taxable income, with a maximum reduction in Wealth taxes due of 80%.

Wealth Tax is payable on an individual basis so for married couples declarations are individual and main property and personal allowances above are applied per person.

ITSGF- Temporary Tax on High Wealth

This recently introduced tax may not be as temporary as it sounds, and has been introduced as an attempt to override the regions which have zero Wealth Tax.

It only applies to individuals whose net assets exceed 3.5 million Euros approx, if this applies to you please contact us and we will provide further details.

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Modelo 210: tax for non-residents with Spanish property

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

This includes:

  1. Drawing up your draft tax calculation and submitting to you for approval.
  2. 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 ?

  1. NIE of each owner of your property;
  2. The full address the property;
  3. The date and cost of purchase;
  4. 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.
  5. 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 admin@europeaccountants.com . You will also find informative articles on non-residents’ tax on our blog and website www.spainaccountants.com .

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How to obtain a personal FNMT Digital Certificate in Spain- 2023 guide

  1. Go to the FNMT website at the following link: https://www.sede.fnmt.gob.es/certificados/persona-fisica/obtener-certificado-software/solicitar-certificado
  1. Click on Configuración previa. To request the certificate it is necessary to install the software indicated in this section.
  1. Download and install FNMT Configurator by clicking on “Área de Descarga de Configurador FNMT”, at the bottom of the page. Select the option according to your operating system, download and install it. The software will run when the browser requires it.
  1. Go back to https://www.sede.fnmt.gob.es/certificados/persona-fisica/obtener-certificado-software/solicitar-certificado and enter the personal details requested (NIE/NIF, first surname, e-mail).
  1. Click on “Pulse aquí para consultar y aceptar las condiciones de expedición del certificado”, scroll down to the bottom, check the box “Acepto las condiciones de expedición”, then click on “Enviar petición”.
  1. Write down or print the application code (código de solicitud) provided by the web. You must take this along to the Tax Office appointment.
  1. Make an appointment to visit your local Agencia Tributaria:
https://www2.agenciatributaria.gob.es/wlpl/TOCP-MUTE/Identificacion

Enter your NIE;

Enter your first name, surname.

Click on “Siguiente”.

Select the button “Otras gestiones”; Identificación Electronica; Certificado Electronico FNMT.

Click on “Siguiente”.

In “Dónde ir” Enter your postcode or province;

Select a date and time for the appointment and click on “Confirmar Cita”

Enter your phone number and email twice and click on “Confirmar”.

  1. When you go along to the appointment, take your passport and NIE (and a copy of both just in case), and the application code obtained in (6) above.

Check in and get a ticket from the machine. If the machine asks you to choose a procedure it will be something like “Acreditación Certificado Digital FNMT Personas Físicas”. The Tax Office employee will activate your digital certificate.

  1. Approximately 1 hour later you can download your Digital Certificate. Go to https://www.sede.fnmt.gob.es/certificados/persona-fisica/obtener-certificado-software/descargar-certificado and enter the details requested (NIE/NIF, surname, and Código de Solicitud).
  1. Before downloading your Digital Certificate, you must accept the conditions of use of the certificate by clicking on “Pulse aquí para consultar y aceptar las condiciones de uso del certificado”, scroll down to the bottom, check the box “Acepto los términos y condiciones de uso”, then click on “Descargar Certificado”.
  1. The key generator application will ask you to enter a password and will ask you if you want to make a backup (recommended). Once the copy is made (only if you have marked “Si”), the certificate will be installed.
  1. If in the process of downloading the certificate you did not make a backup because you checked “No”, it is recommended that you access the certificate store of your browser and make a backup (export). You will need this if you need to recover your certificate at any time or use it on another computer. If you do not have this, the only alternative will be to request a new certificate.

If you have any further questions, please do not hesitate to contact us on admin@europeaccountants.com or to visit our website www.spainaccountants.com .

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Our Spanish tax / VAT registration for foreign companies- update

VAT compliance for non-resident companies

Spanish VAT registration of a foreign company involves registering the company with the Spanish Tax Office (Agencia Tributaria), and obtaining a Spanish tax code (NIF).

Documentation required

It is necessary to supply the following documents.

  1. A certificate produced by the Company Registry in the country where your company was incorporated. This document should state the registered address of the company, and a list of directors.
  2. A Power of Attorney document, the draft provided by us, to be signed by your company director before a Notary. This allows us to obtain your Spanish tax code (NIF) on your behalf and request your VAT registration with the Tax Office.

All documents should be legalised in your country with the Hague Apostille and translated into Spanish by a sworn translator if necessary. We will provide the Power of Attorney documents in both Spanish and English so in the event that you can find a local Spanish-speaking Notary, there will be no translation necessary for these.

We can also provide a sworn Spanish translation service at this end for a reasonable charge. We offer this service for several source languages including English and French.

Our charges

Our current charge for the VAT registration of your company is 350 Euros.

This includes the following:

  1. Drawing up the draft Power of Attorney and tax representation documents;
  2. Obtaining a tax code (NIF) for your company;
  3. Obtaining a personal Spanish tax code (NIF) for the non-resident Spanish director;
  4. Registering your company’s business activity with the Spanish Tax Office (Form 036).

Timescale

On receipt of the above documentation from you, we will normally obtain your Spanish tax number within approximately two weeks..

When we receive your go-ahead, we will invoice you for a payment on account of 175 Euros to proceed.

Digital Certificates

Once your company is registered for VAT in Spain, you might consider also obtaining a Spanish Digital Certificate. It is a actually compulsary but is widely ignored because up to recently, it has been been extremely difficult to obtain unless the company director can physically travel to Spain.

Having a Digital Certificate has certain advantages such as:

  1. Being able to receive notificacions from the Spanish Tax Office. All Tax Office correspondence is sent electronically directly to the foreign company and not to us, their registered representatives. So without a Digital Certificate, important communications will be missed.
  2. The possibility of applying for further registrations such as VIES, EORI and Social Security (to hire Spain-based employees).

We now have a licence to issue Spanish Digital Certificates directly, using videoconferencing to verify the company director’s identity, so no travel to Spain is required.

Our current charge to obtain and issue your company’s Digital Certificate varies between approximately 100 Euros for a 2 year certificate and 150 Euros for a 5 year certificate.

One Stop shop

If you would like to consolidate your VAT on sales in other EU countries into your Spanish VAT declaration, know as One Stop Stop, then this is possible. We can register your company for One Stop Shop in Spain and our current charge for this is 150 Euros, within approximately 10 days after your Spanish tax registration is complete.

Ongoing VAT compliance

If after registration you require our services to prepare and present your quarterly and annual Spanish VAT declarations, then we will also be happy to assist. Our current charge per quarter for VAT compliance is 179 Euros, on the assumption that you send us your VAT data quarterly in the attached spreadsheet format.

If you have any further questions, please do not hesitate to contact us on admin@europeaccountants.com or to visit our website www.spainaccountants.com .

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Obtaining a Digital Certificate in Spain- very useful !

Spain’s famously difficult bureaucracy still exists, but if you have a Digital Certificate your stress levels will be cut down a lot by not having to deal with those bureaucrats face to face !

With a Digital Certificate, many of the formal proceedings that you need to carry out with the Tax Office, Social Security office and local authorities can now be done online, without the necessity to go into their office.

For an individual resident in Spain, it is quite an easy process to obtain a standard 2 year Digital Certificate issue by the official emitter, FNMT. The Tax Office, Agencia Tributaria, acts as an agent for the FNMT and you can book an appointment online to go there to accredit your identity. Normally you won’t need to wait too long for an appointment but it could be longer during busy periods such as just before the annual residents’ tax declaration (Renta) is due in June. So it is best to plan in advance if you can.

We have prepared a detailed guide on how to obtain a Digital Certificate for Spanish residents. Please contact us at admin@europeaccountants.com and we will be delighted to send you one free of charge,

For non-resident companies who have business in Spain without a permanent establishment (for instance VATable sales in Spain) then it is also very useful to be able to obtain a Spanish Digital Certificate. We will be covering this in further detail very soon in our next blog post.

For further information and assistance, feel free to drop by at our web page www.spainaccountants.com .