Do you already have a home in Spain or are thinking about buying one?
You should know the fiscal obligations you need to comply with, which will depend on your fiscal residence status.
If you are resident
According to the Spanish Tax Law, people who stay in Spain more than 183 days a year are considered fiscal resident in this country, which imply the obligation to submit an annual tax return to the Spanish Tax Office.
The tax period for resident tax submissions is May – June and refers to the previous fiscal year, coinciding with the calendar year, January-December.
The Spanish residents are obliged to declare in this country all their assets all over the world: state and private pensions, properties, rental incomes, bank accounts, deposits, life insurances, dividends…There are personal allowances applicable to tax payers depending on their personal circumstances.
The tax liability is calculated according to a progressive scale rate.
Other taxes and legal formalities applicable to residents are:
- Wealth tax: applicable to residents within the same limits referenced on the non- residents.
- Form 720: Since 2012, residents in Spain are required to file an information return on assets outside the Spanish territory. This is not a new tax but a new information requirement approved by the Government within the framework of the fight against fraud and tax evasion.
Fiscal Advice: We offer a wide Tax and legal consultancy to give you the best advice accordingly to your needs.
If you are non-resident
There are two different taxes payable by every non-resident owner:
- Local tax payable to the Town Hall annually, known as local rates (IBI). For this payment we could arrange a DD, being the tax charged automatically to your Spanish bank account.
- National tax payable to the Government annually, known as Income tax. This tax is based on the cadastral value of the property and needs to be submitted to the Tax Office annually in arrears. We calculate the total figure every year and inform you accordingly with sufficient notice.
The tax rate is:
- 19% for European citizens
- 24% for citizens outside Europe
From the 1st Jan 2021, effective exit of the United Kingdom from the European Union, British citizens will be taxed according to the fiscal regulations applicable to Non – European citizens.
We provide a comprehensive and professional Fiscal Representation service, which also includes formalities and proceedings at the Spanish Revenue (Agencia Tributaria).
Apart from these taxes, there are others applicable in determined occasions:
- Wealth tax: due to the public deficit, the Government re-established this tax from fiscal year 2011 under some limits:
- Spanish assets valued in more than 700.000, 00 € minus deductions
- Spanish assets valued in more than 2.000.000, 00 € without deductions
Nevertheless, each region is entitled to reduce the Wealth tax rate and even to approve an exemption. Therefore, depending on where the property is located, the owner will be taxed by the Wealth tax or not.
- Rental income tax: due when a property is rented out.
This tax is declared quarterly being necessary to provide a certificate of fiscal residence to deduct annual expenses of property maintenance from the gross incomes. Just the citizens of the EU are able to apply the deductions.
The tax rate is:
- 19% on net income of EU citizens
- 24% on the gross income for citizens outside Europe.
- Corporation tax: due when a property is owned by a non-resident company. From year 2013, just the companies located in fiscal paradises are obliged to submit this tax.
The tax rate is a 3% on the property cadastral value.
- Capital Gains tax: In the event of selling your property in Spain as a non-resident, the buyer is committed to retain a 3% of the price from you and pay it to the Tax Office as a payment-on-account. If you are making no profit on the sale, we will manage the refund of that 3% retention.
The tax rate is 19% on net profit.
- Inheritance Taxes: There is no exemption from inheritance tax between husband and wife. A tax form must be completed and the taxes paid. In Spain is the heir who is taxed and not the estate. Tax will be calculated on the relationship of the heir to the deceased, the amount of the inheritance he/she receives and existing wealth. All assets will be taxed – bank accounts, property, cars, golf shares, etc. The actual Tax scale applicable and special allowances are different depending of the Regional Government where the assets of the deceased person are located.