Amid all the recent New Year celebrations, you could be forgiven if you missed the deadline for the compulsory non-resident annual tax declaration in Spain, which passed on 31st December 2017.
Whilst you may incur a small fine for late submission, it is possible to submit a late declaration but time is of the essence. The longer the delay, the greater the fine that will be incurred and need to be settled when you do come to sell or bequeath your property.
The declaration refers to any income that is of interest to Spain and covers the previous twelve months. This includes, for example, rental income tax or imputed income tax for non-rented property.
Non-residents with property in Spain must pay IBI (Impuesto Sobre Bienes Inmuebles) or council tax, and imputed income tax or rental tax (in some cases a combination of the two).
IBI is paid annually and goes directly to the town hall or the SUMA office. The exact timing is determined by the tax calendar of the region where the property is situated. IBI is calculated according to the rateable value of your property or valor catastral and is payable if your property is a second home but you do not rent it out.
In relation to property that is rented out, rental income tax is payable instead. Imputed income tax should be declared as part of your non-resident annual tax declaration and is paid to the Spanish Tax Authority.
Rental income tax is collected quarterly on 20th of January, April, July and October. You can claim some types of expenditure against your rental income tax and the tax is also included in your non-resident tax declaration.
The following table shows the extra tax and interest incurred due to late payment:
| December 31st – December 31st | Extra 5% in tax |
| March 31st – June 31st | Extra 10% in tax |
| June 31st – September 31st | Extra 15% in tax |
| After one year | Extra 20% in tax plus interest |
The phrase ‘better late than never’ certainly applies in this case, particularly when compared to the potential outcomes of unpaid tax can take. For example, late payment interest can result in sanctions such as the embargoing of your bank account if the tax office identifies an unpaid tax bill.
Due to the nature of their arrangements, non-residents often experience difficulties in receiving communications from the Tax Office in Spain. Consequently, letters are sometimes returned to the Spanish Tax Authority if they have not been received and signed for. A notification might be placed in the BOE (Spanish Official Gazette) but this can be easily missed and result in a sanction being applied.
Seeking advice can help to ensure that your tax affairs are in order and unnecessary fines and penalties are avoided, meaning that you can focus all your attention on enjoying your 2018/19 New Year festivities instead.
