Residents, Income tax on property in and outside Spain

I would be interested to hear from others in my situation,  (that is, tax residents who own property outside Spain)  and in particular I would like to hear Maria de Castro's comments.

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I am Tax resident in Spain.  I own the property we live in which has a parking space and trastero (store room) on the same escritura.   No income tax to pay on them.  

I also own a lock-up garage in Spain  and my wife owns a property and a plot of land in the Philippines  (or it could be anywhere outside Spain, the same would apply, so say in UK).

My gestor assures me that we must pay (imputed) income tax on the lock up garage in Spain, and on the properties in Philippines.

On the lock up she has taken the catastral value, multiplied by 1.1% .

So 18,000€  X  1.1%  =  198 € tax.

For the property in Philippines,  50% of the purchase price times 1.1%

So,    50,000 € x 50%  = 25,000 X 1.1%  275€  tax.

A non-resident in Spain, on a property with a cadastral value of 25,000 €  (holiday home) would pay 24.75% of the 275€  so just 68 €

 

NB    This is not Patrimonio Tax but Income Tax.

  If we did not own the lock up garage,  or property outside Spain, but had kept the funds in a safe, even know to Hacienda, or in a bank (where we would have to pay tax only on the interest) we would not have any income tax to pay.

 

I wonder how many other tax resident in Spain are in a similar position and maybe had not realised it !

 

 

This message was last edited by johnzx on 26/05/2014.

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This imputed tax seems to have come to the forefront only in the last couple of years, probably with the advent of 720. Apparently it has always been the case that a resident pays it.Was it a surprise to you Johnzx? You are knowledgeable on tax matters, so I thought you would know. this anyway!
I bet the majority of ex pats are unaware, and even if they are, probably don't do anything about it. It does seem a cheek to have to pay tax on something not generating income. Must be a nice little earner with the Hacienda, who are trying to find yet more ways of raising money.
Chasing up ex pats not paying income tax here would be a start!

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Deleted as duplicate
This message was last edited by camposol on 26/05/2014.

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Campo:  Must be a nice little earner with the Hacienda, who are trying to find yet more ways of raising money.

If they took action against the estimated 95% of those who should have, but did not, make the 720 Declaration, they could pay off the national debt. with that alone.  (i.e. standard fines of 5,000 € per item not reported, with a minimum fine of 10,000, plus up to 150'% of each asset not declared)

 

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I wish....!

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The obligation in regards to property/ies abroad of spanish tax residents is just  about informing but not about paying any tax for owning them!

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The obligation in regards to property/ies abroad of spanish tax residents is just  about informing but not about paying any tax for owning them!

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Maria De Castro.  Thank you for your post.

I apologise for asking for clarification, but I have just spoken to Hacienda (helpline 901 335533) they confirmed that a person tax resident in Spain is obliged to pay (formula as I set out) tax on properties owned which are outside Spain.

Confused of CDS

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John: Please show regulation included below to tax advisor in order to see if we are talking about same tax

Legal tip 907. Obligation of Information of Goods and Rights Located Abroad 
06 March 2013 @ 13:53 
 

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Is Maria confusing imputed income tax with the 720 assets declaration?

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I regards to ownership of foreign assets, there is no payment obligation by Spain Income Tax payers.

There is just a declaration duty and just only if the declared value of each asset is above 50k euros

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Income tax in relation of ownership of estate assets is produced when selling it.

Non residents are imputed a value for owning property in Spain. If these non resident have property out of Spain, these have no interest for the Spain TaxOffice.

Are we understanding each other?

 

 

This message was last edited by mariadecastro on 27/05/2014.

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Maria de Castro  May I ask you to call Hacienda and ask why they are giving incorrect  info on this.. Thanks

With reference to :   I apologise for asking for clarification, but I have just spoken to Hacienda (helpline 901 335533) they confirmed that a person tax resident in Spain is obliged to pay (formula as I set out) tax on properties owned which are outside Spain.

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John:

There might have been a misunderstanding?

Cheers!

Maria

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There might have been a misunderstanding?

That is why I requested that you call them.  I know you will not misunderstand what they say.

What they told me was very precise:   i.e. that “a tax resident in Spain is obliged to pay income tax on any property/ies and/or land,  they own which is/are located outside Spain.”

 They even told me that the sume to paid was calcuated as 50% of the declared value,  multiplied by 1.1%,   exactly as I showed in my opening post.

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it seems that even experts aren't aware of this imputed income!

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John,

I know now where the confusion comes from:

If you  are a Spain tax resident with goods abroad that you have not declared to the Treasure, this, the Treasure will treat those assets as a non justified income which is taxed at the marginal rate of our Income Tax ( over 50%) and applied to the last non expired tax year UNLESS you prove that the now non declared Spain assets were duly declared in its time or were acquired when you were not a Spain  tax resident.

Does it make more sense now?

 

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The general rule is that a resident tax payer is taxed on imputed income on property located outside Spain provided the property meets the requirements which are listed in the income tax law and which, in very general terms, means that the property is used by the taxpayer for his own use and is not rented out or used in connection with a business activity, among others.

However,  the tax treaty between Spain and the country where the property is located needs to be reviewed as there could be a rule that the property is taxed only in that other country.  There used to be such a rule in the Treaty with the UK but I know that the treaty has been modified since I last reviewed it so if someone knows what the current Treaty says, it would be good if they can post it.

The information given out by Hacienda to Johnxz is correct in general but the application of the rule to each individual situation needs to be reviewed in particular.

There are also rules as to how to calculate the tax, the 1,1% on 50% rule applies to those properties where the catastral valuation has not been fixed, updated or communmicated to the taxpayer and is based on the purchase price.  As I say, each individual situation needs to be reviewed.

Since many of you are fluent in Spanish, here is a transcript of the Income Tax rules:

 

"Tienen la consideración de rentas inmobiliarias imputadas aquellas que el contribuyente debe incluir en su base imponible por ser propietario o titular de un derecho real de disfrute sobre determinados bienes inmuebles urbanos, incluyendo las que se deriven de un derecho real de aprovechamiento por turno sobre bienes inmuebles.

 Requisitos de la imputación de rentas inmobiliarias

La imputación de rentas inmobiliarias está condicionada a que los inmuebles cumplan los siguientes requisitos:

1. Que se trate de bienes inmuebles urbanos y no se encuentren afectos a actividades económicas.
2. Que se trate de inmuebles rústicos con construcciones que no resulten indispensables para el desarrollo de explotaciones agrícolas, forestales o ganaderas.
3. Que no generen rendimientos de capital como consecuencia del arrendamiento de bienes inmuebles, negocios o minas o de la constitución o cesión de derechos o facultades de uso o disfrute sobre bienes inmuebles.
4. Que no constituyan la vivienda habitual del contribuyente. A estos efectos, se entiende que forman parte de la vivienda habitual del contribuyente las plazas de garaje adquiridas conjuntamente con el inmueble hasta un máximo de dos.
5. Que no se trate de suelo no edificado, inmuebles en construcción ni de inmuebles que, por razones urbanísticas, no sean susceptibles de uso.

 Determinación de la renta imputada

La renta imputable por cada inmueble urbano se realiza mediante la aplicación de los siguientes porcentajes:

1. Con carácter general se aplicará el 2 por 100 sobre el valor catastral del inmueble que figure en el recibo del Impuesto sobre Bienes Inmuebles.
2. El 1,1 por 100 para aquellos inmuebles cuyo valor catastral haya sido revisado, modificado o determinado mediante un procedimiento de valoración colectiva posterior a 1 de enero de 1994.
3. Para aquellos inmuebles que carezcan de valor catastral o no hayan sido notificados al contribuyente a la fecha de devengo del impuesto el porcentaje del 1,1 por 100 se aplicará sobre el 50 por 100 del valor de los mismos que deban computarse a efectos del Impuesto sobre el Patrimonio. Dicho valor será el mayor de los dos siguientes: el precio, contraprestación o valor de adquisición del inmueble; o el valor del inmueble comprobado por la Administración a efectos de otros tributos.

 Cuando un inmueble se adquiera o transmita en el transcurso de un ejercicio o haya estado arrendado o afecto a una actividad económica durante parte de un año, así como en los demás supuestos en que el inmueble haya estado a disposición de sus propietarios o usufructuarios únicamente durante parte de un ejercicio, la renta imputable será la que proporcionalmente corresponda al número de días comprendidos en dicho período.

 En los supuestos de derechos reales de aprovechamiento por turno sobre bienes inmuebles, la imputación deberá efectuarla el titular del derecho real, aplicando el porcentaje del 2 por 100 o 1,1 por 100, según proceda, al resultado de prorratear el valor catastral del bien inmueble en función de la duración anual del período de aprovechamiento.

 Cuando la titularidad de un bien inmueble corresponda a varias personas, la imputación de la renta que se derive del mismo se considerará obtenida por cada una de ellas en proporción a su participación en dicha titularidad."

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Thanks guys,

So to put it simple

    “a tax resident in Spain is obliged to pay income tax on any property/ies and/or land,  they own which is/are located outside Spain.”  (unless that rule is qualified by any double taxation agreement. Which it is not for property in UK nor Philippines at least).

The sum to paid is calculated as 50% of the declared value,  multiplied by 1.1%,  

 

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