What obligations do NON-resident natural persons with properties for personal use in Spain have towards the Spanish Tax Administration (Agencia Tributaria, also called Hacienda)?
Non-resident property owners must pay local Property Tax to the Town/City Council; they must also fill in and submit an annual form to the Spanish Tax Office which details calculations of the taxes to be paid out for the property. This amount must be paid out at the bank.
Is this easy to do?, In principle, for anyone who lives outside our country and even if you live here part of the time, it is difficult to read the annual tax information which undergoes continuous modifications. The forms and procedures are also ever-changing which makes it extremely difficult for the people who want to carry out these procedures by themselves.
What do we offer from our advisors office for your convenience?
The peace of mind that our firm has qualified, well-trained staff who are prepared to deal with these procedures successfully; our up-to-date knowledge and continuous recycling regarding tax information; first-hand information received from our office to submit and pay annual taxes from your bank account without having to leave your house; the peace of mind we will provide you with by representing you before the tax administration to solve a problem or carry out a procedure, or answer to a letter or provide data on your behalf. And the benefit that all this can be done for a simple yearly fee.
If you are a non-resident natural person in Spain and you own some urban property in this country, you will be subject to the Non-resident Income Tax (Impuesto sobre la Renta de no Residentes) and the local Property Tax (Impuesto sobre Bienes Inmuebles).
Non-resident Income Tax
When a property is owned by a single individual, a married couple or several people, each person is treated as an independent taxpayer, and must file separate returns. In other words, there must be as many statements as individual persons, property owners and properties.
There are two types of income tax depending of the use of the property: properties for personal use and properties used for rental.
- Imputed income from urban property of personal use (i.e. that have not been leased during the previous year).
The taxable base is a percentage of the cadastral value of the property, which appears in the receipt of the Real Estate Tax (IBI) (in general, 2%).
The taxable base is 1.1% if the property’s cadastral value has been revised or modified after 1 January 1994.
This return is accrued once a year, on December 31st.
If the result is payable, the declaration must be submitted to a Spanish or foreign bank and the option of direct debit from the owner’s bank account can be chosen when the form is filled in online.
Deadline for submission Income tax returns are filed quarterly.
- Return on property used for rental
The income to be declared in this case is the total amount collected from the tenant; certain expenses can be deducted, if the resident comes from the European Community or the European Economic Area.
This income is chargeable when it is claimable from the tenant or when it is collected (if earlier).
Apart from this tax which is submitted to the Spanish Tax Administration, you must also declare VAT, IVA (impuesto sobre el valor añadido) if the property is located on the Spanish mainland, or IGIC (Impuesto general indirecto canario) if you own a property in the Canary Islands.
Deadline for submission: these obligations are also quarterly though some are annual.
Questions & Answers
Is it mandatory to appoint a representative?
There is no obligation to appoint a representative before the Spanish Tax Administration. However, a representative can be designated if so desired, and the appointment can be notified to the Delegation or Tax office corresponding to the location of the property. There is an exception: in cases of residents in countries or territories where there is no effective exchange of tax information (tax havens, including Andorra). In these cases the designation of a representative is mandatory.
Is the tax identification number (número de identificación fiscal (NIF)) mandatory to file a tax return?
Every citizen in Spain is assigned a tax identification number which gets recorded when filing a tax return and is used in all communications addressed to the Tax Administration.
Spanish citizens use their ID card number (Documento Nacional de Identidad – DNI) as NIF. In the case of foreign nationals, the NIF becomes the NIE (Número Personal de Identificación de Extranjeros), or Personal Identification Number for Foreigners. This form of identification is processed before the General Directorate of the Police.