Income tax for non residents

Who is supposed to inform non residents of their annual income tax bill? Friends of mine have owned property for 6 years and never paid this imaginary tax for non residents, as they were unaware of it (as you would be if you don´t earn any income in Spain).

They don´t intend to pay it until notified, so what will be the outcome, if they continue to ignore it? Nobody has been in touch so far, of this tax which apparently is 1.1% of the catastral value of the property to be paid annually.

Thanks, Amatista

This is my first year to pay it, but as I understand the onus is on you to find out what taxes you have to pay.  Maybe their solicitor should have explained things like this to them when the completed on their sale.  The issue will be when they come to sell their property, and then the unpaid taxes will have to be cleared. 

Hopefully, other people will pick up this thread and give you a more comprehensive answer than I have.

Alyson

There was a report a week or so back that the Spanish authorities are putting together a specialist department to tackle the problem and collect the unpaid taxes from non resident owners from other nations. 

Currently if you don't pay the annual amount by the due date there is a fine which increases each year.  But unless they publicise this with a massive high profile campaign in the ex pat communities it won't make a ha'porth of difference.  A bit too little, too late.

Thanks for that .. yes, as usual too little too late, but best for them to contact a solicitor I expect

It's my opinion that only about 50% of non-residents pay this tax.

The tax office rarely chase and only do so when some other activity is the trigger (ie sale of property or change of status from non-resident to resident etc).

and when they do they go back only 4 years so even with penalties and interest you're quids in.

I saw a letter recently from the tax office asking an individual to submit outstanding non-resident tax returns and it said if submitted in the voluntary period then there would be no surcharge. It's likely they will assess to interest.

Maybe the economy being as it is they will focus on this area as a source of tax revenue?

But I would not lose any sleep over not submitting non-resident tax returns!

Elaine

I am just telling it as I believe it to be.

But let's be clear this is not a tax on real income.

Non-residents are being shafted on tax with all these deemed or artificial values.

Spain is a country where the black economu thrives and I would guess 1/2 of the 5 million unemployed are actually working!

I tend to agree with you ElaineG, but there again I'm British and we are raised with different values.

In the past I've got extremely excited about the pathetic Spanish legal system - but to the Spanish, they just shrug their shoulders with "it's just the way things are".  We think we're right and often it's not easy understanding the alternative viewpoint.  Those Brits who don't pay the tax are arguably guilty of doing the "when in Rome" thing.  But would they pay their taxes voluntarily in the UK if the authorities were equally so wishy washy ?

I should hasten to add that I love Spain and the Spanish people, but I believe sometimes they take their relaxed laid back style a bit too far for their own good.  When we bought I had no idea that we were liable for income tax - the solicitor was lightweight.  But I suppose he would say I'm only paying him for the conveyance.  But you would think that solicitors or the notary should be told to explain the basics or at least hand over a simple leaflet.  I think the authorities could do with the dosh right now.

"Not a tax on real income"  Neither are a lot of taxes but what difference does that make?  None.

Acer

Based on the way the British came to Spain to buy I would say they were raised as gullible and rather stupidly trusting or we could be more polite and simply say naive - that's why the majority were robbed and half of those by their fellow contrymen who knew the other half where somewhat ...........

Also I think you expect too much in terms of advice from lawyer or notary if you don't ask the question. Even a UK solicitor would not sit down and take you through all the tax implications of buying propertyother than those of the conveyance?

Hi Faro,

Sorry perhaps my comment was unclear.  No I think it is down the authorities in Spain to ensure that the considerable number of foreigners who buy are told that they have to pay income tax.  Whether they do it through the solicitor or the notary is a matter of choice - but to me it's an obvious first step is to ensure that a simple leaflet is handed out on each property purchase.

Some of use, including me, being gullible/naive in making our purchase is really a separate issue.   For me it's a lesson I won't forget and hopefully not repeat.  We all make our own choices, but I'm happier paying what I owe.   I'm sure you're not alone, but by all accounts the authorities in Spain are finally waking up and apparently the surchase is 10% to 20% or so if you don't pay by the required date.

Acer

Whilst I sympathise with you,   in the UK one is not told what taxes (Council tax etc) they must pay when they buy a property.

 I have bought property in Spain and in Asia and I had to make enquiries to ascertain what I needed to do in order to comply with the law. No one gave me a list, least of all the government.  This also applies to many other things. For example:  If one buys a car (in UK)  there is no list of what the new owner needs to do in order to comply with the law, nor how the traffic regulations differ from other countries.  It is for the buyer to find out.

Johnzx, in the UK you  are informed how much you council tax is when you are looking at the house, before you even buy it, estate agents have to tell you what band its in and it is stated in the homebuyers pack.

Alyson

Hi Johnzx,

I don't think it is right to equate this tax in Spain with the UK. 

This is an Income/Property Tax that the Spanish charge to all and is totally separate from the Council Tax.  The Spanish authorities should have the nouse to realise that they need to enlighten foreign nationals. 

I have not the slightest doubt that there will be a sizeable percentage of Brits who do not even realise they have to pay it.  You might say that "ignorance of the law is no excuse" but the Spanish authorities need to wake up, it is they who desperately need the dosh right now.

All I ever post on this forum is an honest opinion based on what I see and hear everyday!

I've owned a property in Spain for 8 years.  I was aware of the different taxes that I had to pay as a non-resident home owner as I had bought the book "buying a property in Spain" and also researched on the internet.  When I went to solicitors/notary I was told by receptionist the dates when Wealth Tax and La Renta would be taken from my bank account.  Each January I paid 75e for them to prepare my tax returns.

When Wealth Tax was set to 0%, the annual fee was only slightly less than the La Renta (now called Income Tax) charge so I decided to pay Leswill to prepare my forms for me.  If you look on the Income Tax section further down you will find a posting from her which will lead you to her website.

As I understand it problems will occur when you want to sell the property.  You will then have to show proof that all taxes on the property have been paid.  

If someone has bought a new property then it's not always possible to pay your taxes straight away as you won't have your catastral value to do the calculation.  Once you start paying IBI bills then you will have the CV and will be able to pay the back dated taxes.

I don't think that ignorance is any excuse for not paying these taxes.

These taxes are not just aimed at foreign residents but at people who own two properties.  Spanish residents were also effected too.

The problem with paying the  taxes is the same as everything else in Spain - they make it so difficult.My solicitor wanted around 130 euros to do my 210 tax form - more than the tax itself!  No worries I thought, I'll get one of the on-line companies to do it for 30 euros - no chance - they need my NIE documentation - guess who has it? My solicitor. I think if I ask for it there will probaly be a long delay so that it's too late to submit my tax form. If the Spanish goverment made the system so that you could do it on-line, in English they would probably receive double the money they get now. I struggle with UK tax forms so really have no chance with my basic written and verbal Spanish

I have been doing my son's and daughter-in-law's non-resident tax ( and previously patrimonio) for several years (and helping friends do theirs). Takes a few minutes, I hand it in to his bank and job done.

I would love to able to get  130 euros for few minutes work,   Rip off merchants.