Non-resident tax in Spain. Act now!

If you own property in Spain and you do not live in Spain you may not be aware that you are liable to pay Spanish non-resident income tax.  This is not unusual. Many people own property in Spain for several years without being aware that they must pay non resident income tax.  

After many years of passivity in relation to the payment of this tax, the Spanish tax agency recently commenced a period of activity and began issuing tax demands for unpaid non resident income tax.  Demands can be issued for unpaid Spanish non-resident income tax in the prior four years. Interest is payable on the balance owed and further penalties may be payable later.  The recipient of the demand is given 10 days in which to make payment from the date of receipt of the demand.

What is Spanish non-resident income tax?

If you own a property in Spain but do not let it to tenants then you are required to submit an annual return for non resident income tax.  If you do let the property to tenants on a temporary basis then you are required to submit quarterly returns declaring the net income received in each quarter, taking into consideration the allowable expenses incurred.  If you do not let the property during a particular quarter then you will still need to submit an annual return in relation to the quarters in respect of which you have not yet paid tax.

To the extent that you do not let your property to tenants, you can expect to pay an annual non resident tax that is calculated on the basis of the rateable value of the property.  The reality is that the tax payable will usually be very low, most often based on 1.1% of the rateable value, taxed at the rate of 19% (or 24% for those not resident in the EU). So that is 0.209% of the rateable value for EU residents, not a high tax at all.

If you do let your property on a temporary lettings basis then you can expect to pay tax quarterly on the net income earned at a rate of 19% (or 24% for those not resident in the EU), taking into consideration deductible expenses.  

Find out more about Spanish inheritance tax.

What can I do if I’ve received a demand for Spanish non-resident income tax?  

It will benefit you to act quickly in order to avoid incurring further penalties in relation to Spanish non-resident income tax.  It will be necessary to complete and submit the tax returns, calculate the tax due and make payment of the amount owing within the time specified in the demand.

In order to avoid receiving future demands, or even if you have not yet received a demand for Spanish non-resident income tax, you should ensure that you submit your annual Spanish non-resident income tax return and make payment of the tax promptly.  

It is important to note that even if you have owned a Spanish property for many years and have never paid non resident’s income tax in Spain you are only obliged to pay Spanish non-resident tax for the four prior years owing. Hence, even if you have not recently received a tax demand, you can normalise your position by making payment of Spanish non-resident tax for the past four years and making payment of any penalties due for late payment.

How much is non resident tax in Spain?

Non-resident taxpayers in Spain are taxed at the rate of 19-24 % on income earned in Spanish territory or income that arises from Spanish sources such as property. Specific rates apply to other kinds of income.
 

How do non residents pay taxes in Spain?

Non residents in Spain must pay tax on income from Spanish sources for example Spanish property that is let to tenants.
 

Do you have to pay non resident tax in Spain?

Yes. You’ll need to pay non-resident tax on any income from Spanish sources. Demands can be issued for unpaid Spanish non-resident income tax payable in respect of the previous four years. Interest is payable on the balance owed and further penalties may be payable later.
 

Do expats pay tax in Spain?

If you are a resident in Spain you may be liable to pay tax on income from anywhere in the world. However, if you are a non-resident, you’ll need to pay tax on any Spanish income.
 

Spanish taxation can be complex if you are not familiar with the forms, or the rules for the payment of taxes in Spain.  We can advise and assist. Contact us today to discuss our fixed fee non resident income tax service. Or, email us now at info@solicitorsinspain.com to receive a quote today. 

Last updated: 9 January 2021

Testimonials

I have been very impressed with E&G Solicitors in Spain’s quality of advice and their prompt and concise communications.

Malcolm Fyfe, Surrey