Non-resident taxes in Spain

Publication: 17 Feb. 2020
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What are the taxes that non-residents need to be aware of when owning a property in Marbella?

The non-resident tax regime applies to foreign owners of Spanish assets such as properties, who earn some form of income from them. In areas such as the Costa del Sol, this often involves privately owned homes rented out for all or part of the year.

The specific type of tax that applies here is paid by non-residents who either rent out a property in Spain, or have any other type of asset that generates income for them. Usually, it is about a flat rate of 24%. Nevertheless, if you are renting out a property for which you don’t have any tenant, then you will still pay non-resident tax at a rate of 24% applied to 1,1% of the cadastral value of the property.

The tax you pay, and the declaration you have to make, largely depends upon whether or not you rent out your property. Foreign homeowners may be surprised to find that they are expected to pay income tax even if they don’t commercialise their property in Spain by renting it out.

• Income tax for non-residents who don’t rent out their property (IRNR)
This is the version of non-resident income tax in Spain if the following conditions apply: 1) You do not live in Spain, 2) You are a property owner in the country, 3) The home is exclusively for personal use and you don’t rent it out, 4) You have no other source of taxable income in Spain. Even when you don’t generate income from the property, the Spanish tax authorities still consider that you derive benefit from owning it and accordingly you have to pay an (albeit) lower rate of income tax.

• Wealth tax for non-residents (Patrimonio)
Those who have property in Spain (residents and non-residents alike) are liable for annual wealth tax based on the net value of their assets in Spain, after certain expenses such as mortgages are deducted. This tax is collected by regional governments across Spain, as that of the Junta de Andalucía.

The tax is based on the net value of your property (minus mortgage, if any) or any other value deemed appropriate by the tax authorities, with a tax-free allowance of €700,000. The tax rate works on a sliding scale starting at 0.2% and up to 2.5%.

• Income tax for non-residents who do not rent out their properties, presented with wealth tax
Under certain conditions non-residents can pay the two taxes mentioned above (IRNR and Patrimonio) in the same declaration and use the same form. It is therefore not an extra tax, but simply a more convenient way of paying the two taxes previously mentioned. To present these taxes together in the same form you have to meet the following conditions: 1) You do not reside in Spain 2) you own only one property in Spain, and 3) the home is exclusively for personal use and not rented out.

The value of this tax is the two above taxes combined.

• Income tax for non-residents renting out their property
If you 1) do not live permanently in Spain, 2) own property here and 3) rent it out, you’re liable to pay income tax on the rental income instead of the tax described above. Should you rent out your property to a Spanish company, it will deduct tax at source and pay it to the tax authorities. Under these circumstances a non-resident is not required to present forms 210 or 215.

• Municipal property tax (IBI)
This tax is the Spanish equivalent of municipal rates and is collected by local authorities. It is based upon the cadastral value of the property, with a rate that varies from 0.405% to 1.166% depending upon the region. In Málaga it is 0.7232%.

Contact us for more information or a personal referral to qualified and certified accountants and tax advisors in your home language.