SUMA & TAXES in Spain
As a Home Owner in Spain, can you tell me what taxes in Spain I am liable to pay annually? And how can I pay them?
There are two annual taxes which all Home Owners in Spain must pay:-
Individual Income Tax
1. Real Estate Tax (SUMA or IBI or Council Tax)
This is a local tax which the Council imposes on all property owners.
All the property of each municipality is included in a census and a value is assigned; the land value or cadastral value. The tax is based on a tax scale established by the area, the land value, and the size of the property, including all components like the house, pool, garage, so if you have extended the property and the Council has not been informed, you should be aware you can be fined and certainly the situation must be sorted before you sell. If you need help with updating the legality of your property, please contact us.
The notification for SUMA or IBI bill is posted out directly to the property for the previous calendar year, usually paid by early October of the following year in this area. If on direct debit, you need do nothing. If you have not set up a direct debit, then the notification has a slip at the bottom and should then be taken to be paid at any of the participating banks.
If you have not been paying this SUMA or IBI bill, we urge you to contact us to get up to date, as at some stage an embargo on your car, or your bank account, or your house, may appear.
2. Income Tax (Individual income tax or Non-Resident tax)
Calculation and payment of the Individual Income Tax can be a complicated business. Individuals are deemed as Residents if they meet any of these conditions:-
they spend more than 183 days per calendar year in Spain
their main place of business is indirectly or directly located in Spain
Residents are taxed on worldwide income. If you think you should be making Resident tax Returns, please contact us for an appointment.
Non-Resident tax is the commonly used term for the 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 taxes in Spain individually each year.
Some people say well my neighbour has never paid non-resident taxes and not been caught. We would advise that is irrelevant, they may be tomorrow, and they may be sorry that they did not comply with the law regarding taxes in Spain, and saying that they were unaware is not accepted as an excuse.
3. Property Tax (Wealth Tax)
For those of you that remember Wealth tax, and many people still mention it, this was abolished in 2009, then re-introduced temporarily for 2012 and 2013 and continued for 2014 and 2015! There are some generous allowances but Spanish Residents pay wealth tax on the value of their worldwide assets as at 31st December 2015. Please check with us whether you may be affected.
4. Resident Income Tax
Lastly, it is a mistake to resist making a tax return as a resident when you might clearly be one (for example living in Spain more than 183 days). There are a number of tax advantages, for example.
Spanish Solutions can provide Fiscal Advice, Assistance and Representation with all of these taxes in Spain. Please contact the office directly on 966 761 741 for further information.