Taxes: Resident & No Resident

Taxes: Resident & No ResidentFirst of all, we would like to inform you the Spanish Tax Year is equal to the Calendar Year and it goes from January to December. Most of Spanish taxes are paid one year in arrears which means that every property owner must pay the one corresponding to year “n” in year “n+1”.

Please note you will always be liable to pay two different taxes every year; Council Rates and Property annual taxes payable to Spanish Inland Revenue.

Council Rates will have to be paid once your property is adopted by the Town Hall where the property belongs to which could take a few months after taking possession of it and signing Title Deeds. This is one of the main sources of finance from local Town Halls in Spain and that everyone owing a property will have to contribute on it independently from the fact of living permanently into that property or only using it periodically.

Depending on the qualification of residence of each one, there are very important differences of taxation. People are considered residents in Spain for Spanish tax purposes if they live in Spain for a period of time longer than 183 days per year (approximately six months) or if the centre of their economic interests is located in Spanish territory. In case that none of these factors were clear, people would be considered residents in the country where their families live permanently (i.e. spouse, children under legal age, etc). Accordingly to this fair comment, we could legally distinguish between two different groups of people; RESIDENTS & NON-RESIDENTS.

There would be a first block on which there would be people who would buy a Spanish property for coming periodically on their holiday times. Taking into consideration the majority of the International Double Taxation Agreements, people under these circumstances must pay taxes on their properties or possessions or investments in Spain wherever they are located no matter if the owner is resident in a different country of where those investments are located or built in. In other words, people who are considered Spanish Non-Residents must pay a yearly tax called Non Resident Taxes on their property in Spain.
The amount to be paid is not a fixed rate. Calculating the tax is based on the assessed value called valor catastral. This fiscal value of your property is given by the Town Hall where your property is located. Then, some rates and percentages are applicable to this value to get the final figure.

Please be aware that this tax is not affected by the income produced by the letting of your property. In the event that you decided to rent your property out you should get in contact with our Firm to explain to you the process you may follow to fulfil the appropriate tax forms.

We must call your attention in the importance of paying this tax every year. In the event that you decided to sell your property and you are willing to claim the Capital Gains Tax retention  to the Spanish Inland Revenue, it  is required that the taxes corresponding to the previous years are completely paid.

Every year you should contact the Tax Office in the country where you are permanent tax resident in order to find out if this tax that you are liable to pay in Spain as the owner of a property and as non-resident can be off set against the personal income tax that you are liable to present and pay every year.
Mare Nostrum Law & Tax © 2015
Av.Mariano Ballester 7 - 30710 Los Alcázares - Los Narejos, Murcia
Tel (+34) 968 13 73 74 - Copyright © 2015 - All rights reserved unless otherwise stated.