Non res tax- ouch!!

We have just had our non resident tax taken from our bank, somewhat early as it normally doesn't go until the end of December!! Lukily, the funds were in the bank to let it be processed. Now, I expected there to be some increase due to us being a 3rd country now, but it has almost doubled!! Whether this is all 3rd country related, or if we are now having the payment adjusted because our mortgage is now decreasing and we theoretically own more of the property (which has decreased in value dramatically), i'm not sure until I get a reply from our solicitor.

Mark

I believe the non EU thing will come into effect next year. I also believe the amount you pay is based on the value of the property and the mortgage is not taken into consideration. Mine (divided equally between me and my wife) was the same, to the penny as last year, 

The non resident tax for EU citizens is 19% and for non-EU citizens is 24%. The value of your property, whether with a mortgage or not, is not valid. It is based on the catasral. or rateable,  value and you will pay a percentage depending on that.

So, yes, it would have gone up.

Example

Value of property 150,000, catasral value 50,000 (our property has a value of 190k but a catastral value of only 38k)

You then get a percentage which is either 2% if the property has not been revalued since 1994 or 1.2% if it has.

In the example above at 50k catastral at 1.2% is 600 euro. The tax for EU| citizens would be 114 euro and for non EU citizens would be 144 euro. Not double, though. 

You don't pay this if you are renting your property and declaring it for taxes.

Got my reply:

"The tax is higher this year because the Cadastral Value of the property has been raised by the Administration."

Booo!!!

This non-resident tax is defined by the Spanish Tax Authorities as an ‘’imputed tax’’ but that is only a made-up description as it has nothing to do with imputed tax. If you research the definition of ‘’imputed tax’’ you may get different definitions but the most common is a ‘’benefit in kind’’ like having a free company car would be a good example. 

Years ago ‘’Holiday Rental Licences’’ did not exist, but the Spanish Tax Authorities assumed many holiday homeowners were receiving income from holiday lets. They had no idea or monitoring system, so they just invented a non-resident’s tax. At that time most holiday homes were owned by foreign non-residents, Spanish nationals welcomed a foreigner’s tax. 

So if you are a non-resident with a holiday home that you do not rent out, you are receiving no ‘’benefit in kind’’ whatsoever, you are just paying a ‘’stealth tax’’ for absolutely nothing. 

The non resident or imputed tax also offsets the fact that an allowance is not paid by the regional government for the people that are not there permanently. They claim an allowance for all those on the padron to keep facilities going.

They don't get that money from the regional government if they are not on the padron but still have to provide the road repairs, the street lighting and the other services required to keep the infrastructure up to spec. Not least, they fund the local police (Guardia Civil, National Police and so on are funded by the government but not local police). 

Bit like the broo-ha-ha in UK when second home owners suddenly found they had to pay full council tax instead of being reduced because they weren't there for more than 6 months.

Regardless, there are still many who are renting out their properties with no licence and not declaring it for tax purposes. Very many, I would suggest. As long as they don't stick it on AirBnB or something then they seem it is OK.

It would make sense for all genuine property owners to be on the pardon and not include the long list of those who have passed away years ago who the town hall clerk does not want to remove.

Non-resident property owners pay full annual property taxes, service charges, and utility charges even though they have restricted occupancy (90/180-day rule). Non-resident tax is just greed and abuse, just another example of trying to kill the goose that lays the golden egg.

If anyone knows as many claim to do of non-residents letting out a property illegally it is their duty to inform the authorities. It is unjust to charge a stealth tax to innocent honest non-residents because the authorities cannot be bothered to enforce their own laws.

I struggle to say it Kev, but I reckon you have a point. 

The unfairness grows if you also allow for the affect of Schengen.  I know a lot of non-resident owners who don't rent-out their places.  Of course with the addition of the Schengen time limitations the value of their second homes in Spain becomes even more questionable.

No-one can be sure of the percentage of Foreign owners who prefer to keep their property for their own use, but I reckon it will have increased in recent years - just too much hassle in being registered, for a modest reward. 

It's annoying to know that you pay more for a wrong assumption, but thankfully the cost is less far less than you would pay for the equivalent property in the UK...but of course, there isn't an equivalent.

I see that Macron has plans to announce plans to "reform the Schengen agreement on free movement" when France takes over the six-month rotating presidency of the EU in January.  A report from one source being:

<<
France plans to initiate reform of the Schengen zone after it takes over the presidency of the EU Council for six months in January 2022. This was announced by French President Emmanuel Macron, according to French TV channel BFM TV.

The French leader explained that this would help Europe protect its external borders and avoid migration crises. According to him, a separate organisation should be created to manage the Schengen zone.

He also proposed holding regular meetings of ministers and creating an « emergency border protection mechanism » involving gendarmes or police. In addition, unified rules should be agreed on managing migrant flows and granting asylum to avoid « games leading to a lack of cooperation » between Schengen member states.

Macron noted that the possibility of free movement within the Schengen zone was based on the promise of external border protection, which is now inadequately contained.

The French president also stressed the need to organise defence more carefully and shape the concept of European strategic sovereignty to deal with « common threats », BFM TV points out.

European Commission President Ursula von der Leyen proposed adjustments to the Schengen agreement in September following the deterioration of the illegal migration situation. The bloc will not tolerate the « hybrid attack to destabilize Europe, » she stressed, blaming Minsk for the situation. The EC head urged to speed up work on the new migration pact, which was presented back in 2020, but work on it has been extremely slow. Belarus denies the accusations.
>>

No idea if this will affect Brits travelling to Spain, but it may be a forum for changes to be agreed that improve matters, I cannot think the Spanish would agree a negative move.

Our property is fully registered as a rental property (which we hven't seen for two yers).

We had rentals in the first few months of 2021 whiche were declared and tax paid but not in the later months of the year ans unlikely in the first or second quarter of 2022.

As it is a rental and had been decalared and taxed as such my understanding is that we are not liable to pay NRT. Correct? Also nil returns are not required by the tax authorities?

Thanks. 

This tax is also paid by Spanish residents. The owners of more than one property have to declare on their annual tax return. It is assumed that holiday homes are second properties whoever owns them. 

I believe you are correct ayrez. But it still seems an unfair and unjust tax. Anyone’s second property has been purchased with their own tax-paid money. They also pay full annual property taxes and charges (Suma) so why this extra tax.

In Spain, it is quite easy for Spanish residents to avoid paying this extra tax by putting properties in separate family names (or other) and declaring them as their main residence.

Kavanagh.  The Spanish government are screwing  the holiday home owners for anything they can think of ( especially British holiday home owners ) we pay 24 % Tax whilst the Spanish residents only pay 19% ..we pay full IBI / full Suma / full water meter rental/ full gas meter rental / full electric meter rental / full site fee's ..and we can only use our property for 90 in any 180 days ..the Spanish government are concerned that the British are not buying in Spain anymore ...I wonder why .. personally I would not buy or recommend a British citizen buying until the Spanish government reciprocate with the British government on visiting Spain currently the UK government allow a Spanish visitor 180 days continues or 180 spread over 365 day period ..why haven't the Spanish reciprocated.... they are a Sovereign state within the EU so they don't need the so called EU to give them permission.

The quesstion was:

I am fully registered for rental of my property in Spain and have paid tax on rental income during teh first two quarters of this year. Do I have to do nil returns for no rental income during the second half of teh year.

I believe I am exempt from NRT as I pay Rental income tax.

Seeking clarification.

Well said Windy, absolutely correct. Brit non-resident property owners are being scammed and always seem to fall for the 3 card trick. I doubt any Spanish resident even pays the 19% tax, as Mr. Sergio's main residence is in Madrid and Mrs. Sergio's main residence is in Alicante.

As for Spain's sovereignty and the 90 day rule, Spain needs to abide by the EU mafia desires, if not no grants, loans, or sweeteners.

Mikeandhelen I think you will find  the Tax of 24% that you paid was for the rental income that you received...As you are a None Resident you will need to pay the None Resident Tax ( Modelo 210 ) ..my None Resident Tax came to 450 Euro's for myself and my Wife ... whom ever is submitting your Tax returns for the rental income will clarify your position on paying NRT..

You don't pay non resident tax if you are paying tax on rental income. 

Mariedav  I actually owned a property for 14 years that was classified as a Tourist property with a tourist plate fully registered at the local council ..I did not rent the property out  ..both myself and my wife had to pay full IBI Basura Tax ..if what you are saying is true and all I had to do to avoid this tax was to rent the property out once pay the tax on that one rental and your now exempt from paying NRT ....nice loophole.that I have never heard of before.

WindTalker / Maridev.

That is my understanding, 

You don't pay non resident tax if you are paying tax on rental income. 

My question is do I have to do quarterly returns, is ther a limit.  I paid tax in the first two quarters on rentals but not in the second two, so I think i am in the clear as no rentals this winter. 

Mike

"Spanish Tax Authorities assumed many holiday homeowners were receiving income from holiday lets. They had no idea or monitoring system, so they just invented a non-resident’s tax. At that time most holiday homes were owned by foreign non-residents, Spanish nationals welcomed a foreigner’s tax." 

Kavanagh, you really need to get over this feeling of victimisation of non-resident foreigners. As someone else has pointed out, and you have conceded, Spanish nationals (and foreign residents) who own second homes or properties also have to pay imputed income tax. I even have to pay it on a trastero I own in a different building to where I live! 

The Spanish government are screwing  the holiday home owners for anything they can think of ( especially British holiday home owners ) 

Again, Windtalker, you should try to get over this feeling of victimisation and accept that it is the British government that has changed the position that UK citizens / residents now find themselves in. Rather than accuse the Spanish government, I suggest you take the matter up with your local MP!

Mike: 
If you pay tax on actual rental income you need you submit an imputed tax return pro-rata to the number of days that the property was not rented out.