Spanish tax situation on rental income

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This topic contains 9 replies, has 6 voices, and was last updated by Profile photo of Anonymous Anonymous 10 years, 10 months ago.

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  • #51500
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi

    What is the Spanish tax rate on rental income?
    Is tax due on the gross rental income or are costs (eg mortgage, community charge etc.) tax deductible?

  • #60626
    Profile photo of Anonymous
    Anonymous
    Participant

    If you own as non-resident then:

    Tax is 25% of gross income.
    No deductible expenses whatsoever.

    Harsh, but true.

    Mark

  • #60627
    Profile photo of Anonymous
    Anonymous
    Participant

    I don’t know anyone who declares for tax on rental. Different in the USA your agent wil deduct it.

  • #60628
    Profile photo of Anonymous
    Anonymous
    Participant

    No wonder the Spanish Government loves us.

    Out of interest Mark, what is the percentage if you are a resident?

    (….if there is a difference, then aren’t we back to the same discussion as with the Capital Gains tax when you sell….i.e. should be the same for everyone, regardless)

  • #60629
    Profile photo of Anonymous
    Anonymous
    Participant

    If you are a resident then your rental income gets added to any other income and taxed according to the normal income tax earnings bands (progressive scale).

    However, as a resident, they only tax you on 50% of net rental income, and almost all expenses are deductible.

    Renting out property as a resident is therefore fiscally quite attractive. Problem is that the many other laws discriminate against landlords, and rental yields are down.

    Mark

  • #60633
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks Mark

    This is not the reply I wanted but the one I suspected!!

  • #60636
    Profile photo of Anonymous
    Anonymous
    Participant

    is it true that the spanish goverment are being taken to the eu court because of the differences in capitial gains tax between residents and non residents?

    I am now a resident in spain, but family members have been stung by the 35% capitail gains which was painful!

    I also have a rental property in spain (holiday lets only because of laws affecting land lords) and I am glad to learn that there are some tax breaks….however does the same not apply to this type of tax as it does to capitail gains tax i.e. that it is unfair to EU non spanish resident property owners and should the spanish goverment not be taken to task because of this also?

    Regards

    Tony

  • #60639
    Profile photo of Anonymous
    Anonymous
    Participant

    Yes, it is true that the European Commission has taken Spain to the European Court of Justice for applying discriminatory taxes on non-resident EU nationals. At present Spain applies a CGT of 15% on residents, compared to 35% on non-residents.

    The Commission decided to go to court because Spain made no effort to change the discriminatory legislation despite a formal request that it do so, made by the Commission last July.

    The Spanish Finance Ministry is ‘studying’ the situation.

    Mark

  • #60642
    Profile photo of Anonymous
    Anonymous
    Participant

    It is sad to say but Spain is actually a “Lawless Society”. They effectively stick two fingers up to the rest of the Europe. IMHO.

  • #60646
    Profile photo of Anonymous
    Anonymous
    Participant

    I agree with that Claire. All through the buying process we have been reassured to see that our rights are very well covered by Spanish Law only to have the rug pulled out from under us because no-one actually takes the slightest bit of notice of the law.

    The court process is so slow and difficult for a foreigner to access that most people just give in and allow themselves to be ripped off by all and sundry.

    It is not at all reassuring to see that the government is included in the ever growing number of people lining up to put their hand in our pocket.

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