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TAX LIABILITIES FOR NON FISCAL RESIDENTS OWNING PROPERTY IN SPAIN

The Accountants, Tax Advisers and Lawyers of the Spanish Law Firm Arcos & Lamers Asociados have the pleasure to inform you about the tax consequences of being an owner of a Spanish property and non tax resident inSpain.

The tax law in Spain for non residents states that any income obtained directly or indirectly from the property should be taxed in the country where the property is situated, regardless the fiscal residency of the owner of the property, whether the property is used by the owner or rented out in any way. 

We will differentiate between the tax applied on a rental agreement and when the property is used privately by the owner, or not used at all:

  1. The property – rented out to a third party.

As a general rule the full income obtained will be taxed without the possibility of reducing any expenses to the income generated.

Nevertheless, when the owner of the property is a fiscal resident in the European Community it will be allowed to reduce from the full income all the expenses incurred which are necessary to obtain the income as per the rules of the Spanish Income Tax for residents.  Whenever these expenses are deducted, the owner will need to prove his fiscal residency by way of certificate issued by the Inland Revenue of his country and the same attached to the declaration.

The tax rate applied stands at 24.00% up to 31.12.11 (24.75% from 01.01.2012)

  1. The property – not rented out to a third party.

A deemed Spanish Income tax form should be presented at the National Inland Revenue.

When the property is rented out for only part of the year, two declarations will be due by the non resident tax payer. Being taxed proportionally for the period which was rented out (point 1) and the rest taxed by the Deemed Income Tax rule (point 2).

The Spanish Law Firm, Arcos & Lamers Asociados, will provide a free quotation of your tax liabilities in Spain.

Sara Duarte Davidson, Ba (hons) in Accountancy.

Arcos & Lamers Asociados, Your Spanish Tax advisers in Marbella, Málaga, Costa del Sol.Spain.

Marbella, July, 2012.
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