Annual Tax : Frequently Asked Questions

What tax do I need to pay?

The Spanish government levies an annual tax specifically aimed at non-resident property owners called “impuesto sobre la renta de no residentes” with the literal translation being “income tax for non-residents”.

When is the tax year in Spain?

The tax year is the calendar year – 1st January to 31st December – and non-residents have a year following the tax year in order to submit tax returns. So 2010 tax returns are due by the 31st December 2011.

How is the tax calculated?

The tax is based on either 1.1% or 2% of the rateable value of your property. The actual % will depend on your local council and when they last valued your property. This figure is your “notional income” for tax purposes, and will be taxed at the non-resident tax rate of 24%.

Can you provide an example?

If your rateable value was €50,000 and your local council percentage was 2%, then 2% x €50,000 = €1,000 would be your “notional income”, which would be taxed at 24%, so 24% x €1,000 = €240 total tax to pay.

Who needs to pay the tax?

Every non-resident owner of property in Spain -  so if there are 2 owners of the property they need to account each year for their “share” of the tax. So this means that a tax return is required from each owner of the property.

What if don’t yet have a rateable value?

Until a rateable value is assessed, 50% of the purchase value must be used as a replacement value. Although in practice this can often be significantly more than the actual rateable value.

What if I have more than 1 property?

The same process applies for any addtional properties.

What if I rent out the property?

Any income or profit you generate through renting your property is subject to a different tax in Spain, and so in this situation the nominal income tax will be pro-rated for that part of the year when the property was not rented. Please click here to find out how Numerological can help with you this tax.

What if I bought or sold the property during the year?

The notional income tax will be pro-rated for that period of the year when the property was still under ownership.

What happens if I do not pay the tax?

The Spanish tax office can charge penalties and interest on any outstanding tax, and this may create problems when you come to sell the property.

If you would like more information, the please give us a call today.