Complete guide of property taxes in Spain for non residents
Any person who own a property in Spain and is not habitually resident (live less than 183 days in Spain) is considered a non-resident for tax purposes in Spain and must pay non-resident tax for that property. Find here all info for the property taxes in Spain for non residents.
First of all, see here how to calculate the number of days to be a non-resident for tax purposes in Spain.
If you have a home in Spain and you are a non-resident for tax purposes, you must pay tax on it whether you rent it out or not, as residents who have a second home do.
Non-residents with property in Spain must impute presumptive income in a similar way to residents. And if they are renting the property, they must declare the positive income.
Yearly property tax in spain
If you are a non-resident and you are going to acquire a property in Spain for private use (without renting it out or using it for economic activities), you will have to pay tax on it under the Non-Resident Income Tax (IRNR).
Owners of a property who are non-residents in Spain are taxed under the non resident tax in Spain on property.
Even today there are foreigners who do not know that they have to pay taxes for owning or renting a property in Spain.
If they are individuals and the property is not rented or used for economic activities, the rules for the imputation of real estate income provided for in the IRPF apply.
How the property taxes in Spain for non residents is calculated?
Thus, the owners must declare the following income each year:
- In general, 2% of the cadastral value of the property.
The cadastral value is shown on the IBI bill that you pay to the town hall or to SUMA.
- This percentage is reduced to 1.1% when the cadastral value has been revised in your town or modified in the same tax period or in the previous ten tax periods.
Here you can see if the cadastral value has been revised in your town.
- If the property has no cadastral value or if the cadastral value has not been notified to the owner, the imputation is 1.1% of 50% of the acquisition value (or 50% of the assessed value for the purposes of other taxes, if higher).
This imputation is made for the number of effective days that the property has been at the disposal of the owner.
- That is to say, if you have been the owner all year round: 365 days.
- If you bought the house on 20 March: 287 days.
Thus, if a non-resident bought a house on 1 June 2023 with a cadastral value of 200,000 euros updated in 1999, in 2023 he will have to declare an income of 2,345 euros (200,000 euros x 2% x 214 days / 365 days) in the IRNR.
2,345 is the tax base on which the tax rate is applied.
Non-resident property tax rate?
As for the applicable rate, it depends on the country of residence.
- If the holder resides in the EU, Iceland or Norway, he/she will have to pay 19% on the presumed income,
- Whereas the applicable rate is 24% if he/she resides in a country other than the above. Thank you Brexit.
When is the non-resident property tax is due?
To pay the tax, you will have to file the form 210 within a very long period of time:
- until 31 December of the year following the year in which the income is imputed.
For example, an income attributable in 2023 can be declared until 31 December 2024.
Be careful if it is payable before 20 December.
Form 210 can only be filed online.
New non-resident tax in 2024
From 2024, non-residents will be able to file form 210 for their rentals on an annual basis instead of quarterly.
Tax on rental income spain non resident
Non-resident tax when renting your property in Spain
The tax rate applicable to this income is 19% for residents of the European Union, Iceland, Norway or Liechtenstein, and 24% in all other cases (thanks Brexit, again).
Annual non-resident tax periodicity for the redemption of income obtained from the rental of a home
When paying IRNR, the non-resident taxpayer must file form 210.
Until now (until 2023), when the result of the tax return was to be paid, this form had to be filed every quarter during the first 20 calendar days of April, July, October and January (depending on the quarter).
Well, from 2024 onwards, rentals of the same property may be grouped together and declared on an annual basis. In this case, form 210 for the 2024 rentals must be filed from 1 to 20 January 2025.
How to calculate the non-resident tax on the rental income of a property
When a non-resident owns a property and rents it to private individuals (so that the income received is not subject to withholding tax), he/she must pay non-resident income tax (IRNR).
How is the rental income calculated for property taxes in Spain for non residents purposes?
In the case of rented properties, the non-resident must pay IRNR tax in the following terms:
If he/she resides in another EU country, Iceland or Norway, he/she can deduct the corresponding expenses according to the IRPF or Corporate Tax rules (depending on whether he/she is an individual or a legal entity).
What expenses are deductible when renting a property for non-resident tax purposes?
- Deductible expenses are those necessary to obtain the rental income.
- The expenses are deductible only for the rental period, i.e. the expenses must be apportioned.
- Deductible expenses must be exclusive to the activity of renting the property. * For example, if you buy an electrical appliance and rent it to other people and you enjoy the property while it is not rented, the expense is NOT DEDUCTIBLE.
- In general, the following expenses are deductible:
- Electricity and water
- Internet
- Rental management or key holding
- Advertising and/or internet portal (Booking Airbnb, etc.)
- Cleaning
- Maintenance and repairs
- Community (Prorated)
- Ibi (Prorated)
- Insurance (Pro-rata)
- Loan interest
VERY IMPORTANT
If you are a tax resident outside the EU, Iceland or Norway you will not be able to deduct any expenses.
No offsetting between income
Rental income is determined individually and separately for each property, with no possibility of offsetting the positive income of one property against the negative income of another, nor of offsetting the negative income of one property against the positive income generated by the same property in subsequent years.
How much non-resident tax do I pay for renting a house?
As with the imputation of real estate income, the tax rate will be 19% for residents of the EU, Iceland or Norway,
And 24% in all other cases. Thank you Brexit.
When is the non-resident tax payable?
Regarding the tax settlement:
- Until 2023, If the result is to pay the settlement is quarterly, and the form 210 will be presented during the first 20 calendar days of April, July, October and January (depending on the quarter).
- From 2024 onwards, rentals of the same property may be grouped together and declared on an annual basis. In this case, form 210 for rentals in 2024 must be filed from 1 to 20 January 2025.
- If the result is a zero tax liability, the form must be filed from 1 to 20 January of the following year.
- And if the result is a refund, the tax return must be filed from 1 February of the following year, and always within four years of the end of the period of declaration and payment of the withholding.
Non-resident property taxation of a company
Sometimes it is a company that has the money to invest and in order to avoid the taxes of taking the money out of the foreign company, it is the foreign company that invests in the property to rent it out.
A non-resident friend of yours is going to buy a property in Spain to use it for private purposes during his holiday periods and is considering doing so through a company established abroad.
Non-resident taxation of a foreign company for rental purposes.
However, your acquaintance has indicated that he is considering acquiring the property through a company in his country in which he has shares.
As the acquirer will not be a natural person, the company will not be obliged to make the above-mentioned income imputation in the IRNR.
Related transaction
However, be aware that if you plan to use the property for long periods, your tax costs for acquiring it through a company may be even higher.
If the non-resident (alone or together with family members up to the third degree) owns at least 25% of such a company, the use of the property will be considered a connected transaction.
This will also oblige the company to declare a presumptive income on form 210.
Presumed Rent
The company will be deemed to receive rent for the days on which the non-resident uses the property, which must be valued at market rates.
For these purposes:
If the company is resident in another EU country, Iceland or Norway, it will be able to deduct the expenses derived from the property according to the corporate income tax rules.
Otherwise, the company will not be able to deduct expenses.
Example of a non-resident’s rent for an individual or a foreign company
A non-resident acquires a property in Spain with a cadastral value of 100,000 euros – updated 15 years ago – to use it for three months of the year.
The market value of the rent for those three months is estimated at 3,600 euros and the deductible costs at 1,000 euros.
See what the annual tax cost will be for an individual and a company:
Acquirer natural person:
Concept EU No EU
Income to declare 2.000 2.000
Tax rate 19% 24%
Annual tax cost 380 480
Acquiring company:
Concept UE No UE Paraíso Fiscal.
Income to declare 2.600 3.600 600
Tax rate 19% 24% 24%
Tax to pay 494 864 144
Special levy 3%. 3.000
Annual tax cost 494 864 3.144
If the company is resident in a tax haven, the special IRNR tax of 3% of the cadastral value of the property is also applicable.
In order to pay this tax, the company must file form 213 every year.
The special tax can be deducted from the income to be declared in the IRNR in form 210.
The non-resident should be warned that, in these cases, the use of the property will be considered a related-party transaction for which the non-resident company will have to declare an income in the IRNR, which may entail higher annual tax costs.
