Annual Spanish Tax

HI Fibby have been out of circulation for the weekend and busy day today so only just read your reply to mine. Sorry to hear about the osteo - ought to get here more often..... I have arthritic knees (nothing like your condition of course) ... havent taken an anti inflammatory for over three years now. Get the occasional twinge but usually after I have been back to the UK for a week or so. Weird .... who would have thought it would make that much difference ...... even when we go inland at this time of year where it can be a lot colder than the UK it doesnt seem to affect me .... perhaps it is simply the fact the sky is so much brighter that it is still there I just dont notice as much. Not sure I am a font of all knowledge but hopefully it helps those that havent a clue. So many sharks here that it helps if those who have some in the same water as they and come through unscathed give our little pointers. Incidentally I was going to ask if you could e mail me your guide on non resident property tax - not so much for me but for any of my clients who want it unless you want me to refer direct to you and you make a few quid (you could promote it on EBay) ........as a resident I take the easy way out and let my gestor deal with it along with the income tax, wealth tax, property tax for my other properties plus all the other things they tax you for. Still ate least they call it a tax - they dont call it duty and put up petrol, booze, fags etc. He is a good friend anyway so I dont get taken to the cleaners.

Rgds and have a great Christmas in case I forget to mention later in the week.

Patrick

Hi Crackers,

I think that the Renta Tax must have come about because for years English people rented out their properties and didn't declare it, making a fortune for them and nothing for the Spanish Tax system. Doing it this way, by charging all of us, irrespective of whether you rent out or not, they have generated a nice little earner!

Sorry that you have already engaged someone to pay your taxes this year, I have a document for sale to enable you pay it yourself in the future (I have done it sucessfully for the last 2 years).

If you are interested, please PM me.

Kind regards

Hi Crackers Fibby is absolutely right about rental tax. The Spanish assume that anyone who owns a holiday home will inevitably get it to generate some income by renting it out for some of the time. A great deal of the time they are correct but a great many people do not declare that rental income to the Spanish authorities. Therefore in order to ensure they are not completely done out of taxes due they apply the annual property rental tax to all and sundry. I suspect that over the years they have still been getting the raw end of the deal but currently they feel this is the only way they can "police" it. 

Rgds

I accept the general view that that the Spanish authorities are making sure they take their slice of the rental cake, but isn't 25% a little high? Especially when there may be many out there who are not successful in renting their properties. On the other hand I have heard there are people established with properties in Spain, never paid this tax and nobody bothers them for it!

Confusing.

Alan

Hi Alan,

The Renta Tax is not 25%, it's 2%

The 2% is payable on the Valor Catastral.

Valor Catastral is always less that the real market value. It is the assessed value of the property for tax purposes.

So unless you own a property that is worth millions & millions of Euros, the actual tax payable per person or per owner, is relatively small.

Regards,

I am not sure how the Valor Catstral is calculated, or who does it. All I know is that when we got our first IBI bill (Council Tax), this value was shown on there. It was not shown on the next year's bill though.......

I imagine they have been advised of the real buying price when the Escritura is signed as their is a small registration tax that is paid at this stage. Then I assume they take a % of that?

Regards,

Hi Fibby,

We are soon to complete on our off plan apartment. We are just trying to get an idea of what bills to expect for the coming year, and when to they arrive through the post.

I believe the IBI bill is our form of council tax. We have a 2 bed apartment on a complex. How much can we expect to pay in the Fuengirola area. Is it banded like the UK, on the valuation of the property, and when can we expext the first bill.

With the Valor Catstral (rental tax), you say the figure it is based on is below the actual market value. With the value of our apartment having gone up since buying it off plan, would the estimated figure be below todays market value, or below the price we actually paid for it a few years ago. Are you sure its 2%. On a € 200,000 figure thats  €4,000 a year tax bill for nothing. If I were to rent it out, could I offset this Valoe Catstral bill against any rental income I get. When can we expect to get this bill.

I believe there is a wealth tax to pay. Is this annually, and what percentage can we expect to pay, and on what valuation of the property do they base this on. If you are non resident, do they include any money you have in a bank account. When can we expect to get this bill.

Water and electric bills. Are these paid monthly or annually, and what can we expect to pay for a 2 bed apartment as a holiday home with a few weeks summer rental. Are  there standing charges on these bills, or are you charged for usage only. When can we expect to get these bills.

When does your Spanish Tax Return have to be in by each year?

Are there any other bills we need to know about?

Hope you can help out on these questions Fibby, and maybe Smiley can help out too. He seems to know a lot about everything. Keep up the good work.

Cheers

Hello Westport,

Phew, such a lot to answer! However, i will try to answer most of your questions!

I will give you our running costs for our 2 bed apartment in the Costa Blanca, I don't think there willk be much variation to yours on the Costa Del Sol.

We got our keys in Nov 2003, we signed with the Notary in April 2004. We started paying our first electric and water bills as soon as we came off of builders supply, roughly Feb 2004. At this point, Iberdrola (Electric) came and fitted their own fuse. There was a one off connection charge of 225€. Be careful here, as our builder charged us for this, slightly hidden amongst other charges, then we paid again via Iberdrola! Needless to say, the builder refunded us, eventually and after some 2/3 months! After this, expect to get electric bills every 2 months and water bills (Aquagest) every 3 months. Yes there is a standing charge on both bills, this is slightly higher than residents, but not much. Costs of course, depend on your demand, use water sparingly, they are short of it in Spain, plus it works out slightly more expensive than the electric.

Next comes your IBI (Council Tax), this is so much cheaper than the UK and our fist bill was in July 2005 and was for 93€. Be careful here too, as the builder is liable for the amount up to the signing of the Escritura. Suma, the council, will bill you for it, but show it to your solicitor/agent to check if it's you or the builder that pays the first one! The first bill will have to be paid in cash, thereafter you can set up a direct debit.

I think that's about it! We budget for £1,000 per year to run our holiday home, that includes our community charge for our building, pool etc., plus our Renta and Wealth Tax.

If you would like a copy of my guide to paying the income taxes yourself, please e-mail me for payment details.

I hope I have covered everything,

Kind regards,

Hi Smiley,

"The Spanish assume that anyone who owns a holiday home will inevitably get it to generate some income by renting it out for some of the time."

I bought a plot in July 2005 but not started my build yet, would you know if I still have to pay the renta tax even though all I have is a piece of ground and no dwelling to rent!!

Cheers for your help.

Hi guys,

More info on this renta tax here. Apparently its 2% of 20% of the official property value with I presume is what is in the title deeds.

http://www.eyeonspain.com/Secure/ForumReply.aspx?thread=208&dev=FB21&name=Spanish%20taxes

Westport, that has your bill at €800 which is a sight better than €4000!!

Can anyone confirm if the information here is accurate?

regards

gunnerfitzy

Hi Gunnerfitzy,

I think you have your sums wrong here.

The Tax is actually 2% of the Valor Catastrol

Not 2% of 20% of whatever!

Please read back on the threads to underestand the percentages

kind regards

Good on you Fibby, I thought I had my sums wrong when I read the pm. Thank you very much for all your help on this site. Happy new year to you  Take care Pat.    .  

Interesting one J650 - not a question I have come across - if I were you I would send a PM to either Spanish Inquisition or Maria de castro - logic dictates that as there is nothing to rent ...... there should be no rental tax - however this is Spain!

THink that Fibby has covered about everything for you Westport except to say that your IBI will likley be much higher in Fuengirols than Costa Blanca. Additionally the wealth tax is calculated on the net value of the asset - thus assuming a value of 200,000 and a 100,000 mortgage the tax is evaluated on the 100k. However you do have allowances and assuming there is a partner you each own 50,000 worth of the asset. I think the wealth tax will be insignificant for you.

sorry guys, i posted the wrong link. here is where i got the info (2% of 20% of declared value)

http://www.idealspain.com/Pages/Information/LettingProperty.htm

a further google search revealed the follow link

http://www.strongabogados.com/taxes.php#PropertyTaxes

here it states that the estimated income is 2% of the cadastral value of the property and then the tax to be paid is 25% of this.

Using the example of a €200,000 property, link one calculates as €800 payable and link 2 calculates as €1000 payable.

I would be inclined to go with the infomation provided in the second link myself seeing as these are established laywers. It would be good to get a second opinion from another spanish lawyer just to confirm.

Hello Gunnerfitzy,

I think the confusion lies in whether or not you rent your property out.

If you do, the tax payable IS 25% of rental income.

If you do not, the tax rate is 2%, set by the Government

The Tax Form 214 for Non Residents, actually calculates the tax at 2% so the Tax Office must be right I imagine.

Try this link:

http://www.spainexpat.com/spain/information/taxes_for_expatriates_in_spain/

Scroll down and it will explain things better.

regards,

Hi Fibby,

Thanks for the info.

When does your Spanish Tax Return have to be in by each year?

Cheers

Westport

Hello Westport,

If you are Non Resident, there is no time scale in which to pay your taxes. Just as long as it is done annually.

If you are Resident, there is a timescale to pay between certain months.

Not sure what the dates are though, sorry.

Regards,