As the deadline for the non-resident tax declarations (December 31st) approaches, many non-residents with property in Spain have been coming to us with their questions. Here, we summarise the answers.
Am I a resident or a non-resident?
If you live in Spain for more than 183 days a year then you are a resident here. Any less and you are a non-resident.
As a non-resident you must pay two non-resident property taxes.
What property taxes must I pay?
You must pay two taxes:
- IBI (Impuesto Sobre Bienes Inmuebles) or council tax
- Imputed income tax or rental tax (in some cases a combination of the two)
What is IBI?
IBI (Impuesto Sobre Bienes Inmuebles) is a council tax that must be paid by every home owner. IBI is:
- Paid directly to the town hall or the SUMA offices
- Collected annually
- Collected at different times of the year according to the area
- Based upon the rateable value of your property or valor catastral
When should rental tax be paid?
If you rent out your property then you will need to pay rental tax in Spain. This is collected quarterly:
- 20th April
- 20th July
- 20th October
- 20th January
Why do I have to pay income tax in Spain when I don’t live there?
The imputed income tax is payable by non-resident property owners who do not rent out their property and so do not pay rental income tax. The idea is that you could rent out your property if you wished.
Imputed income tax:
- is paid on a second home that is not rented out
- is declared in the non-resident annual tax declaration
- is paid to the Spanish Tax Authority
Why haven’t I heard about imputed income tax before?
The system of collecting taxes is different to that in many other countries. For example:
- you will not necessarily be reminded that you owe tax
- it is your responsibility to make sure your tax is paid
- overdue taxes must be settled before you sell or inherit
What happens on the 31st December?
The 31st December is the deadline every year by which time non-residents must have made their annual non-resident tax declaration. The non-resident tax declaration:
- covers the previous year
- is when your imputed income tax is calculated
- is the means by which income of interest to Spain is declared
What happens if I don’t pay?
If you miss paying one or both your non-resident taxes then:
- the debt is held against your property until it is either sold or bequeathed
- you cannot change the names on the Title Deed until the debt is settled
- you may have to pay late payment interest as well as sanctions
- you might be caught out through one of the Spanish Tax Authority’s anti-tax fraud campaigns
- your bank account can be embargoed leading to missed utility bill payments
How will they know?
The Spanish Tax Authority are increasingly cross-referencing information to identify where there are irregularities. This includes:
- monitoring electricity consumption
- comparing your details as logged on the Land Registry with utility usage
Won’t they warn me?
A letter may be sent to your Spanish address. If you are not there to receive it then:
- the letter will be returned to the Spanish Tax Authority
- a notification will be placed on the BOE (Boletín Official del Estado) - you are then considered to have been informed
- if you do not respond to the notification your bank account might be embargoed
What should I do?
We recommend that non-residents have a fiscal representative. A fiscal representative like Ábaco will:
- make sure your non-resident taxes are paid on time
- represent you to the Spanish Tax Authority
- be in a position to receive notifications
- alert you to changes in the tax law
- answer any queries you might have throughout the year
Ábaco has developed two tax options to help non-resident Spanish property owners:
- a free property report for non-resident owners of Spanish property – includes the current market value of your property and how much non-resident income tax you should be paying
- our comprehensive service for non-residents – includes a full package of services to ensure that your Spanish property taxes are up-to-date
We provide non-resident tax assistance to Spanish property owners all over the world. We invite you to join them.