From 1st January 2008 the wealth tax disappeared, both for residents and non residents, although it has been re-established with temporary effects for the years 2011 to 2017. It is a tax over assets in Spain, and there is a minimum exempt (for 2016, the first 700.000 euros are not taxed).
Non residents are liable to declare the following income arising in Spain:
PROPERTY OWNER´S IMPUTED INCOME TAX
The tax is based on the rated value of the property, the “valor catastral”, and may be 1,1 or 2 per cent of this rated value, depending if it has been revalued or not since 1994. The 1,1 or 2 % are the imaginary income for the non resident and the tax payable is 19 %, EEC residents, (24,75 % in 2014, 19,50 % in 2015) and 24 %, rest of Spanish non residents (24,75% in 2014 ).
If the property is not registered at “Catastro” and, in consequence does not have a “valor catastral”, the taxable base is 50% of the value declared on the purchase deed, and the tax rate is 1,1% of this value.
If the house has been rented during part of the year, the owner is liable to declare only for the proportional part of the year that the house was not leased. If the house was rented the whole year, there is no liability.
The declaration (Form 210) is annual and has to be submitted within the following year (for instance: the 2014 deadline is on 31st December 2015).
OWNER´S INCOME ON RENTAL
The tax rate is 19 %, EEC residents, (24,75 % in 2014, 19,50 % in 2015) and 24 %, rest of Spanish non residents (24,75% in 2014 ).This percentage is applied to the lease income. From the income it is possible to deduct all necessary expenses (insurance, reform costs, interest, depreciation …).
Only ECC citizens are allowed to deduct from their taxes the expenses related to the rent. In order to be able to prove that condition, it is convenient to get, annually, a fiscal certificate of residence issued by the Tax Agency.
The liability to declare (Form 210) is within 30 days of receiving the income, but, to save paperwork, it is possible to submit the forms quarterly (April 15th, July 15th, October 15th and January 15th). If the tax result is negative, the liability is annual, on January 20th of the following year.
Capital gains obtained as a result of selling a property, located in Spain, are subject to tax.
In general, net gains shall be calculated based on the difference between the cost price and transfer value of the property.
The cost price is the real amount for which the asset was acquired, adding the sum of the costs and taxes inherent in the acquisition, excluding interest. Until 2014, this value could be corrected, according to the year in which the property was acquired, by applying updating coefficients tha twere established annually in the General State Budget Act. Since 2015 it is not allowed applying the coefficients.
If the building being transferred had been rented, the value determined should be reduced by the amount of the depreciation corresponding to the rental period. This depreciation will also be updated in accordance with the year to which it corresponds.
The transfer value is the real amount for which the disposal was made, reduced by the amount of any costs or taxes related to the transfer paid by the seller.
Nevertheless, if the property is transferred by an individual who purchased it prior to 31 December 1994, net gains will be subject to a transitory scheme and the previously calculated figure will be reduced.
If the seller acquired the property on two separate dates or the property has been renovated, calculations must be made as if there were two net gains.
An exemption applies to 50 percent of the capital gains resulting from the sale of urban real estate in Spain which has been purchased between 12 May 2012 and 31 December 2012. This partial exemption is not applicable in some postulations as sales between parents or linked companies.
Tax rate is 19 %, ( 21% in 2014 and 19,50 % in 2015 ) to be applied over the capital gain.
The person who acquires the building, whether resident or non-resident, is obliged to withhold and deposit with the Public Treasury 3% of the consideration agreed.
For the seller this amount constitutes a payment on account for the tax. The purchaser will give a copy of form 211, used to deposit the withholding, to the non-resident seller, so that the seller can deduct this withholding from the tax to be paid as a result of the tax return including the capital gain. Should the amount retained be greater than the tax liability, it is possible to obtain a refund of the difference.
The seller is liable to submit the tax refund ( through the Form 210 ) within three months from the end of the period that the person acquiring the building has to deposit the withholding (this time period is one month from the date of the sale).
Refund of excess withholding. Should there be a capital gains loss, or if the tax withheld is greater than the whole payment due, you will have the right to have the excess amount withheld refunded. The refund procedure is initiated by filing the tax return form.
Non residents trading/carrying out an economic activity in Spain, are liable to declare their earnings arising from:
1.- operations carried out via permanent establishment located in Spain.
2.- operations carried out without permanent establishment, only in the following cases:
* Activities carried out on Spanish territory, with some exceptions ( installation or assembly of machinery or facilities coming from abroad, when these operations are performed by the supplier and their amount does not exceed 20% of the cost price, purchase/sale of goods, … ).
* In the case of the provision of services used on Spanish territory.
* They are derived from the personal action on Spanish territory of artists and sports people.
The taxable base should be calculated according to the guidelines in the General Corporate Tax System, with a possibility to compensate negative taxable bases from prior financial years. The allowable deductions will depend on whether it works or not through a permanent establishment:
- income obtained through permanent establishment:
The amount of the allowances and deductions specified in articles 30 to 44 of the Corporate Tax Law may be applied to the total tax amount under the same conditions as the corporate tax ( all expenses directly related to the income: purchases, rental, wages, social security, depreciation, interest, … ).
- Income obtained from sources other than a permanent establishment:
Only the following is deducted from the amount payable:
o Deductions for donations made under the same conditions set out under income tax law.
o Tax withholdings that have been applied to the taxpayer's income.
Generally speaking, non-deductibility of the payments that the permanent establishment makes to the head office for fees, interest, commissions, technical assistance services and for the use or assignment of assets or rights.
Deduction of management and general administrative expenses are subject to a number of requirements.
The applicable tax rate is 30% for tax periods starting after 1 January 2008.
The tax refund shall be submitted ( through the Form 200 or 220 ) within the 25 first days of July of the following year.
Property Tax - IBI
This is a tax charged by local Councils and paid by property owners.
All property within the Council's area is included on a tax register ( Catastro ) and is assigned a value (Rateable Value – Valor catastral ). The amount of tax to be paid is calculated by applying the tax rate set by the Council to this Rateable Value.
A bill is sent out for payment of this tax every year for every property on the tax register. Usually, Councils accept payment of the tax by direct debit from a bank account, which facilitates payment within the time period set and thus avoids any possible surcharges.
The payment deadline depends on the Council, although it is normally around the months of September, October or November each year.