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Taxation in Spain
If you have a property or live permanently in Spain, make sure you fulfill with your tax liabilities and duties.
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Taxes in a different country could be a hard, complex, expensive and time-consuming matter, and it will probably cost you more than you imagine if you are not a specialist on this area. The give you a quick picture of the Spanish taxation system that may me applicable to both a resident as well as a non-resident citizen so that anybody can understand how important is to take a proper advice on time.
Resident taxation in Spain
The personal tax liabilities when someone becomes resident in Spain are:
Resident Tax Returns (form 100)
To do that, it is necessary to declare all your worldwide rent (not only those obtained in Spain): incomes from job/pensions/rentals; interests, dividends or bonds paid; investments and shares…; properties (rented or not rented); sales done (properties, investments, shares in companies…). The tax rate is calculated depending on these incomes and the personal situation of the tax payer.
Wealth Tax (form 714)
Depending on the region of Spain, it may be necessary to declare all your worldwide wealth (not only those situated in Spain): properties, financial investments, shares in companies, bank account balances and deposits, and, in general, any asset with a value. The tax rate is paid on the total value of these assets with some limits and deductions.
Informative Abroad Assets Tax Declaration (form 720)
Those resident citizens with assets abroad of Spain should analyze whether they have the obligation to present the annual this informative tax declaration. It is applicable in case these assets have a valuation above 50.000€, per categoty (properties, financial investments, shares in companies, bank account balances and deposits). It is not a declaration to pay taxes, but it helps as control to the tax authorities of the future tax returns and/or wealth tax declarations presented.
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Non-Resident taxation in Spain
Congratulations! You have bought a property in Spain and will enjoy it many years, but there is a question you do yourself now: what are my tax obligations and formalities to avoid any problem with the tax authorities? Let us explain briefly what the different tax liabilities to take into consideration.
Non-resident tax is a personal tax and it is an obligation to all owners who are holders of a property in Spain. The non-resident tax declaration is presented in different periods and ways, depending on the following situations:
Properties not rented
It is also called as “imputed income”. The tax declaration is presented once a year, from the 1st of January to the 31st December of the following year (i.e. 2024 period has to be presented during 2025). The tax is a fix rate, which depends on the tax value of the property (different from the price paid to the seller on completion at the notary –purchase value- and from the Cadastral Reference Value). The tax value is shown on Catastro Registry and within the yearly council tax receipt (IBI) released by the City Council where the property is situated.
Properties rented
The tax declaration is presented every year (tax declarations since 2024 onwards) and/or every quarter of the year when the property is rented (tax declarations before 2024). The tax is variable, which depends on the net profit obtained on the rentals, that is, incomes less expenses (directly or indirectly linked to the rental incomes or the property). Only UE citizens can opt for the deduction of these expenses .
Properties sold
When a property in Spain is sold, the seller can obtain a profit or a loss. In the event the result is a profit, each seller must pay a capital gain tax on the net profit (not on the selling price), that is, on the result obtained as difference between the purchase price (adding the purchase expenses) and the selling price (adding the selling expenses). To this respect, when the seller is considered as a non-resident citizen in Spain, an amount of a 3% on the selling price will be retained by the buyer by law in concept of advanced payment to the potential non-resident capital gain tax to pay . This retention could be lower or higher than the final result obtained (profit or loss), so depending on this, an extra amount should be paid by the seller after the sale to complete the total applicable capital gain tax, or the seller could have the right to claim back for part or all the 3% tax retained in advance through a special tax refund process.
Property Taxes in Spain
Council Tax
Known as IBI, is the tax the property pays every year an annual tax to the Town Hall where the property is situated. Its amount depends on the tax value of the property (not the price paid at the notary to buy it).
Stamp duty Tax
It is the tax all buyers or a property will pay after signing at the notary. The rate is from 6% to 10% depending on the region the property is place. In general terms, the deadline to pay it is 30 days after completion.
Plusvalía Tax
When you sale a property, this tax could be applicable depending on the result of the sale (profit or loss). It depends on the number of years a person has own the property before selling it. Nowadays there are some different points of view in respect to the obligation to pay it even when you obtain a loss, so do not lose your opportunity to claim for your rights.
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Other Taxes in Spain
Car Tax
The tax you pay for your vehicles with Spanish plate registered in the town hall where you have your property or residence. It is usually paid once a year and is managed directly by the town hall.
Inheritance Tax
The tax all inheritors pay to receive any asset in Spain inherited by the deceased person. The deadline is 6 months since the deceased date and it can apply for some reductions and bonificados depending on the relationship between the inheritor and the deceased person.
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