Don't let non-payment of Spanish taxes spoil your yearTaxes Wed, 18 Dec 2013
How has 2013 been for you? The end of the year is a good time to reflect on just how well the previous 12 months has passed. We’ve all had our ‘annus horribilis’ at one time or another. Those years when circumstances seem to have conspired against us. Equally, most of us have had golden years that will stick with us and soften those less favourable times.
Hopefully, if you chose 2013 as the year in which to buy your Spanish property then you will agree now, and in the future, that it has been a year to remember for all the right reasons. Making the decision to buy a holiday home in Spain is a big one that can bring huge enjoyment and added value to your life.
However, it is also an investment that needs continued TLC. It can be so easy once you have purchased your property and returned to the UK to put it out of your mind until your next break away. This shouldn’t cause a problem provided you are sure that all Spanish tax matters and legal affairs are being taken care of.
For us at Ábaco, the 31st December has a meaning other than seeing out the old and welcoming in the new. It’s also the last date on which we can submit non-resident tax declarations in Spain. Hopefully, if you have bought a home here as a non-resident the implications of your tax obligations have been carefully explained to you.
If not, it is important for the continued enjoyment of your new Spanish home that the correct non-resident property taxes are paid. There are two taxes to pay if you don’t rent out your property:
* Spanish IBI – council property tax, payable to the town hall
* Imputed income tax, payable to the Spanish government
If you rent out your property you must still pay IBI but will pay rental income tax in Spain instead of imputed income tax. To pay your imputed income tax, you must complete the annual non-resident tax declaration, and time is running out.
We do sometimes come across people who think that paying this tax is an option. It’s not. Failure to pay doesn’t mean the tax goes away. Instead the amount you owe is banked up and must be settled before your property is sold or inherited. On occasions, it can even lead to an embargo on your Spanish bank account.
Some of our more difficult years are just down to bad luck and circumstances. Others are of our own making. Make sure your enjoyment of your place in the sun isn’t tarnished by failing to pay your taxes in Spain.