Income Tax for the Non residents in Spain. Letting, discrimination, expenses

If you are considered a non-tax resident in Spain and you own properties in this country, you need to be aware of the tax obligations that affect you.


In addition to the annual local rates which are collected by the Town Hall through the IBI receipt (Impuesto de Bienes Inmuebles); you must also declare your assets in the Non-Resident Income Tax return.


The amount of this tax will depend on whether the property has been rented out at any time during the year for financial gain.


If you do not rent the property out

If your property has not earned any income, which means it has not been rented out, you must declare in one annual tax declaration a small percentage of the property’s cadastral value. The cadastral value is a tax value that the Spanish Administration gives to private properties and you can find this at the Catastro Office or by looking at the copy of your receipt of the IBI.

The percentage of this cadastral value charged for this Non-Resident Income Tax depends on whether the cadastral value has been subject to revision in the last 10 years or not. On this the percentage to be paid in tax will be 19 per cent or 24 per cent depending if the property owners are resident in the European Union (or countries with special agreement with the EU) or not.


If you rent your property out

If you have a property in Spain and it is let out, you must declare the amounts you have obtained for the letting. Unlike the case above, the declaration of the income obtained from the rent of your property must be made quarterly.

If you are non-resident in Spain, but resident in another country member of the European Union, Iceland or Norway, you will be allowed to deduct from the amount you declare the expenses related to and required for the letting, for example, the local IBI tax, the cost of community charge (backed by receipts), mortgage interest etc.

If your property has been rented for just a few months in the year, you must declare quarterly for the periods where it was actually rented and declare at the end of the year the balance of the months where it was not rented out.

Owners who are resident outside of the European Union, Iceland and Norway cannot currently deduct any expenses from taxes due from the result of lettings.


We at White Baos Lawyers (as experts who give legal advice to expatriates) believe that this is a clear discrimination as such a distinction does not exist as far as Inheritance and Gift Taxes are concerned and should be contested.


In actual fact, the Spanish Supreme Court issued a very important resolution during 2018 which established that tax discrimination against taxpayers who are resident outside of the European Union, (which makes them pay more taxes only because they live out of the EU), is against the principle of free movement of capital of the European Union, and we conclude that this also applies to Income Tax for Non-Residents.


Therefore, if you are resident outside of the European Union and wish to take action to claim that your expenses should be deducted or if you need advice about Income Tax for Non-Residents, contact us and we will help you.


The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.


Carlos Baos (Lawyer)

White & Baos

Tel: +34 966 426 185


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