Non-Resident Tax in Spain: What You Need to Know
If you own property or earn income in Spain but are not tax resident in Spain, you may be subject to non-resident tax. Non-resident tax in Spain is the tax paid by people who are not tax residents in Spain.
Understanding the rules and regulations can be overwhelming, but this guide will help you simplify the process and make sure you comply with Spanish tax laws.
What is tax residence in Spain?
There are many people who confuse tax residence in Spain with being resident in Spain and they are different things.
You can be a tax resident in Spain and not be resident in Spain.
Having residence in Spain is an indication of having tax residence.
Tax for non residents in Spain is for people who live more than 183 days in Spain. Therefore, if you do not live more than 183 days in Spain, you do not have tax residence in Spain.
To have the residence in Spain is to have the green document (for the countries of the European Union) or the TIE (for the other countries including the United Kingdom) and that is given by the Spanish police. The green document is the proof of being registered on the list of Europeans residing in Spain. This document allows you to have access to public health care.
Non-Europeans are given the TIE. British nationals who were resident in Spain until 2022 and who had a green card can exchange their green card for the TIE.
If you are tax resident in Spain, you have to pay tax on your income in Spain and worldwide.
If you are not tax resident in Spain, you only pay tax on your income in Spain.
Who must pay the non-resident tax in Spain?
Tax for non-residents in Spain applies to individuals who own property or earn income in Spain but are not considered residents for tax purposes. This includes individuals who spend less than 183 days a year in Spain or do not have their main residence in the country. Non-resident taxation may also apply to inheritances or gifts received in Spain by non-residents.
In our area, traditionally the non-resident tax is the taxable income imputed to individuals owning urban real estate not used for economic activities (the same as owners with tax residence in Spain who pay on their second and subsequent home).
Therefore, the non-resident tax of imputed income is the one that is paid on the Real Estate located in Spanish territory, it is paid by foreigners who have a house in Spain.
It is paid through form 210, which must be filed online. The form 210 of imputation of income is paid on the 31st of December of the following year for the days of possession of the house. It is paid by direct debit from a bank account in Spain or abroad.
It is important to consult a tax professional to determine your specific tax obligations.
At Asesoria Orihuela Costa we are experts in filing your non-resident tax in Spain.
How to calculate non-resident tax in Spain?
Calculating non-resident tax in Spain can be a little complicated, but it is crucial to understand the process to avoid any tax-related problems.
The calculation of non-resident tax in Spain
The taxable base for non-resident tax in Spain is the cadastral value of the house multiplied by 1.1% or 2%, depending on whether the cadastral value is updated or not, and the taxable base is multiplied by the tax rate.
The tax rate for non-residents in Spain is the general tax rate in force:
- Residents of the European Union, Iceland, Norway and, from 11-07-2021, Liechtenstein: 19%.
- Rest of taxpayers: 24% (Thanks Brexit)
Deadlines for paying non-resident tax in Spain.
As mentioned above, non-resident tax in Spain must be paid annually, with the deadline being 31 December of each year. However, if you sell a property in Spain, the buyer must pay the non-resident tax withholding within 30 days of the sale. We will look at non-resident tax in Spain in another post.
It is essential to bear in mind that non-payment of non-resident tax in Spain can lead to penalties and legal problems, so it is crucial to keep informed and meet all deadlines.
Other taxes on non-residents in Spain
But there is more taxation of non-residents in Spain:
Depending on whether non-residents have in Spain what is called a permanent establishment situated in Spanish territory or without permanent establishment.
Income from work
In general, when it derives from work carried out in Spanish territory.
Pensions and other similar benefits.
When they derive from employment in Spanish territory.
Remuneration of directors and members of Boards of Directors, Boards acting in their stead or representative bodies.
When they are paid by an entity resident in Spanish territory.
Income from movable capital.
Dividends and other income derived from the participation in the equity of entities resident in Spain.
Interest
Income from real estate capital.
Income derived from the rental, directly or indirectly, of real estate located in Spanish territory or of rights relating to the same.
If you have a house in Spain and rent it out, you must file and pay form 210 quarterly, but if you do not rent it out, only annually.
WARNING: If you have a house in Spain and rent it some seasons and not others, you must file the quarterly and annual forms.
If you are resident in a European country, you will be entitled to deductions; you can deduct expenses such as repairs, maintenance and property management fees.
If you are a non-EU resident, you will not be able to deduct the costs of renting out your property, and you will have to pay tax on the total of your income (again, thanks Brexit).
Capital gains.
When non-residents sell a house in Spain.
In the title deed, the buyer obligatorily withholds 3% from the seller, and then the seller files the non-resident tax form 210. If he has made a profit, he pays the difference; if he has not made a profit, he applies for a refund.
