Non-residents pay taxes

Non-resident tax in Spain

Many non-resident property buyers in Spain are unaware that they automatically have to pay a range of property-related taxes when buying property in Spain. The Spanish tax office will not provide you with sufficient information and it is up to you to inform yourself accordingly.

In this article, we'll keep it short and simple, and will only address one, often forgotten, tax: the Non-resident tax orIncome taxfor non-residents.

This tax is due once a year, usually at the end of December. This tax applies nationwide in Spain.All non-residents who own property in Spain, have to pay this tax once a year.

Even if your property is in SpainNOT rent, you have to pay this tax.

Even if you own the property temporarily rent, on the days on which you do not rent it, the property will be credited proportionally to your imputed income on the remaining days.

Basically, this tax is a legal invention that assumes that you receive a financial benefit (income) from your Spanish property. Because of this, it is considered non-resident imputed Income tax as it is considered income. The Spanish tax authorities believe that an owner gets a benefit in kind from owning real estate, whether or not they do, and taxes it accordingly.

Regarding the ongoing pandemic, the Spanish tax office believes that it will tax the days when your property is vacant and not rented out despite the mandatory curfew.

  • When is this tax levied? It is due on December 31 of each calendar year.
  • How much is the tax? It's pretty low, usually a few hundred euros.
  • What if i don't pay the tax? You will have to pay penalty interest and if you want to sell your property the mandatory 3% non-resident withholding on your sales proceeds will be forfeited.
  • Is there a limitation period? Yes. Currently, the tax office cannot reclaim this tax for 2020 until 2015. So if you own a property in Spain and are not resident in Spain, you will need to file tax returns for the past 5 years to be tax compliant.

Please contact us if you would like to file your non-resident tax.

At LNA we can help you buy, sell or rent your property in Spain. We have 17 years of real estate transfer and tax experience.

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