As a non-resident property owner do I have to pay income tax in Spain?


I am paying taxes in UK where I am resident, I also pay the local rates for my Spanish house and I have been told that I must pay Income Tax in Spain; Is this correct? Should I pay Income Tax in Spain even if I am not a resident in Spain and do not have any income here, on top of the taxes I pay in UK?

Yes, you must pay taxes in Spain even if you are Non Tax Resident and even if you do not have any income in Spain, as you are liable for the Income Tax for Non Residents (IRNR) just for the fact that you are a property owner in Spain.

Up to 2008 it was an obligation for Non Tax Residents in Spain to pay Wealth Tax and Income Tax, but from that year the Wealth Tax has been abolished as per the Law 4/2008, of December 23rd. therefore the last Wealth Tax declaration was the one you submitted (or should have submitted) for the year 2007 and presented in 2008.

But Income Tax for Non Residents (IRNR) is still due and you are liable for it, just for being a property owner in Spain, as previously stated.

The actual rate for this Tax this year (2010) is 24%; it has been reduced from the previous 25% as per the Law 35/2006, of November 28th.

Therefore if you are Non Tax Resident in Spain and you receive any income in Spain: i.e.: rents from a letting, interest on bank accounts or even in the case that you do not have any income but you have a property or a share on a property in Spain you must pay Non Residents Income Tax (IRNR).

In this last scenario, if you do not have any income in Spain, but you own a property in Spain or a share of a property, your tax bill will be based on a calculation as per the Cadastral Value (value that appears on your Spanish Local Rates receipt from the Town Hall, the SUMA office or the equivalent).

It is important for you to know that the National Spanish Tax Authority (Agencia Tributaria) is reviewing the cases where the Non Tax Residents in Spain are not paying this IRNR. They are asking for the taxes due to be paid plus an interest for delay. We recommend you to pay your taxes and avoid any future unpleasant surprise from the Spanish Tax Authorities.

Please contact our offices for further advice and please remember that EVERY PERSON, NON TAX RESIDENT WHO OWNS A HOUSE (OR A SHARE OF ONE IN SPAIN) must pay Non Resident Income Tax, don’t wait for the Taxman to knock on your door with a penalty proceeding against you.

Carlos Baos (Abogado) 
C/Diana 19, 2º-D, 03700 Dénia (located close to the Glorieta Square at the end of Marques de Campo).

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