All owners of properties in Spain are required to file an annual non-resident tax return. This obligation is mandatory even if the owner does not live in Spain and pays taxes in another country.
GB Abogados have an accountancy department who offer annual tax filing services to clients of any nationality.
I own a property in Spain but do not rent it out. Do I still need to file a tax return?
The non-resident tax return is to be filed regardless as to whether the property generates any rental income or not.
Many clients own a property which is utilised as a holiday home. Others own a property that is rented long term or on a week by week basis as a holiday let.
In all cases, an annual tax return must be filed to the Spanish tax office.
I don´t rent out my property. What tax liability I am likely to have?
The tax on properties that do not generate an income is based upon a percentage of the assessed value of the property (catastral). You can find this value on your annual council tax statement (IBI).
For properties where the value has been revised or modified within the last 10 years, the base rate is 1.1%.
For all other properties the base is 2%.
The base rate is then divided by the rate of annual income tax – in 2016 this is 19% for E.U. citizens and 24% for citizens living outside the E.U.
I own a property with my partner. Do we both pay this tax?
If a property is owned by more than one person, for instance a married couple, then each individual must file a non-resident tax return.
However, this does not mean that more tax is paid. The total amount payable will be divided across owners.
Most ownership is on an equal share basis, in which case each owner would pay half.
When is the deadline for filing the non-resident tax return?
The deadline for filing the tax is return is the end of the calendar year. If you wish to set up a direct debit for your tax payments then the deadline is 20th December.
I rent my property out as a holiday let. Do I pay tax on the income?
Yes. The rental income tax calculation is based on the percentages outlined above, either 19% E.U. resident or 24% non E.U.
However, if you are an E.U. resident, you can deduct legitimate expenses, such as mortgage payments, home insurance, letting agent fees, property maintenance bills etc.
It is important to note that, if you make a monthly profit form the rental, then you should file your tax return on a quarterly basis.
I have recently purchased a property. Am I liable to pay tax for a full calendar year?
No. If you have only owned a property for a few months then the non resident tax amount will be divided and you will pay the proportion to match the time you have owned the property.
What happens if I am late filing a tax return?
If you are late in filing a return, the Spanish tax office will impose a fine. The law covering these penalties are article 198 and 191 LGT 58/2003.
I have owned a property in Spain for several years and have never filed a return. What can I do?
This is not unusual. GB Abogados have helped many client in this situation. It is not uncommon for a non resident property owner to be unaware that they have to file a tax return.
It is never too late to file your returns. Our accountants are able to file several years on your behalf.
The statute of limitation in Spain is 4 years. Therefore you will only need to ensure that the last 4 years are up to date, even if you have not filed a return for a longer period.
There will obviously be late filing penalties to pay, but once the returns are up to date, you will not encounter any further difficulties.
It is important to bring the taxes up to date, as you can encounter problems and increased charges in the future, particularly if you plan to sell the property at some point.
How can you help?
Our accountants department has many years of experience in assisting non resident clients. Our staff speak several languages, Spanish, English, French and German.
We will talk you through the process and assist you with gathering the documentation that is required to file your non resident tax return.
We will deal with the tax office on your behalf and explain the calculations involved in reaching your calculated tax liability.
What documentation do you require?
In order to file a non resident tax return on your behalf we require:
- Copy of council tax bill (IBI)
- Copy of NIE certificate
- Passport copy
- Confirmation of UK address
Additionally for rented properties:
- Invoices for income derived from the property
- Invoices for all expenditure in relation to the property
How do I start the process?
The first step is to contact us. One of our qualified accountants will discuss your requirements and explain how we can help. We will confirm our fees in writing for you to consider.
Once appointed we will assist you with gathering the documentation and then proceed with calculating your tax return and filing with the Spanish tax office.
Whilst dealing with your non resident tax returns we would be happy to provide advice on a range of other matters such as:
- Licence applications for holiday letting
- Insurances (home, contents, car etc.)
- Banking (we can introduce you to banks with free current accounts)
- Mortgage review
- Car loans or leasing
- Inheritance tax liabilities & property donation
Please don´t hesitate to contact us today to discuss your circumstances.