Non-Resident Taxes in Spain

Tax

Regular legal-contributor Raymundo Larraín Nesbitt explains which property taxes non-residents face on buying property in Spain (Non-Resident Taxes in Spain).

The following article has been greatly simplified to avoid unnecessary tax technicalities. The quoted tax rates are subject to change from one year to the next. Seek professional legal advice on your matter – see disclaimer below.

By Raymundo Larraín Nesbitt

Lawyer – Abogado
8th of December 2015

Introduction

Unbeknownst to most non-residents, on buying property in Spain, you automatically become liable for a series of property-related taxes. No one will give you the heads up on them, so it is up to you to find out how much you owe and comply with the Tax Authorities.

Resident: to be or not to be – that is the question.

This article deals only with non-resident taxes. To ascertain whether you qualify as resident or non-resident the Spanish Tax Office applies the following criteria:

• You spend more than 183 days in a calendar year in Spanish territory.
• Your centre of financial interests is located in Spain.
• Your spouse and/or underage children live in Spain.

If any, or all three, above apply you will be regarded as resident for tax purposes which escapes the purpose of this article.

Are you married or in a joint property ownership?

For tax purposes couples or joint owners will be treated as separate taxpayers and be required to file separate tax returns. Property tax will therefore be split among co-owners.

Cadastral Value

Is the assessed value local Tax Authorities give to a property. It is usually well below the market value. This rateable value is used as the taxable base to calculate a series of taxes. You will find the cadastral value of your property in one of your local tax bills (i.e. IBI). Be aware that a store room or garage space may be regarded legally as a distinct separate entity from your main home and therefore subject to their own individual cadastral values.

Non-Resident Taxation Overview

 

I review below six taxes. Before anyone frets, in truth most non-residents on buying property in Spain will only be liable for the first three on an annual basis:

I. Non-Resident Income Tax (regardless of whether you let your property out or not)
II. IBI tax.
III. Rubbish Collection Tax.

However, for completion’s sake, I have added a further three:

IV. Wealth Tax: this will be paid by a small minority of people.
V. Special tax levied on real estate: this will be paid by even fewer people as it relates to offshore holding structures domiciled in tax havens.
VI. La Complementaria or ‘bargain-hunter’ tax: strictly speaking this is not even a separate tax. It is a consequence of today’s low-priced property in Spain. It is actually supplementary Property Transfer Tax. It is explained below.

I. Non-Resident Income Tax

The overview of this first tax is split depending on whether you rent the property out or not – either way you are going to pay it. It is strongly advised you hire a lawyer to file this tax on your behalf. Lawyers are covered by professional indemnity insurance in case of malpractice or negligence. Make sure that whoever files taxes on your behalf has insurance in place from which to claim from.

Calculation: the taxable base is 2% of the cadastral value of your property or 1.1% if the cadastral value was revised after the 1st of January 1994. This taxable base is then multiplied by the appropriate tax rate. The tax rate varies depending on whether a taxpayer is resident or not in the European Union or European Economic Area (Norway and Iceland):

•    Resident in E.U. or E.E.A.: 20% (19% as from 2016).
•    Non-resident in E.U. or E.E.A. (rest of the world): 24%

In truth on the 10th of July 2015 Royal Decree 9/2015 was passed reducing the tax rate for EU/EEA residents down to 19.5% as from the 12th of July onwards till the 31st of December 2015. From the 1st of January through to the 11th of July it remains set at 20%. The idea behind this article is to keep it short and simple so I will choose to ignore this amendment to avoid overcomplicating the examples below.

Worth noting is that EU/EEA residents now qualify for tax relief on renting out their Spanish property as from 2015 onwards. This is a result of a recent landmark ECJ ruling of 3rd September 2014 which forced the Kingdom of Spain to amend various key laws to put an end to discrimination between residents and non-residents on taxation matters. For a full comprehensive list of available landlord rental allowances, please read my article Spain’s Holiday Rental Laws (under the heading “II. Changes in Taxation Brought About by European Legislation”).

1. Not renting out property

Hang on, does that mean I get taxed on Income despite not renting out my Spanish property?

Yes. This is a frequent question. It is a legal fiction whereby it is surmised that you derive some form of financial benefit from your Spanish home; that is why it is called non-resident imputed income tax as it is deemed. Spanish authorities take the view an owner derives a benefit in kind from owning property irrespective of whether it is true or not and taxes it accordingly. It is a fixed annual fee.

i) Resident in E.U. or E.E.A.

Tax rate: 20%
Tax relief: not applicable.
Dates: to be paid before the 31st December of each year. If you buy a property mid-year, you are only liable to pay in proportion to the months you have owned the property (pro rata).
Tax form: 210.

Example E.U./E.E.A. resident: Mr. John Shepard owns property in Spain with a cadastral value of €100,000.

· Non-revised cadastral value: 2% = €2,000; 20% * €2,000 = €400. He will be liable for €400 as Non-Resident Imputed Income Tax.
· Revised cadastral value: 1.1% = €1,100; 20% * €1,100 = €220. He will be liable for €220 as Non-Resident Imputed Income Tax.

ii) Resident outside the E.U. or E.E.A.

Tax rate: 24%
Tax relief: not applicable.
Dates: to be filed and paid before the 31st December of each year. If you buy a property mid-year, you are only liable to pay in proportion to the months you have owned the property (pro rata).
Tax form: 210.

Example Non-E.U./E.E.A. resident: Mr. Salhadin ibn Ayyūb owns a villa in Spain with a cadastral value of €100,000.

· Non-revised cadastral value: 2% = €2,000; 24% * €2,000 = €480. He will be liable for €480 as Non-Resident Imputed Income Tax.
· Revised cadastral value: 1.1% = €1,100; 24% * €1,100 = €264. He will be liable for €264 as Non-Resident Imputed Income Tax.

2. Renting out property (without permanent establishment)

i) Resident in E.U. or E.E.A.

Tax rate: 20% on rental income for 2015 (19% as from 2016).
Tax relief: Yes, physical persons may deduct, for example, home insurance, mortgage loan interest payments, property maintenance expenses etc. Legal persons may also deduct rental related expenses.
Dates: collected annually or quarterly.
Tax form: 210.

ii) Resident outside the E.U. or E.E.A.

Tax rate: 24% on rental income.
Tax relief: no.
Dates: collected annually or quarterly.
Tax form: 210.

Rental related articles

II. IBI Tax (Impuesto sobre Bienes Inmuebles)

This tax applies to both residents and non-residents. In some parts of Spain, it is known as SUMA.

This is a local tax levied by the town hall where your property is located. It is paid once a year (normally due in August through to November). It is equivalent to the UK’s Council tax.  It varies from one town hall to the next. It is based on the rateable value of your property (0.4 – 1.1% of cadastral value per annum); for cheap properties it can be as low as a few hundred euros whereas posh pads, in sought-after areas, may command a couple thousand euros.

It is highly advisable you set this tax as a standing order. The reason is because failure to pay may lead to your property being seized and sold in a public auction. Town halls are becoming increasingly aggressive pursuing this local tax post-credit-crunch; particularly for high-end property.

III. Rubbish Collection Tax

This self-explanatory tax applies to both residents and non-residents.

It is a local tax levied by the town hall where your property is located. It is paid once a year. On average it is a few hundred euros a year. It is advisable you set this tax as a standing order.

IV. Wealth Tax

This tax had been suppressed but was reinstated because of the severe recession. It will likely be abolished – again – over the next years. More on its reintroduction in my article: Spanish Wealth Tax Reloaded. It applies to both residents and non-residents

If you own assets in Spain that exceed a net value of €700,000 you are liable for this tax. The first seven hundred thousand euros is a nil rate band and the excess is taxed following a sliding scale. If the property is mortgaged, this amount may be deducted as it is a liability. If you are liable for Wealth Tax, it is compulsory you appoint a fiscal representative in Spain. In truth, only a small minority of people qualify to pay it.

Tax rate: National scale is 0.2 – 2.5% of net assets. However, it varies from one region to the next in Spain as they have devolved competencies over it i.e. in Andalusia the scale is: 0.24 – 3.03%.

Tax relief: None for non-residents aside the nil rate band.

Dates: To be filed and paid before the 30th of June of each year.

Tax form: 714

More on Wealth Tax in my in-depth article: Spanish Wealth Tax.

V. Special Tax Levied on Real Estate (GEBI)

If you own property in Spain through a corporate offshore structure domiciled in a tax haven you are liable to pay 3% of the property’s cadastral value every year. A full list of what the Spanish Tax Office (Hacienda or A.E.A.T.) considers as tax havens can be found here. Appointing a fiscal representative is mandatory in this case for blatant reasons. Only a fraction of taxpayers is liable for it. Unbeknownst to many, a non-resident landlord may – exceptionally – offset this special tax to mitigate his own tax bill on, for example, renting out the property. A buyer will be held liable for a non-resident vendor’s tax liability going back four years.

Dates: To be filed and paid before the 31st of December of each year.

Tax form: 213

More on this in my article: Buying and Owning Spanish Property through Corporate Structures: Pros and Cons.

VI. La Complementaria or Bargain-Hunter Tax

Unlike the previous five taxes, this ‘tax’ is paid only once. In fact, it is not really an extra tax. It is more of a supplementary Property Transfer Tax on buying low-priced property in a rock-bottom market. Local Tax Offices make the (wrong) assumption that a buyer has under-declared the sales value to dodge taxes. So they tax the amount they believe was under-declared. It is highly unfair and should be put to an end. It applies to both residents and non-residents.

More on this matter and how to challenge it successfully in my article: La Complementaria or Bargain-Hunter Tax.

Frequently Asked Questions (F.A.Q.)

1. What happens if I don’t pay my property-related taxes?

You are breaking the law. Overdue taxes are lodged against the property at the Land Registry. Prior to the property being sold or bequeathed (inherited) these outstanding amounts must be settled. In addition late payment interests and penalties will be rolled up compounding the debt. You will not be allowed to change the name in the Title deed until any unpaid tax is settled in full. Additionally the Tax Office is empowered to seize your Spanish bank accounts securing the debt.

On selling, the 3% retention withheld by a buyer by law (on account of a non-resident seller’s Capital Gains Tax liability) will be used to offset any owed tax by a non-resident seller (tax model 211). Do NOT expect the Tax Office to refund you the difference on the 3%; if you owe property taxes the tax authorities will pocket the full 3%. To avoid this you must first pay in advance the owed property tax (up to the last 4 years, as the statute of limitation time-bars any tax exceeding the four-year limit) plus any penalties or surcharges for late payment. Only once the outstanding property tax is settled, will they refund you the 3% withheld in full. More on this topic: Taxes on Selling Spanish Property.

In some serious cases, i.e. non-payment of IBI tax, may lead to the property being embargoed and seized by the local authority (town hall). It will then be sold in a public auction to recoup the outstanding debt. This procedure is ‘surprisingly’ expedient in Spain (as in months). With the ongoing recession town halls are proving increasingly more resolute in pursuing this (aggressive) course of action. Pre-recession they were fairly lenient.

The statute of limitations for all taxes in Spain is four years and one day (notable exception is Spanish Inheritance Tax which is four years, six months and one day).

2. Can I be chased abroad for outstanding property taxes?

To be honest, I have never seen it happen nor have I heard of such a case over the past decade. As specified above, unpaid taxes will be lodged against the property at the Land Registry. You won’t be pursued abroad for them.

That said, there are scenarios in which Spanish creditors may chase you abroad (E.U. and E.E.A.) for outstanding debts on instigating European legislation: European Enforcement Order (E.E.O.). And vice-versa, British or Irish creditors may benefit from said legislation to pursue and secure assets held in Spain by a debtor (i.e. HM Courts & Tribunals Service EEO fact sheet). In practice Spanish creditors seldom chase you abroad unless the amounts are worth their while – but make no mistake, it can be done.

The following is an example list of scenarios where you may be pursued in the E.U./E.E.A. for money claims arising in Spain:

• Defaulting on Spanish Mortgage Loan instalments on a second home in Spain.
• Falling in arrears with your Community of Owners.
• Outstanding amounts owed to developers on Buying Off-plan Property in Spain (forced completion).
• Unpaid personal loans (Bad Debtor’s List).
• Pursuing negative equity abroad: post-auction shortfall on Spanish Bank Repossessed Property.

More on this matter in my in-depth article: Spanish Creditors Pursuing Debts Abroad.

3. Do I need to appoint a fiscal representative?

It is not compulsory (in most cases) but it is highly advisable that you do. This will assure tax compliance in a diligent manner and avoid nightmare scenarios like you losing your Spanish home because of non-payment issues or having your Spanish bank account frozen to secure pending debts. A frozen bank account means that any standing orders will bounce back compounding your problems i.e. unpaid utility invoices.

4. Do I get notified in my home country of any taxes/debts?

Sadly no. You will only be notified at your Spanish address. Which is why non-residents should seriously consider appointing a fiscal representative to be on the right side of the law and avoid incurring in late payment penalties or surcharges. Moreover, you could appoint the address of your fiscal representative to receive all tax notifications ensuring compliance and adding to your peace of mind.

What can a lawyer do for you?

Appointing a lawyer as your fiscal representative in Spain to file and pay on your behalf your Non-Resident Income Tax and Wealth Tax returns, if applicable, has the following advantages:

•    Mandatory professional indemnity insurance which you can claim from in case of negligence or malpractice.
•    Complete the tax forms in Spanish.
•    Ensure you do not overpay on calculating the tax due on your property based on its rateable value and the number of days you have owned it on a pro rata basis.
•    Apply for tax relief (where possible).
•    Submit the tax returns before the Tax Office in a timely manner (thus avoiding attracting penalties and surcharges on late payment).
•    Setting a fiscal representative’s address to deal with all tax-related correspondence generated throughout a fiscal year.
•    Reply to any tax notifications within the deadline ensuring tax compliance.
•    Appeal misunderstandings or material errors.
•    Up-to-date knowledge on fast-paced fiscal changes.

Conclusion

Lawyers are specially qualified to act as your fiscal representative in Spain ensuring all tax deadlines are met and complied with in time. This will avoid you falling foul of the law and making costly mistakes in the long run.

Blissful ignorance on which taxes you ought to be paying, on owning property in Spain, will not be accepted as an excuse to avoid payment (Article 6 of the Spanish Civil Code). Do not expect Tax Authorities to handhold you reminding or even explaining what your taxpayer responsibilities are. It is up to you to find out and comply with them.

If in doubt, just ask a lawyer to help you out – we don’t bite (usually).

L’art de l’imposition consiste à plumer l’oie pour obtenir le plus possible de plumes avec le moins possible de cris.” – Jean Baptiste Colbert.

French economist and Finance Minister under King Louis XIV.

Translated as: “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” Plus ça change, plus c’est la même chose!

Related articles

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No goose was harmed on writing this article. VOV.

2015 © Raymundo Larraín Nesbitt. All rights reserved.

Comments

comments

22 thoughts on “Non-Resident Taxes in Spain”

  1. Carole W

    I had read that the tax rate for non-EU residents is 24.75% until the end of 2014. I recently paid the imputed tax for last year based on 24.75%. If I overpaid, is there any way I can claim back my overage amount?

    You might also mention that if a property is rented out part-time, for example, 4 weeks during the summer, and the rental tax was paid for that period, then the annual imputed tax is proportional to the number of days the property was NOT rented out.

    1. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

      Morning Carole,

      You have read correctly. 24.75% tax rate applies for 2.014 and is due to be paid before the end of 2.015.

      But my article refers to 2015, the year on which it is being published. You can verify this from the Spanish Tax Office’s website directly:

      http://www.agenciatributaria.es/AEAT.internet/en_gb/Inicio/La_Agencia_Tributaria/Campanas/No_residentes/Impuesto_sobre_la_Renta_de_No_Residentes/Cuestiones_destacadas/Tributacion_de_los_inmuebles_urbanos_propiedad_de_no_residentes_personas_fisicas.shtml

      The tax rate was amended for 2015 (lowered) for non-EU/EEA residents and it was amended yet again in mid July for EU/EEA residents. As I mention in my article, tax laws change often. Which is why it is advisable to take legal advice so you are always up-to-date.

      Regarding your comment, you raise a good point. Or you either pay Imputed Income Tax (not renting out) or else Income Tax (you rent out) but not both simultaneously as they are mutually exclusive; it is one or the other pro rata. I took for granted this could be easily inferred from my article, but perhaps you are right and it is worth highlighting.

      Regards

      1. Carole W

        Thanks Raymundo, but now I am really confused. Someone told me that I had to pay income tax on my 4 weeks / year rental, and this I paid in October. That means I did not rent my property for 48 weeks / year. I was told that imputed income is still due on the number of days the property is not rented, i.e., 365 – 28 days.

        You seem to be saying that I should not have paid the additional imputed income on the non-rented days, is that correct? I only needed to pay the tax due on the 4 weeks of rental income? In that case the gov owes me 5 years of overpayments!!!

        1. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

          Morning Carole,

          I think you are reading too much into it and confusing yourself.

          As pointed out in the article itself, either way you are going to pay tax on owning property in Spain, whether you rent or not.

          1. If you rent the property out you pay income tax on the four week’s income.

          2. The remainder of the year, in which you did not rent out the property, you are liable to pay imputed income tax.

          So basically, one way or another, you pay for the full 365 days.

          What I wrote in my article, and in my initial reply to your query, was that they are mutually exclusive for the same time period. You cannot be taxed both simultaneously i.e. you cannot pay income tax and imputed income tax on the four weeks you rent out.

          Hope that clarifies.

          Regards

      2. Profile photo of PatPat

        In my opinion the Tax will be greater in 2015 than in 2014 for the vast majority of home owners
        My property was built in 1987 and the rateable value was reviewed in 1994. Let’s say my Catastral valor was €30000 in 2014 and also 2015

        Tax year 2014,
        The Base Imponible was (Catastral Valor X 1.1%) if revision took place since Jan 1994. This Base Imponible was then subject 24.75%
        Tax = €30000 X 1.1% X 24.75% = €81.67

        Tax year 2015
        The Base Imponible was (Catastral Valor X 2%) (because revision did not take place within the last 10 years). This Base Imponible was then subject 19.5%
        Tax = €30000 X 2% X 19.5% = €117

        If the property was less than 10 years old or was revalued within the last 10 years, then the tax for 2015 is less than 2014.

        The following is an extract from the link shown above. Am I reading it correctly?
        *************************************************************************************************************************************
        Accruals until 2014
        In general, 2%.
        In the case of properties with rateable values reviewed or modified from 1 January 1994, 1.1%.
        Accruals from 2015
        In general, 2%.
        In the case of a property whose rateable value has been reviewed or modified and has come into force within the tax period or in the ten previous tax periods

        1. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

          Morning Pat,

          I think you are getting a a bit carried away by the numbers.

          If all things remain equal (ceteris paribus) and the tax rate drops from 24,75% in 2014 to 19% in 2016 it stands to reason you will pay less taxes as a non-resident.

          Regards

          1. Profile photo of PatPat

            Yes, if all things remain equal, then 24.75% in 2014 Versus 19% in 2016, then of course the tax paid in 2016 will be less than 2014.
            The problem is (as I see it) things do not remain equal in all cases.

            A property valued or revalued in 2008 will pay less tax in 2016 than 2014 because it has been assessed within the last 10 years (Tax Base = Catastral Valor X1.1%)

            A property valued or revalued in 2004 will pay more tax in 2016 than 2014 because it has not been been assessed within the last 10 years (Tax Base = Catastral Valor X 2%)

            Prior to 2015 both of above properties would have a Tax Base of ( Catastral Valor X1.1%)

            Two changes took place from tax year 2015 onwards:-
            The tax rate was reduced
            The method of calculating the Tax Base was changed from (January 1994) to (10 years from valuation or re-valuation) to avail of the 1.1% rate.
            As I see it, your article is 100% correct for properties of 10 years or less and maybe that is what you had in mind when you wrote the article. If so, my apologies

            Maybe I am reading it incorrectly. Please correct me if I am wrong.

        2. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

          Hi Pat,

          I understand where you are coming from.

          The thing is that most coastal resorts (where I am based) have been revised within the last decade. So they do not face the problem you are describing. But I get what you are saying and find it very interesting.

          The major problem, which is what I was replying to someone else on this thread, comes by way of the revisions of the cadastral values themselves. For example, a property worth 100k can be updated to 150k after said ‘revision’. That is a major problem as many taxes will soar because the cadastral value is used as reference to calculate a number of taxes.

          A few years ago, when town halls had just revised the cadastral value, citizens took to the streets to protest the significant increase. Town halls approached the problem in a manner of different ways. Estepona simply opted to increase it massively from one year to the next causing much upheaval. Eventually the town hall backed down and reduced it. Marbella on the other hand sneakily implemented a gradual increase so it wouldn’t be as painful (and noticeable!) to taxpayers (and undoubtedly more ballot-friendly!).

          It is the revised cadastral value, in my humble opinion, what has a major impact in taxation. But this is done at a local level (devolved competencies) as opposed to the tax rates I describe in my article above which are decided upon from a national level. A reduced tax rate in five or six points over the last two years to non-residents will not compensate a huge revision of the cadastral value. Seen from this angle then, yes, there is in fact an increase in taxation, by way of the cadastral revision, despite a sharp drop in (national) non-resident tax rates.

          Cash-strapped town halls need to raise their revenues in the face of a prolonged ‘recession’ which drives them to be on their toes when it comes to cadastral values, continually updating them.

          Regards

          1. Profile photo of PatPat

            Thank you for your comprehensive reply. I can now see your thinking when you wrote the article. We all see the world through a different pairs of eyes.
            The only question that I need addressed is, are the examples shown below correct? Just the words YES or NO (SI or NO)is sufficient because you have invested a lot of time in writing the article and responding to questions relating to it.

            A property valued or revalued in 2008 will pay less tax in 2016 than 2014 because it has been assessed within the last 10 years (Tax Base = Catastral Valor X1.1%)

            A property valued or revalued in 2004 will pay more tax in 2016 than 2014 because it has not been been assessed within the last 10 years (Tax Base = Catastral Valor X 2%)

            Prior to 2015 both of above properties would have a Tax Base of ( Catastral Valor X1.1%)

  2. Mats

    Hello Raymundo,
    I own a small apartment in a very old community, I think 1974 in San Pedro cost del sol.
    Since I live in Sweden I rent out during summer and use the apartment a couple a month during winter, until the day I retired.
    I need to know how to pay my non residens taxes, isit that simple to apply for the payment myself?
    Since this is an old community, I spoke to the administrator that says that we do not need License of first occupancy we have it says the administrator, but theres is no document (cedula)
    How to get the document?
    Do I need a lawyer? In that case can you recommend to a reasonable lawyer here in San Pedro?
    Your answer will be much appreciated 🙂
    Thank you
    Mats

    1. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

      Good morning Mats,

      If you are renting out on a short-term basis (less than two months) in Andalusia I advise you to read my new article: Holiday Rental Law in Andalusia (for residential properties):

      http://www.spanishpropertyinsight.com/2016/02/10/andalusias-holiday-rental-decree/

      This new law requires that landlords attain a Licence of First Occupation to register before Andalusia’s Tourism Registry (or ATR).

      Old communities, such as yours, will not have a LFO as they did not exist back in the 70’s. You can however request what is known as a ‘cedula de habitabilidad’ from Marbella’s town hall. This document should suffice to replace a LFO for the purpose of registering before the ATR in Malaga.

      If you are going to rent out for more than two months to the same person, but not as a permanent abode, than you are ruled by Spain’s Tenancy Act in which case this new Decree 28/2016 would not apply.

      As for filing and paying Non-Resident Income Tax yes it is advisable to hire a lawyer specially if you are renting out on a short-term basis following new regulation.

      As for recommending a lawyer, I stopped doing so years ago for various reasons. You can browse from a list here:

      http://www.spanishpropertyinsight.com/lawyers-in-spain/list-of-lawyers/

      Regards

  3. Profile photo of AndrewAndrew

    Surely Pat is right because things are not ‘ceteris paribus’. The criterion for determining whether the taxable base from 2015 onwards is 1,1% or 2,0% is dependent upon whether the valor catastral of the property has been revised during the ten years prior to the current fiscal year rather than whether it had been revised since 1994.

    This means that the taxable base for a property last revised in, say 2000, will have virtually doubled whereas the tax rate has only been reduced from 24,75% to 19,5% for 2015 and 19% for 2016 neither of which will compensate for the virtual doubling of the taxable base.

    I cannot see how this can be dismissed as a case of getting carried away by numbers.

    1. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

      If a cadastral value has been revised recently then yes you will likely pay more taxes as the cadastral value is the base which the AEAT takes to make its calculations on as explained in my article above. The fact that the tax rate was dropped from 2014 to 2016 will likely have no bearing on it. I honestly find it hardly surprising.

  4. Profile photo of AndrewAndrew

    Is it not the other way around? If the revision has been made recently, ie. in the last ten years the multiplier for the valor catastral in order to obtain the taxable base is only 1,1% whereas if the last revision was more than ten years ago the multiplier is almost double that at 2% and will remain at 2% until or unless the valor catastral is revised again at some time in the future

  5. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

    You are correct, but again, we are talking at cross purposes.

    If the cadastral value is revised, the underlying value of the asset will have been increased regardless of the multipliers increasing the overall value. My point is that the drop in tax rate will not negate the increase in such cases.

    Quite a few properties haven’t had a cadastral revision over the last two decades so generalisations are dangerous.

  6. Profile photo of AndrewAndrew

    I must have misunderstood your answer to Pat because I thought you were saying that non-residents would be paying less tax in 2016:

    “If all things remain equal (ceteris paribus) and the tax rate drops from 24,75% in 2014 to 19% in 2016 it stands to reason you will pay less taxes as a non-resident”.

    I was making a like for like comparison between taxes payable for 2014/15 and 2016. Properties which have been revised between 1st January 1994 and 31st December 2004 will see an 82% increase in the taxable base for their taxes whereas the tax rate is dropping by only about 5 percentage points so owners of such properties will certainly not ‘pay less taxes as a non-resident’ and as the years roll on more and more properties will fall into that category unless the municipality carries out a full revision.

    It is also the case that increases of valores catastrales in municipalities like Fuengirola and Benalmádena and probably many more have risen far beyond the actual value of the asset and there have also been instances where the values have been increased in a manner that they claim does not constitute a ‘revision’.

  7. Profile photo of Alex77Alex77

    Dear Mr. Nesbitt,

    First of all thanks a lot for providing a huge amount of useful information on your website.

    I am likely to stay on Costa Del Sol for over 183 days and will automatically be treated as “resident” from taxation point of view. I also come from a Non EU country.
    My question – would a non-EU “tax resident” pay the same 24% tax on rent income? Is there any chance to apply tax relief (e.g. deduct home insurance, % on the mortgage loan) in my case?
    Do I get it right that having an official Tarjeta does not give me the preferences of EU residents in terms of taxation?
    Is there a link where I could find the % of IBI Tax for regions like Marbella, Estepona, Casares?

    Thanks a lot!

    1. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

      Morning Alex,

      Tax residence and admin residence are two different concepts; you cannot mix both.

      If for example a Russian citizen becomes tax resident in Spain and files IRPF annually (not IRNR) then he becomes entitled to offset his rental costs against his rental income mitigating his tax bill. The Tax Office does not allow negative income or losses so the deduction is capped. Losses can be compensated on the following 4 tax periods.

      You have a very detailed description in one of my articles. For a full comprehensive list of available landlord rental allowances, please read my article Spain’s Holiday Rental Laws (under the heading “II. Changes in Taxation Brought About by European Legislation”:

      http://www.spanishpropertyinsight.com/2015/03/06/explaining-the-latest-changes-to-spains-rental-laws/

      IBI tax is a local tax levied by town halls. Every town hall is entitled to set its own rates (within legal boundaries). You should contact each town hall you mention and query this. This information can also be found online.

      You are welcome Alex.

      Regards

  8. Profile photo of FlamingoFlamingo

    Hi Raymundo

    Thank you for an extremely interesting and useful set of guides.
    I would like to ask about Impuesto Sobre la Renta no Residentes.

    Does this only apply to urban properties and are Rural/Rustic properties exempt from it.

    Many thanks

    Stephen

  9. Profile photo of Mark CMark C

    Hi

    Thanks for a very easy to understand article. Perhaps you can comment on my conundrum? I have owned a house in Spain since it was new 12 years ago. All my SUMA and Basura have been paid since I moved in, but due to a mix up at the beginning I have not had an NIE number until last year. As such I have not paid or been asked to pay Non-Resident Income Tax for the past 12 years (i don’t rent out the property and am a non-resident). As there is a 4 year statute of limitations I fully expect that at some point I will have to pay 4 years back tax, so should I just sit tight and wait for the request?

    Many thanks
    Mark

    1. Profile photo of Raymundo Larraín NesbittRaymundo Larraín Nesbitt Post Author

      Hi Mark,

      Thank you for your kind words. I always make an effort to try and make my articles accessible to everyone leaving out the esoterics.

      I have never known someone to own property in Spain without a NIE number. Are you certain the property is lodged under your own name at the Spanish Land Registry? You should double check this. I simply fail to understand how a NIE number can be overlooked by the Authorities as it is a basic requirement for everything in Spain; from opening a bank account to paying taxes. Moreover, you simply cannot do anything in Spain without one. So I do not have the faintest idea how you are able to pay SUMA and basura as you would need a Spanish bank account to pay them from and following anti-money laundering regulations you must be identified by your lender which requires having a NIE number assigned. Quite bizarre.

      As you correctly point out, there is a statute of limitations so they cannot ask for taxes dating back more than four years. They will of course levy interests and surcharges as a penalty for late payment if they catch you i.e. on selling on the property which requires going through a Notary public and it is then when you get caught out.

      Will it happen? Alas I do not happen to have my crystal ball with me tonight but if it does happen they will simply place a charge against the property and pocket the 3% retention the buyer will withhold on account of your capital gains tax liability given your non-resident status.

      You mention you have not been asked to pay Non-resident Income Tax. As I mention in the first paragraph of my article above no one will give you the heads up on it; you are simply expected to fulfill your tax duties as non-resident which involves paying this tax.

      Will they chase you abroad for a shortfall (i.e. in the UK)? I have never seen it happen and find it highly unlikely given todays’ laws. If you add the fact of Brexit then it is nigh impossible if you ask me.

      Hope that answers your query Mark.

      You are welcome.

      Regards

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