Paying rental income tax as a non-resident

What are your fiscal obligations?

Taxes Friday, January 13, 2017
Spanish rental income tax

An issue that we’re often asked about is if you rent your property in Spain as a non-resident where should you pay your rental income tax? Most will accept that some tax is due to be paid somewhere but should it be in the UK or Spain?

The good news is that you don’t have to pay it in both. You are required to pay tax on your rental income in Spain even if you’re not a resident here. However, the double tax agreement between the UK and Spain means that you do not have to pay twice.

The rental income should be declared in the country where you are a tax-resident, but the tax already paid in Spain can normally be deducted as double taxation.

Quarterly collections

Rental tax in Spain is collected quarterly:

  • 20th April – first quarter (January, February, March)
  • 20th July – second quarter (April, May, June)
  • 20th October – third quarter (July, August, September)
  • 20th January – fourth quarter (October, November, December)

There are allowances made for some expenses, but, only for tax residents in a country within the  European Union, Norway and Iceland and these reduce the amount on which tax is payable. This includes a proportional part of the house insurance, IBI, the community fee, water and electricity if paid by the house owner.

When the property is rented out and tax is paid on this income, adjustments are made to the calculation for the normal non-resident tax. The amount of this tax to pay is then based only on the number of days the property was unoccupied by tenants.

Changes to tax rates

Changes to the amount of tax that non-residents have to pay were implemented from the 1st of January 2016. The changes that non-residents should be aware of include:

  • for the year 2017, the rental income tax remains at 19% for those non-residents who are tax resident in a country within the  European Union, Norway and Iceland and 24% for tax residents outside these areas.
  • a lowering of non-resident income tax  for the period 2016  from 19.5% to 19%  for those non-residents who are tax resident  in a country within the  European Union, Norway and Iceland and 24% for tax residents outside these areas.

It is important to note that the amount you pay as a non-resident is dependent on the country in which you are currently fiscal resident and not your nationality. There have been cases, for example, where people with a British passport have moved to live in a country outside the EEC and consequently their Spanish property is now taxed more heavily.

Letting out your property in Spain is a good option for many people as it can provide a steady income that helps maintain other property abroad. However, do make sure you are prepared for the tax implications and don’t leave yourself vulnerable to the Spanish Tax Authority

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Comments

Hello
I own an apartment on the island of Tenerife. The property is let out for most of the year. Currently i pay no rental income tax. I had a meeting with my Spanish accountant this week & he explained about a new law that was passed last year stating i need to pay 19% tax on profits only, also i need to register each guests details and upload to the police and keep the records for 3 years
Can you please provide any additional advice?
Thank you

Registrations do change from place to place. However, there has always been a requirement to pay income tax on rentals every quarter. It is 19% for EEC residents with allowances for costs and 24% with no allowances for non EEC residents. 

Hi,
We rent out our property long term (first time in 12 years) we still have a mortgage and we charge 600 per month. Can we claim all of the interest. All of expenditure I.e washing machine if faulty: I I etc or do we only get a percentage off these expenses.
Thanks

Hi Karen

The examples of costs that can be deducted by landlords who are resident within the EEC and the European Economic Area for the period the property is rented ar:

- council tax

- community charge

- utilities (if not paid by the tenant)

- house insurance

- mortgage interest

- cleaning and laundry

 

Hi, my wife and I bought an apartment in Spain. We do rent it out for some period and we have also paid rental tax. As we understand, we also have to pay the imputed income tax. Since it is just my name that registered with Airbnb and on the invoices, my Spanish advisor just send in Modelo 210 for me. Since we both are registered as owners of the apartment, does my wife not need to send in Modelo 210?

Hi Dennis

As the property is in both names you both have to declare the rental tax as well as the normal non-resident taxes for the days that your property isn't rented out. 

Hello
We have an appartment in Spain and rented it out to a travel company for their staff. We would like to ask, do we need to pay rental tax by ourselves or does the company has to pay that tax. If it is a case has this company give to us any documental prove?

Hi Marina

As you receive the money you will responsible for paying the tax

Can you declare rental income without having registered the property as a tourist let?The reason I ask is because I have a few bookings for this year which I will honour but have decided that I'll no longer let thereafter.Therefore I don't want to apply for a licence which I won't need or use in the future but I do want to settle my tax liability.Thanks for your advice.

Hi Katie

You have to declare your income but you also have to register 

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