I understand that owners of a property, or a share of one, in Spain who are non resident have to name a fiscal-legal representative to act for them in front of the Spanish Tax authorities for the payment of their non resident tax. Is this true? Can you please clarify what the real situation on this matter is?
Thank you for your query.
Firstly, we should immediately make it clear that ALL non tax residents in Spain who are owners of a property, or have a share in one, should pay Non Resident Income Tax, even if they do not have any other income.
This is very important as there are a large number of non residents in Spain that are not submitting their non resident tax returns, and this could mean trouble for them.
Secondly, we should point out that it is not always mandatory for non residents to appoint a fiscal-legal representative. This will be necessary only for those cases specified in the Income Tax Law for Non Residents (Royal Decree Law 5/2004).
Article 10 of this Law states under the section entitled ‘Representatives’ that (non resident) taxpayers are obliged to name a legal fiscal person or company with residence in Spain to represent them in front of the Tax authorities in the following cases:
1) When they operate from a permanent establishment (such as a shop, office or warehouse) when providing services, technical assistance, installations or assembly works derived from engineering contracts etc in Spain.
2) When required by the Tax Office due to the amount and characteristics of their assets.
3) When the non resident, owner of assets or rights in the Spanish territory, has his habitual residence in a country or territory which has no tax information exchange agreement with Spain i.e. those countries that have not signed an agreement with a clause for tax information exchange with Spain to avoid double taxation; or any other agreement in respect of tax information exchange that could suit the same purpose. The most evident examples of these countries or territories are the so called ‘tax havens’.
Thus with the three above mentioned situations the non resident tax payer or his representative are obliged to inform the Spanish Tax Authorities of the name of the duly named representative.
Breach of the obligation of naming a representative is considered a serious tax violation punishable with a fine of €2,000. If the non tax resident has his habitual residence in a country or territory with no tax information exchange agreement in place with Spain (as described above) this fine can rise to be €6,000.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
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