Renting in Spain - the tax implications

Taxes Tuesday, September 12, 2017
Rental income tax in Spain

Renting is a good option if you are looking to make some money out of a property you have bought in Spain. Whether it is a short term or long term let, renting is increasingly popular and many different types of property are in demand.

Some people choose to do all the paper work themselves in terms of issuing contracts and checking inventories. Others choose to hire a rental agency who will take care of this for them. Whichever you choose, the payment of tax on your rental income is your responsibility and you should ensure that it is done correctly.

The arrangements for this vary depending upon whether you are a resident or a non-resident. However, the good news is that when it comes to tax you can offset the income you have with deductable expenses incurred. Expenses you can submit include:

  • Council tax (IBI)
  • Community fees
  • Utility charges (if paid by the owner) 
  • House insurance 
  • Mortgage interest
  • Legal costs
  • Cleaning and laundry

Account can be taken of these only if you are tax resident in a country within the European Union, Norway and Iceland.

Non-residents

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 tax resident but the tax already paid in Spain can normally be deducted as double taxation.

Non-residents must declare the rental income on form 210 every quarter:

1st quarter: January, February, March – tax payable before 20th April
2nd quarter: April, May, June – tax payable before 20th July
3rd quarter: July, August, September – tax payable before 20th October
4th quarter: October, November, December – tax payable before 20th January

All declarations have to be presented on line before the 15th of the following month and the tax office will then charge your bank account directly on the 20th. If you are paying rental income tax then for the periods of the year that this applies you do not have to pay Property Owners’ Imputed Income Tax. IBI council tax still applies throughout the year for both residents and non-resident owners of Spanish property.

For each period where income tax is declared you must submit the names of the tenants, dates of occupancy, the amount paid and the costs incurred. You will need to keep evidence of the costs and forward them to your tax representative so the correct amount of tax is paid.

For the year 2017 the rental income tax is 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. Remember that t is the country where you are currently a fiscal resident that counts and not your nationality.

For more information about the implications of renting out your property read the article 'Renting out your Spanish property'.

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