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Non-residents tax guide
If you have a property in Spain but are classified as a non-resident, understanding how the Spanish tax system applies to you can prove difficult.
Basically, non-residents in Spain are subject to non-residents income tax and a local property tax, as well as Capital Gains Tax which has been reinstated since 2011.
Every person is assigned a tax code (NIF) which must be stated on tax returns and any correspondence with the Tax Administration. For non-Spanish nationals, the tax code is known as the NIE.
If a property is owned by a married couple or several people, each must file a separate income tax return. Depending on how the property is allocated, taxable incomes are as follows:
Own use of urban property: The income to be declared is that calculated by applying 2% to the rateable value of the property and accrues annually on 31 December. Since 2016, the tax rate is 19% for EU residents (including Iceland and Norway) and 24% for non-EU residents. The proportional part of the amount is declared if property has not been owned by the individual for the entire year or if it has been leased for a period.
The declaration should be filed on form 210, declaring income type 02, following the year of accrual.
Leased property: The income to be declared is the entire amount received from the lessee with no deductions applicable. Since 2016, the tax rate is 19% for EU residents (including Iceland and Norway) and 24% for non-EU residents. An exception applies to taxpayers who are resident in another EU state, who may deduct the expenses provided for the determination of the gross tax base, provided that they directly relate to incomes obtained from activity performed in Spain.
The declaration should be filed on form 210, declaring income type 01, or 35 for the combined income of multiple payers, and the applicable filing period depends on the outcome of the self-assessment.
Capital Gains derived from sale of property: This constitutes an income and accrues from the time of the capital change. Generally, the gain is defined as the difference between the transfer and acquisition values. For gains accruing since 1 January 2015, the acquisition value is calculated by adding the amount at which the transferred property was acquired to any expenses and taxes paid by the transferor in the course of the acquisition, excluding interest. For gains accruing until 31 December 2014, the acquisition value is adjusted by the application of a reviewing coefficient which is calculated annually. The tax rate since 2016 is 19%, and both full and partial exemptions apply.
The declaration should be filed on form 210, declaring income type 28. It applies to the three months following the period during which the purchaser must deposit the withholding retention. In the case of capital losses, or the withholding is greater than the liability that should have been deposited, the taxpayer is entitled to a refund of the withheld surplus.
Property tax is payable annually to the relevant local authority up to a maximum rate of 1.1% of the cadastral value of the property. The period for making the payment varies depending on the local authority involved but is usually between September and November. Additional taxes are imposed on any increase in land values at the time of transfer.
Capital Gains tax
Capital Gains tax has been re-established in Spain since 2011, accruing on 31st December each year. The tax base will be reduced by €700,000 as exempt minimum. All taxpayers with assets and rights exceeding €2million are obliged to file a tax return.