Owners of rental property in Spain are liable to pay Spanish tax regardless of whether or not they are resident for tax purposes there. If you’re living in Spain for more than 183 days in a given tax year (1 Jan – 31 Dec) you’re considered a resident for tax purposes, even if you have not obtained a Spanish residence permit.
The current Spanish rental income tax rate for non-residents is 24% of gross income with no deductions permitted for expenses. However, EU residents may deduct expenses against rental income provided such expenses are directly related to the rental income generated from the Spanish property.
They can also avail of a reduced income tax rate of 19.00% Spanish rental income must be reported and paid one month after the rent is received.
Deemed Rental Income
Tax on deemed rental income is payable on urban property for the period during which the property is not let. The taxable base is calculated at 2% of the registered value (‘valor catastral’) of the property that has not been evaluated for the last 10 years. For registered value reviewed in the past 10 years, the taxable rate is calculated at 1.1%. General income tax rate is applicable on the base.
Spanish Local Property Tax
Spanish Local Property Taxes (rates) are based on the rateable value of the property and generally vary between 0.4% - 1.1%. Rates depend on whether the property is urban or rural and varies per region. They are generally due from September to November each year. An annual local tax on mains drainage & refuse collection is also payable.
Spanish Capital Gains Tax
A non-resident selling property in Spain will pay a rate of 19.00% Spanish Capital Gains Tax (CGT) on the gain from the sale of the property. The purchaser must withhold a public treasury tax of 3% of the purchase price at the time of the sale and pay it to the Spanish tax authorities within a month of the transfer.
If the amount withheld by the purchaser exceeds the CGT payable, the seller may claim a refund of the excess amount. A Spanish CGT tax return should be filed within three months of the payment of the withholding tax.
Non-resident owners of Spanish may be obliged to pay wealth tax depending on the value of their Spanish property. The wealth tax rate ranges from 0.2% to 3.7% of the value of the property. There is a general exemption of €700,000 which is not subject to wealth tax.
UK & Irish Residents
If you are resident in the UK or Ireland you will have to report any income received in Spain on your annual tax return. There are double taxation agreements in place between Spain and both Ireland and the UK so double taxation relief will usually apply. Your PTI Account Manager can advise on double taxation relief and assist with the filing of your UK or Irish tax return.
Property Tax International can organise the following services for you
- Prepare and file your Tax Return in regards to your actual Spanish Rental Income
- Prepare and file your Tax Return in regards to your deemed Spanish Rental Income
- Assist in payment your Income Tax liability to the Spanish Tax Office
The information provided here is intended as a guide only. While Property Tax International Limited makes every effort to ensure that the information contained herein is accurate, we take no responsibility or liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon.