What taxes do I have to pay in Spain?
Many clients come to us asking about taxes: what must be paid, why and about the deadlines. With this post we’ll try to give you a brief summary, only applicable to non-resident property owners in Spain.
IBI: this is the Council Tax and it’s a yearly tax that every homeowner must pay, even if you don’t use or live in your property. This tax funds local services such as fire and police services, libraries, roads, etc.
The amount you’ll pay is based upon your property’s cadastral value and each Town Hall applies a percentage, currently between 0,4% and 1,3%, to calculate the final sum. Since it’s a local tax the deadline to pay varies significantly. For example, in Murcia city it’s from the 1 st of May till the 5 th of July, in Orihuela the deadline was 4 th of October, but it has been extended until the 5 th of November because of the damages caused by the rough weather.
We recommend setting up a direct debit with your Town Hall. This way they’ll take the money automatically from your bank account every year. If you forget to pay, there will be penalties and late interests added to the initial sum. You might even end up with your money seize from your bank account a few months later.
Non-Resident Tax:
This tax is paid on second residencies (not on your main residence), when the property is not rented out. The final amount is calculated from the cadastral value, applying a percentage of 1,1% or 2%. The difference between the percentages depends if the cadastral value has been checked during the last 10 years or not. Then another percentage is applied, 19% or 24%, depending if the homeowner is an EU citizen or not.
This is tax is submitted yearly but, if you are not sure if you qualify as a non-resident there is a
general rule: if you spend less than 183 days in Spain within a year then you are. Otherwise you are a resident and must submit Income Tax. If you are still not sure contact us with your query.
Rental Tax:
If you rent your property then you’ll pay a 19% income tax on the profit, if you are an EU citizen. Non-EU citizens pay 24% income tax as for the time being, they cannot deduct any expenses. EU citizens can deduct expenses such as insurance, maintenance, taxes, etc.
This tax is submitted quarterly and an end-of-the-year summary. If the same property is rented out for part of the year and then used as a second residence for the other part, then both taxes will need to be submitted