TAXES PAYABLE IN SPAIN BY NON-RESIDENTS WITH PROPERTY FOR THEIR OWN USE AND/OR RENTED
In addition to the annual REAL ESTATE TAX to be paid to the relevant City Hall, the non-residents who are owners of real estate in Spain must be very attentive to two other taxes to pay to the State Treasury:
– Income Tax
– Wealth Tax
PROPERTY EXCLUSIVELY FOR OWN USE (i.e. not rented)
For each property owned and used exclusively for their own use, the owners will incur an annual income for non-residents, which is calculated based on an imputed income (fictitious) of 1.1 % of the cadastral value and applying on this income a tax rate of 24% while the people who are resident in EU or EEA territory will pay 19.5 % for 2015, and 19% from 2016. For 2014 the rate was 24.75 % in all cases.
If the property has not been enjoyed throughout the year or during part of the year the property has been rented the imputed income (1.1 % of the cadastral value) is reduced in proportion to the number of days the property has been enjoyed or has been in a position to be enjoyed by the owner.
For example: a household with a cadastral value of €200,000 which has been enjoyed (or has the possibility to be enjoyed) throughout the year 2014, has to be declared an annual imputed income of 2,200 Euros (1.1 % of 200,000 ) and pay 544.50 Euros (24.75 per cent of 2,200 ). And, for example, if the housing has not been able to be used all year round because it was sold on 30 September or because it was rented as of that date, would need to calculate an imputed income of 1,650 Euros (1.1 % of 200,000 x 9 months/12 months) and pay 408.37 Euros (24.75 per cent of 1,650 ).
In any case, for certain properties these charges do not apply: land, buildings under construction, etc.
In regard to the forms and deadlines to declare and pay the tax:
-Is declared with the Modelo 210 and submitted for each property, for which this tax applies.
-You can declare and pay during the following year. Thus, for example, the taxes for the year 2014 can be paid until 31 December 2015. The tax of 2015 can be paid during the entire 2016 and as a new tax of 2015 it can be settled with the Agencia Tributaria.
Non-residents who credited their tax residence in another State of EU or EEA and renting real estate in Spain can pay the income tax (24.75 % in 2014, 20% of the 1/1/15 to 12/7/15, 19.5 % of the 12/7/15 to 31/12/15 and 19% from 2016) on the net yield and not on the gross rent. These people are able to deduct all the expenses of the property (in proportion to the period that the property has been rented): depreciation, property tax, garbage rate, community costs, costs of repair and maintenance, interest on loans that have already been used for the acquisition or improvement of the property, etc. ,
Those non-residents who rent for example business premises and their tenants are practicing an appropriate retention on non-resident tax income can be able to deduct expenditures by submitting statement, requesting the return of all or part of the retention practiced.
Landlords who do not reside in EU or EEA must be taxed on the gross income and must pay 24.75 % for 2014 and 24% for 2015.
A property that has been rented part of the year and another part of the year has been at the disposal of its owner, will have to be declared two types of income: the income derived from rental (gross or net EU residents) and the imputed income depending on the time for their own use.
The Wealth Tax is payable until December 31 of each year (one must only declare the properties, which are owned up to that date) and is paid with the Modelo 714 and normally it will be presented in May and June of the following year. For example, 2014 was paid by 30/6/2015.
In regard to the forms and deadlines to declare the income derived from the rental:
-Is declared with the Modelo 210, which if it is to be paid must be submitted within the first 20 days of the months of April, July, October and January, in relation to income accrued in the previous calendar quarter. In a same Modelo 210 only can be grouped rent the same property and with the same tenant. If, for example, a same property has been rented to 7 different tenants during the 3Q 2015, because the owner has the non-resident status and renting as holiday home then you will need to submit 7 Modelo 210 (one per tenant) from 1 to October 20 2015 (and, if you are a resident in EU or EEA, discounting in each model the costs of the property in proportion to the time leased to each tenant).
-If the declaration statement, Modelo 210, is with result to refund (for example, since this is a rented premises in which the tenant has been practicing deductions, and to deduct expenditures is a refund), may be submitted from the February 1 of the year following the year of accrual of income reported.
This tax has been restored in Spain, in principle only for 2011 and 2012, but has been renewed for 2013, 2014 and 2015, and will be also extended to 2016. This tax must be paid by those people who are residents in Spain and have a property (or a part of it) with a value greater than 700,000 € (minimum exempt). For 2015, persons residing in EU or EEA with real estate in the Balearic Islands are taxed from €800,000 .
Above the exempt amount is paid on the basis of a progressive scale, from 0.2 % to 2.5 %.
This tax is always declared individually. A family that is the owner of a property bought by 1,200,000 Euros doesn’t have to pay because the value for each person is less than 700,000 Euros.
For the purposes of this tax the property should be assessed by the higher of the 3 following values: cadastral value, price or value of acquisition, and checked value by the Tax Authorities. You can deduct the debts by loans invested in the acquisition of the property.
Palma, September 2015
Alejandro del Campo Zafra
Lawyer and tax advisor