Taxation related to Spanish properties for non residents – PART 2- Income tax in Spain

If you are a private individual, Non-Resident in Spain for tax purposes and you are planning to purchase a property in Spain you should learn of the Spanish tax obligations you will be liable to.

Once you purchase a real estate in Spain you will be liable to the following Taxes:

• Local Property Tax (Rates) –  SEE PART 1

• Wealth Tax. – SEE PART 1

• Non Resident Income Tax in Spain:

• Income Calculated on Urban property for Personal use (Spanish Deemed Income Tax).
• Income on Rented Building.

Both above mentioned alternatives fall under the Spanish expression (Impuesto Sobre la Renta de No Residents – I.R.N.R).

NON RESIDENT INCOME TAX IN SPAIN.

The Spanish Non Resident Income Tax is an unilateral tax declaration that all Non Fiscal Resident individual owners of a property situated in the SpanishTerritory should declare to the Spanish Inland Revenue on an annual bases.

When the property is owned by a married couple, or to more than a person, each person is an independent taxpayer and an individual tax form needs to be filled and presented by each owner.

The tax payer has two ways to declare this Income Tax in Spain:

• Income Calculated on Urban property for Personal use (Deemed Income Tax in Spain).

When the property is solely being used for personal use.  To obtain the yearly yield we need to apply an established rate to the Catastral or Rateable Value of the property, in the calculation we also need to take into account the time of ownership of the property during the period being taxed.  To obtain the tax rate we need to apply the tax rate in force:

Year 2011:                             24,00%

Year 2012, 2013 & 2014       24,75%

This tax declaration will be due during the next calendar year following the accrued date.

• Incomes on Rented Building

In general lines, the amount to be declared is the total amount received from the tenant, without deducting any costs.

Nevertheless, when we are dealing with taxpayers residents in another European Union member state, only the expenses described in the Law on Spanish Personal Income Tax (IRPF) can be deducted when calculating the taxable base, as long as there is proof that this expenses are directly related to the income earned in Spain.

Tax Rate:

Year 2011:                             24,00%

Year 2012, 2013 & 2014       24,75%

When to present the Spanish Income tax for non residents?

This depends on the result of the Spanish tax declaration.

1) Amount to be paid:  The first 20 calendar days of April, July, October & January following the previous quarter.

2) With a zero result:  From the 1^st up to the 20^th of January of the following year for the declared income.

Additional information on Spanish Income tax for NON resident can be found here:

TAX LIABILITIES FOR NON FISCAL RESIDENTS OWNING PROPERTY IN SPAIN

Previous posts at our blogs regarding Income Tax for Tax residents in Spain:

INCOME TAX IN SPAIN FOR INDIVIDUALS. ELIMINATION OF DEDUCTIONS

INCOME TAX IN SPAIN, SCALE

WHO IS REQUIRED TO FILE THE INCOME TAX 2012 SPAIN?

SPANISH INCOME TAX DECLARATION DEADLINES.

GOOD NEWS ON INCOME TAX FOR FISCAL RESIDENTS IN SPAIN!

When is a person considered resident in Spain? Spanish accountant is giving you the answer

Do not hesitate to contact one of the specialized and professional lawyers and accountants of our firm for any legal, tax and accountancy inquiries.

Sara Duarte, Accountant in Spain.