CASE STUDY – What is Non-Resident tax in Spain?

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It still amazes us that people come in here sometimes and we ask them about their non-resident tax as they are a home owner in Spain, living abroad, and they look blank.

So what is the situation? For example, Mr Jones has taken the plunge earlier this year and moved out to Spain for some time on his own. He is one of many people coming into our office not having been told by solicitors when he bought his apartment many years ago that he had this obligation legally.

So is he a Resident or a Non-Resident?

Well basically, individuals are deemed as Residents if they meet any of these conditions:-

– they spend more than 183 days per the calendar year in Spain
– their main place of business is indirectly or directly located in Spain

Residents are taxed on worldwide income, and it is not a choice which you want to be. If you live here in Spain or your main place of business is here when you are deemed Resident, and as such, should check whether you need to make an annual Return “Renta”.

Mr Jones has already decided that he is keeping his main home in the UK and that the Summers are too hot for him, and he has a part-time job in the UK that he can put some hours in on a relaxed basis when he feels like it. He is not going to spend more than 183 days per year in Spain. In that case, he should have been already paying all the years he had the property, what is known by the commonly used term as  “non-resident tax” on non-resident Spanish property owners. Many people do not realise that regardless of whether or not their property in Spain is rented out, they have to pay tax individually each year by way of a Return.

When a property is owned by a married couple or various different people, each person listed on the Title Deeds is defined as an independent tax payer, which means that an individual tax return must be separately filed by each of the co-owners.

If the property is only used by the owner and not let, the tax is based on an estimated income of the property´s cadastral value. The Return has to be presented and paid by 31st December each year, for the previous calendar year, so a year in arrears. If the property is rented out, this tax is payable, but also a separate tax based on rental income.

Now is the time that many people are coming over to their property in Spain and they should not forget these payments, both SUMA (the local Council tax) to be paid by October and the Non-Resident tax, to be paid by December (for the previous annual year). We can also help people by email and arrange for direct debits to be set up if people wish. 

If you have never paid these and need some advice, please contact us and mention this article. You may find that to put things right does not cost as much as you may imagine (as the tax office cannot claim all previous years), and it will save you many a sleepless night when you realise that eventually, non-payment of these legal obligations will cause problems.

Please note that we do need to make payment of your non-resident tax before the end of November owing to the volume of payments. 

 

20 Comments

  • Karen Shillingford

    Hi. My husband and I bought a house in Mallorca last August. We moved into it permanently in May this year. The house does not have a habitation licence so cannot be rented out. Are we liable for non resident tax for last year, despite it not being a rentable property?

    • Nicola Ryan

      Good Morning Karen,

      The non residents tax is a tax you pay when you own a house in Spain and are not resident here in Spain, this has to be paid each year.

      As you bought the house in August you will be liable for the non residents tax from August to December 2018, which will be paid this year. The non residents tax is paid a year in arrears, we hope this helps.

      Kind regards
      Nicola

  • carlton lovett

    Hi i am a bit confused, if as a couple you are non residents and you have a property in spain you mention each has to complete a non residents tax return. does that mean the tax cost is split between both people or does each person have to pay the full amount ie. the tax on the house is shared or paid double if you see what i mean?

    • Nicola Ryan

      Good Afternoon Carlton,

      When you own a property in Spain and are not resident, each owner has to pay non residents tax. The tax itself is not split if it is a couple who own the house. The solicitor who deals with the non residents tax will calculate the tax and submit the tax return on your behalf, we hope this helps.

      Kind regards
      Nicola

  • Daniel

    Hi there,

    I’m really impressed with this information and has been really helpful for my understanding so far but I think my case is a bit complex so I would like to find help to simplify.

    I have had an NIE since I moved here in 2006. I was not the owner of the property (my parents were) and I had moved to the UK and got my first job, it’s important to know that this happened after I got my NIE.

    I bought my own holiday home in Spain in 2016 but have not been living in Spain for the amount of time needed to submit resident tax.

    I want to sort this out, but should I be filing for resident or non-resident tax?

    The confusion is my NIE says I’m a permanent resident, but I haven’t been for many years…
    How can I resolve this?

    • Nicola Ryan

      Good Evening Daniel,

      Thank you for your enquiry and kind words, which will be passed to the rest of the team.

      Your NIE would not confirm if you are a permanent resident in Spain, could you email us a copy of the NIE to allow us to check the document before giving you accurate information please. Please email this to me at enquiries@spanishsolutions.net.

      You would only submit a yearly tax declaration if you were resident in Spain and have your residencia, which is a green certificate or card. If you do not have this, you would be liable to pay Non Residents Tax. This is paid when you own a property in Spain and are non resident. We can confirm which would apply to you when we see your NIE, when received we will confirm which tax needs to be paid. Either way, we can help you for sure.

      Should you have any queries in regards to this, please do not hesitate to contact us.
      We look forward to hearing from you.
      Kind regards Nicola

  • ROBERT . TAYLOR

    Good evening Nicola,
    Thank you for your latest response by email and having just read the above query by Daniel and your reply I am even more unsure as to which tax we would be liable for going forward?
    I understand that Non Resident or Resident tax is paid in arrears for the previous calendar year and having bought a property in September last year and thus having only lived in 2019 in Spain for less than 183 days I believe from your reply to Daniel that we will be liable to pay Non Resident Property tax from September to December 2019. Is that correct?
    However we have gained our Residencia cards on advice from our solicitor in December 2019 even though we may possibly only live in the property for less than 6 months in 2020. If that is the case will we still only be liable to pay Non Resident Property tax in 2021 for 2020?
    Hopefully your response will clarify the position not only for me but your other readers?
    Kind regards, Robert

    • Nicola Ryan

      Good Morning Robert,

      Yes, this is correct. You would be liable for Non Residents Tax from September to December, as you were not a resident in Spain.

      When you become a resident and are in Spain for more than 183 days of the year, you are liable to pay your taxes here (not the UK) and submit a yearly tax return. If you state you are not in Spain for more than 183 days of the year and do not pay your taxes here, the Spanish tax authorities can ask for evidence of this.

      As per our previous conversations, it would be best for you to speak with a Fiscal advisor, who will give you tax advice based on your current situation.

      We hope this helps.
      Kind regards
      Nicola

  • ROBERT . TAYLOR

    Good morning Nicola
    Many thanks for your response and for clearing this matter up for both me and I trust other interested parties. One final question is will the property tax bill be calculated and sent to us directly from our local town hall or will we need to make contact with another local government department?
    Your kind assistance is much appreciated and I will take your advice and seek a local Fiscal Advisor but we may still arrange to meet with your specialist tax accountant as well.
    Kind regards
    Robert

    • Nicola Ryan

      Good morning Robert,

      Lovely to hear from you again.

      When you mean the property tax, would this be the Non Residents tax or the council tax (like we would have in the UK).

      If it is the Non Residents Tax, we would recommend appointing a tax advisor to calculate and pay this on your behalf. this will ensure there are no problems in the future.

      If it is the council tax, the town hall will send you a yearly bill or it will be taken by direct debit from your Spanish bank. The Solicitor whom you bought your property with, should have changed the coucil tax into your name and should be able to tell you when it is due or if a direct debit has been set up. We hope this helps.

      Kind regards
      Nicola

  • Tom

    Hi there Nicola,

    Not related to property ownership but I wondered if you might be able to help. I am a third year languages student from the UK based in Spain from January 6th to June 6th this year. I am an intern on €1,000 per month and my employer is currently charging me IPRF of 19% on each paycheque; so I’m losing €190 a month currently. A woman from the Agencia Tributaria told me that as I am here for less than 183 days, I won’t be eligible for the €5,500 tax-free allowance a resident would get. However, it is my belief that I am a tax resident here. I believe I would be considered a resident as my main economic interest is here: in spite of me being here for under 183 days, Spain is where I earn all my taxable income (I don’t have taxable income in the UK anyway, only student loan – which works out less than my Spanish income – and contributions from my parents) . Am I correct in my belief? And if not, can I expect any of my IRPF back? It seems extortionate to pay €190 a month but still not be considered a tax resident!!

    Many thanks,
    Tom

    • Nicola Ryan

      Good Afternoon Tom,

      We would recommend having a consultation with a Fiscal Advisor (accountant), here in Spain. The Fiscal Advisor will give you tax advice based on your current situation. We hope this helps.

      Kine regards
      Nicola

  • Janet Gagen

    I purchased a property at the end of August 2 years ago there was a dispute over the value of it then revalued last year with a small increase in purchase price. I have not paid any non residency tax and have asked my lawyer how I go about firstly calculating what needs to be paid and to whom it needs to be paid too. So far I have had no response. I only holiday in my property for around 40 days a year the rest of the time to reside in the uk but dont own a property here just rent. Can you advise me the calcuations where to get the form to complete and where to send it too please.

    • Nicola Ryan

      Good Afternoon Janet,

      Thank you for your enquiry.

      We would strongly recommend you appoint a tax advisor to do the Non Resident Tax as a calculation of the taxes is required.

      Please see a link below discussing the Non resident Tax and the documents required:

      https://www.spanishsolutions.net/blog/taxes-in-spain/non-resident-tax-spain/

      Should you need any assistance with this, please do not hesitate to contact us, we would be delighted to help.
      Kind regards
      Nicola

  • Heather Alldis

    We have been told non resident wealth tax in Andalucia is going up from 2% to 24%in 2021. Is this correct?

    • Jane

      Hi Heather

      The tax tends to vary from 19-24% your local council office can confirm.

      Kind Regards

      Jane

  • Damien reilly

    Good afternoon, I own a apartment in Los Altos and I would like to use yourselves to help me pay my non resident tax bill would it be possible to an appointment please, I’m not flying over till the 6th of February so Monday the 7th please in the afternoon please

    • Nicola Ryan

      Good Morning Damien,

      Thank you for your enquiry.

      We would be delighted to help you with your non residents tax, we will contact you directly to discuss this further.

      Kind regards
      Nicola

  • Catherine Downey

    I am a UK national planing on returning permanently to UK after living & working in Spain for over 30 years. I would like to consult a lawyer/tax advisor here in Barcelona where I live. Can you recommend any?

    • Nicola Ryan

      Thank you for your enquiry Catherine,

      We do not collaborate with any fiscal advisors in Barcelona, may be we can help. We will contact you directly to discuss this matter further.

      Kind regards
      Nicola

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