Annual Taxes

Annual Taxes for Non-Residents

Please, notethat:

If you live in Spain less than 6 months per year (184 days), then you are a “Non-Resident” citizen for tax purposes.

Many people assume that if they own a holiday home in Spain they are not liable for Spanish taxes. WRONG!!! Non-Resident property owners ARE liable for 3 annual taxes.

We advise you to ensure that you are paying all the relevant taxes to avoid problems in the future (when you come to sell your property). Please make an appointment with our specialist Tax Consultants, who will be pleased to advise you on ALL your tax liabilities and any allowable deductions for your specific circumstances.

We have listed the property taxes below, with a brief description under each one:

Wealth Tax

For Non-Residents, the property is not considered their principal residence but, rather, one they could let for income - whether they do or do not is immaterial; this is therefore a 'notional' tax. (This tax is replaced by Income Tax in the case of actual declared income from letting.)

If you own only 1 property in Spain, the deadline for the presentation is the 31st

of December of the following year.

If you own more than 1 property, then the deadline for the presentation is the 30th of June of the following year.

1.1% or 2% of the official unrevised rateable value (valor catastral), of the property is attributed as "income" and this figure is taxed at 24.75%. Note that if the rateable value has never yet been assessed (in the case of a new property) the rateable value is deemed to be the value as declared on the Title Deeds and 1.1% of this is attributed as "income" and taxed at 24.75%.

All those named on the Title Deeds (usually husbands and wives) are taxed separately on their share of the property.

Paperwork needed:

- NIE copy (of all the owners)

- IBI (SUMA bill for the house/s)

- Copy of a passport (first page)

- Your home address (in your country, not in Spain)

- If the owner never paid taxes in Spain, it is possible he/she isn’t registered in Spanish Tax System. In this case we will need:

- The ORIGINAL of NIE

- A copy of his/her passport

- Post address in his/her country

- Your phone number, address and e-mail, if possible

Local Rates (two)

Called the IBI (Impuesto sobre Bienes Inmuebles), this is a municipal tax paid annually to the Town Hall (or, in the Alicante province, to the SUMA office - an agency who collect the tax on behalf of the Town Halls). You may sometimes see this referred to as Real Estate Tax.

It is based on the valor catastral (the rateable value as set by the Town Hall) of the property and is applicable to Residents and Non-Residents alike. There are no exemptions. This tax is for municipal roads, street lighting, schools, hospitals etc. When you sell your property you are required to present the latest, paid, IBI receipt.

The valor catastral is adjusted periodically in line with inflation.

And the Tax for rubbish evacuation calculated by and paid to the Town Hall and it´s based on the same valor catastral.

Annual Taxes for Residents

Please, note that:

If you live in Spain more than 6 months per year (184 days), then you are a “Fiscal-Resident” in Spain and should do your Tax Return.

The period of time to do it is from May, 2nd to June 30th, every year.

People have to declare all their incomes (all over the world) and also all the Taxes already paid for the year. So we need all the information regarding any income.

All Residents, whether retired or not, are liable for Income Tax on all income, including pensions (with the exception of some Civil Service pensions). This is separate from and in addition to the annual Wealth Tax.

However, Spain has Double Taxation agreements with many countries - which ensure that you do not pay tax on the same income in both Spain and your home country. (If your tax liability in your home country is lower than it would be if paid in Spain, you pay the Spanish tax authorities the difference. However, if you are paying a higher tax than you would pay in Spain you will not receive a rebate from the Spanish authorities!)

Employed in Spain

If you are employed in Spain, a 'withholding tax' is deducted from your salary throughout the year (you are taxed at source). Tax declarations, and any adjustments, are made in May and June of the following year. The Tax Authority (Hacienda) calculates the 'withholding tax' deductions as near as possible to the employee's actual tax liability, depending on the known factors (such as number of family dependants), and issue any refunds due.

Self-employed in Spain

If you are self-employed or operating a business, you have to make a tax declaration regardless of how low any income might be.

Residents with Incomes from Outside Spain

If you have an income from outside Spain, an annual tax declaration has to be made. However, you do not pay tax on the same income in both Spain and your home country.

Exceptions

Anyone with a total worldwide income from one source of less than 8,000 euros (if you receive more than one kind of income) or 22.000 euros (in case of one kind of income) is exempt from Income Tax and does not have to file a tax return (subject to certain conditions). These amounts can different every year. For a husband and wife this is 8,000 or 22.000 euros joint income.

Wealth Tax

For Residents, this is a low-rate tax on your world-wide assets, not just those held in Spain. However, Spain has Double-Taxation agreements with many other countries, which means you will not be taxed twice (in two countries) on the same asset.

Residents have an exemption on the first 150,253.00 euros of the valuation of their main residence property in Spain. Husbands and wives are taxed separately and the exemption is per person, so a husband and wife with both names on the Title Deeds are jointly exempt from the tax up to a total property valuation of 300,506.00 euros.

To be able to prepare your Tax Return we need next documents:

- Any Fiscal information received by post (P60’s, pensions, bank interests).

- Copy of last year tax declaration in Spain, in case it was submitted.

- Copy of a valid residence card/Certificate of European Citizen (if the declaration is a joint, also one copy of partner’s residence card/Certificatel)

- Bank statements marked “Declaración de patrimonio y renta” from ALL accounts in Spain, and a certificate of interests paid/received from any overseas accounts.

- Receipts for all pensions/incomes during the year and details of the amount of taxes already paid. Please, remember that the Spanish Tax year begins on the 1st of January and ends on the 31st of December.

- Rate bills for all the properties in Spain (SUMA bills)

Invoices for all major house alterations or extensions carried out during the year.

- Details of pensions plans with a Spanish company (or a foreign company providing they have an office in Spain)

- Details of all interests received from investments, shares, etc.

- Details of any interests paid on mortgages for your property during the year

- Details of any rental incomes or payments on properties

- If you bought or sold a property during the year you must to bring a copy of the deeds.

If the owner never paid taxes in Spain, it is possible he/she isn’t registered in Spanish Tax System. In this case we will need:

- The ORIGINAL NIE number

- A copy of his/her passport

- Post address in his/her country

- your DATE OF BIRTH, phone number, address IN SPAIN and e-mail, if possible.