The tax requirements for non-residents are as follows:
- If you are a resident, you are subject to personal income tax (including capital gains tax) and property tax (IBI).
- If you are non-resident, you are subject to personal income tax (including capital gains tax), property tax, plus an additional non-resident property tax. Personal income tax for non-residents only represents income from the property; income from salary is declared where you are a resident. If the property is for your own use, you must pay a certain percentage of your property; if the property is rented, you declare the amount you have received in rent.
Non-residents: Personal income tax
If the property is owned by a married couple or by various individuals, each person is treated as a separate taxpayer and must file returns separately.
Depending on what the property is used for, the income subject to taxation is as follows:
Property for own use
Filing period: January 1 – December 31 of the following year, but if you choose direct debit for your taxes, the filing period ends December 23.
The income to be declared is a percentage of the cadastral value of the property, as indicated on your property tax receipt. It is 2%, or 1.1% if the property’s cadastral value was revised after January 1, 1994. If you are an EU resident, the tax rate is then 19% of this “income”. If you are not an EU resident, the tax rate is 24%. If you didn’t own the property for the entire year or if it was rented for part of the year, then you would prorate the amount accordingly. Note that the rules regarding this tax were modified significantly on March 1, 2004.
A non-resident whose only taxable property in Spain is a dwelling fundamentally for own use may elect to use a single form for declaring both property tax and personal income tax on the estimated income from the use of that dwelling.
Property used for rental
Form 210 for ordinary return, using general section 210-A and indicating income type 01.
Filing period for Form 210: quarterly, during the first 20 days of April, July, October, and January, but only if you owe money.
The income to be declared in this case is the total amount collected from the tenant, without deducting any expenses. If you are an EU resident, the tax rate is then 19% of this “income”, otherwise the tax rate is 24%.
This income is chargeable when it is claimable from the tenant or when it is collected (if earlier). Each rent due is taxed separately and, consequently, a return must be filed for each rent due. Or, collective returns may be filed which may include various chargeable income of one or more taxpayers falling within a calendar quarter.
A tax form must be sent after the termination of every rental agreement, in addition to the regular declaration of income.
Non-residents: Additional property tax
Form 714, the same as for resident taxpayers
Filing period: May 1 – June 20 of the following year.
Non-residents must file this tax form if they own property in Spain on December 31 of each year, regardless of the value of the property. The tax is calculated based on the highest of the following three values:
The cadastral value, as reflected in the property tax receipt for the year to which the return refers.
- The value assessed by the Spanish Tax Office for purposes of other taxes.
- The purchase price.
- The taxable amount is based on the value plus any charges or liens on the property minus the mortgage the property has, if any.
Each individual must file a separate return; if a property is owned by a married couple or by various persons, each one of them must file a single return for the portion of the house owned (usually 50%).
Residents and non-residents: Capital gains on the sale of property
Form 210 (using section 210-H). When the property being transferred is owned jointly by a married couple in which both spouses are non-residents, a single return may be filed.
Filing period: three months from the end of the period in which the purchaser of the property must pay the withholding tax (which is one month from the date of the sale).
Capital gains on the sale of property are taxable income that must appear on your income tax form for both residents and non-residents. This income is chargeable when the capital gain takes place. The gain is generally the difference between the sale and purchase values. The purchase value is the purchase amount plus the expenses and taxes paid that were involved in the purchase (with possible adjustments based on the purchase date). The sale value is the sale amount minus the expenses and taxes that were paid. If you are an EU resident and you have subsequently reinvested this capital gain in a new property, you may reduce the capital gain by the amount of the new purchase, as long as the reinvestment takes place before the deadline to file this tax form.
If the property has been rented, the purchase amount must be reduced by the amount of depreciation corresponding to the rental period. The depreciation is also updated on the basis of the year in question.
Withholding tax: If the seller is non-resident, then the buyer must withhold 5% of the agreed price (regardless of whether the buyer is resident or not), using Form 211 to pay this 5% to the tax office. The buyer then provides the non-resident seller with a copy of the form, so that the seller may deduct this withholding from the tax payable in the return declaring the capital gain. If the amount withheld exceeds tax payable, the excess is refundable. If the tax withheld is not paid, the liability for the tax is attached to the property.