Free Guide to Taxes in Spain: Spanish Taxes For Residents And Non-Residents

If you decide to buy property in Spain, then it would be useful to read this article to understand in advance what taxes expect you. In order to make it easier to navigate this issue, let’s consider such concepts as «resident» and «non-resident».

In the event that you live in the country for less than half a year, invest in the economy of this state, and your family members live also in Spain, the administrative system defines you as a resident automatically. If you do not meet these criteria, then you are a non-resident.

Under Spanish law, each of the spouses is an individual taxpayer and fills a tax return by himself. If they have a joint property, then all liabilities are divided between them.

The tax inspector’s guide is a special scorecard, where the value of real estate is usually somewhat underestimated. The cadastral value is indicated in the IBI document (even for a warehouse or a barn).

A non-resident who purchases property must pay the following types of taxes in Spain:

1. The so-called Income Tax for non-EU Residents – IRPF. It is payable whether you receive rental income or not.
2. The Property Tax or IBI.
3. The Tax on Garbage Collection or el Impuesto sobre eliminacion residuos en vertederos.
4. The Wealth Tax or el Impuesto sobre el Patrimonio (selectively applied)
5. The Special Tax on Real Estate or GEBI (only applies to offshore holdings).

Let’s look at each of them in more detail.

Income Tax for non-EU Residents – IRPF

The tax amount will depend on wether you receive rental income. How is this tax calculated? You have to multiplay the cadastral value by 2% (1.1% in case of real estate whose cadastral value has been revised over the past ten years), i.е. only 2% (1.1%) from the value of the property is taxed. Furthermore, this «tax base» is multiplied by the corresponding tax rate, which varies for residents and non-residents of the EU or the EEA:

• 19% – for EU residents
• 24% – for non-EU residents

Example:
If you are a non-resident and the cadastral value of your property is 85,000 € (the value has been revised over the past 10 years), then to pay property income tax you will need:

85,000 × 1.1% × 24% = 224.40€

Do I have to pay taxes if I don’t rent out my property?

In accordance with Spanish lows, this type of tax is charged every year, regardless of the fact whether income-generating or not.

Tax for EU and EEA residents is charged:

• at the rate of 19%;
• lack of benefits;
• paid once a year. For real estate acquired in the middle of the year, accrual goes since the acquisition;
• the Form 210.

Tax for non-EU and EEA residents is charged:

• at the rate – 24%;
• lack of benefits;
• made by one-time annual payment. When buying a house in the middle of the year, since the acquisition;
• the Form 210.

If you receive rental income from your property:

For residents:

• at the tax rate — 19%;
• benefits are applicable. The amount of house insurance, mortgage interests, etc. shall be deducted from the amount of the calculation;
• once in three months;
• the Form 210.

For non-residents:

• at the tax rate 24%;
• lack of benefits;
• payable every 3 months
• the Form 210.

The Property Tax – IBI

The Property Tax (IBI) is common to both groups (residents and non-residents). It is charged by the city hall at the place of residence. Local authorities independently regulate the rates – from 0.4 to 1.1% from the cadastral value.
The tax rate in our city of Torrevieja is 0.4105%. That means, if the cadastral value of property in Torrevieja is 75,000 euros, you would pay this amount:

75,000 × 0.4105% = 307.87 (€)

Deadline for IBI payment in Torrevieja in 2022: from 07/25/2022 to 10/10/2022

NOTE: failure to pay may result penalties and even confiscation of property. In order to avoid any difficulties with paying this tax, you could contact the specialists of our company Easy Tax & Legal – they will compile your tax report competently and professionally.

The Tax on Garbage Collection – el Impuesto Sobre Eliminacion Residuos en Vertederos

This tax is paid by both residents and non-residents. The regularity of payment in Torrevieja is 2 times a year ин 21.36 euros. Each city has its own terms and amounts.

The Wealth Tax – el Impuesto Sobre el Patrimonio

Since this is a regional tax, its amount varies greatly depending on the region, as is the case with other taxes that the regions set independently, for example, inheritance and gift taxes. In particular, the Community of Madrid, which concentrates the Spain’s largest assets, offers a bonus of 100% for its residents. That is, taxpayers must declare their capital, but they do not pay anything. In Catalonia, in turn, rates range from 0.21% to 2.7%.

There are no tax exemptions for non-EU residents.
This tax is payable on the Tax Form 714 annually, by 12/31.

Special Tax on Real Estate – GEBI

If you have purchased a property in Spain through an offshore holding, you must pay 3% of the cadastral value of the property annually. Compensation for this tax is occasionally provided for non-residents, but, in such a case, legal advice will be useful.

Payments are made till 31/12. The Tax Form 213.

What can a non-resident face if these taxes are ignored in Spain?

As a result, you will be denied a residence permit renewal as a violator of Spanish laws. Then you can sell your property, gift or inherit it. It should be remembered that overdue debts are overgrown with penalties, and the municipality can collect the debt forcibly, block your bank accounts and even take away your property against non-payment.

Will I be wanted abroad with tax debts?

That rarely happens. But, in this case, you lose the opportunity to conduct real estate transactions and you will be sued.

Interpol will be interested in you only:

• if you have large debts on mortgages and other loans;
• if you owe property owners;
• if you have a large debt to developers;
• if you owe even after the confiscation of property.

How can I find out about my taxes and debts while outside of Spain?

You can obtain relevant information from your trusted representative. He will receive all your tax notifications. You can also use the services of our company Easy Tax & Legal. You will be aware of all the news and updates related to your tax obligations.