Tax law for non-residents in Spain

Tax law for non-residents in Spain

Foreigners who have properties in their name in Spain have to pay taxes in Spain.There is a common belief among foreigners who own properties in Spain that the only taxes they need to pay are the Land Tax (IBI) and the rubbish collection tax due to the townhall. However, this is not true and there are more taxes (detailed below) that must be paid.Gesche offers this service to its clients and each year we take care of the preparation and presentation of their taxes. This means that our client can rest assured that at Gesche we will take care of the whole procedure.

LIST OF TAXES TO BE PAID BY NON-RESIDENT CITIZENS IN SPAIN WHO OWN REAL ESTATE AND PERSONAL PROPERTY IN THE CANARY ISLANDS

1. URBAN CONTRIBUTION (IBI): Real Estate Tax (IBI), which is fixed for each property in each municipality. It must be paid twice a year, in spring and autumn in the current year and this can be paid directly to the Town Hall in question, or it can be paid by direct debit. When buying, it is important to make the change in the Cadastre through Mod. 901. It should also be noted that the property must pay a fee for rubbish collection twice a year. This can also be done by direct debit, or by paying directly to the Town Hall. If there is a vehicle, the registration tax must be paid annually to the Town Hall in the same way as the previous ones.

2.WEALTH TAX: This tax is paid if the value of the property is 700,000 euros. This tax is 0.2% of the value indicated in the deed or the cadastral value, if this is greater than the value of the purchase. If after the purchase, the tax authorities have made a value check, the highest of the three values always applies.

If you have deposit accounts, or have other important assets, this should be reported as an asset. For this you should ask your bank each spring for a bank statement for the previous fiscal year.

3. OWN USE TAX: (Tax Return 210): This tax is 24% (19% for EU citizens) of 2% of the cadastral value of the property. This tax has to be paid by the owners, who do not have their property in tourist renting (private). If you rent your property, you will pay in taxes 19% of the income obtained, but keep in mind that at the moment it is not allowed until the law regulates it.

Please note, that if you do not pay this tax, when you sell, the tax office will demand this payment with its possible fine and interest.

4. IGIC CANARIO: With rental income you must also pay 7% IGIC to the Canary Islands Government. Model 420.-

5. RESIDENCE: By applying for Residence in Spain it means that you have moved your main residence to Spain. You must therefore cancel your residence in your country of origin. So from this moment on you will have to pay the tax on your total worldwide income in Spain. You must immediately notify your bank of the fact that you have applied for the Residence, otherwise your Spanish account may be blocked for an indefinite period.

Taxes are always paid in the following year before the end of June or possibly before the end of the year, this will depend on which tax is involved. We will provide you with information and personalised advice.

Every non-resident in Spain requires a tax representative, article 46.1 of the Spanish Tax Law.