Tre-Pol-Pen's latest forum comments

06 Nov 2011 3:25 PM:

Hi Johnzx,

Thanks for your reply, I appreciate what you have said, however, the agenciatributaria web site puts out a document "Non-Resident Income Tax" in English (I think it was possibly Maria who had a link in her blog, I cannot find the direct link at the moment but have a printed copy) this document is clearly defined as relating to a Income Tax, the fact the Spanish authorities use the Valor Catastral to calculate the amount payable is neither here nor there, it is defined as an income tax. You cannot apply a special income tax to a non-resident that would not be applicable to a resident with only one residence or 'owned' property whether they stay at that property or not.

Some years ago Spain where taken to task for the "property" or wealth tax against non-residents.

A Spanish tax resident would not be taxed for use of there home in Spain. The same should be said for a non-tax-resident who owns a property in Spain, and no other properties outside of Spain. I 100% agree if a property is rented out then tax would be due on any profits the same as any resident in Spain, I think you will find expenses are deductable from those incomes, the same as for residents.

Your interpretation of this "non-residents income tax" would apply when someone has the use of effectively free accommodation or some other perk or gain connected with their employment. HMRC and Norway tax authorities to that respect will tax for what they see as a "perk of the job or a payment in kind" but this is connected to someone under an employment situation, that are getting that perk or gain because of, or through their employment. Your argument dictates that a person's property is always connected with a personal gain or earnings ie renting out. In that case all properties should be exposed to the same income tax. Many people own properties in Spain who do not rent out their properties or get any financial or other credit/compensation from the property. As I stated before if the non-resident person filing their tax return in Spain, state on the return that they have no income then this is legally binding and subject to the Spanish Tax authority to prove otherwise.

As another slant. Should all residents pay an "income tax" on legal Spanish cars they own in Spain, because they might rent them out or allow free use to friends while they are not in Spain? - Certainly not, as you would have to enforce the same "income tax" against all tax residents.

One certainty in life is we all have to pay taxes, but those taxes should be fair and not discrimitory or biased against certain persons than others.

Tre-Pol-Pen

Thread: paying non resident tax

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06 Nov 2011 1:27 PM:

With respect to "Income Tax" and the stated non-discrimination against non-residents and spanish residents, am I right in understanding that if as a non-resident property owner in Spain, whom does not own another property outside of Spain, would not have to pay the non-residents Income Tax, when the property in Spain is not rented out and any income earned? Spain's argument being that they apply the Valor Catastral calculated income tax to Spanish tax residents who own second homes.

Also, Norway Tax authorities has stated in writing that they do not recognize Spain's "Income tax" for non-residents using the property casdral value calculation, as there is no earnings or "income" to set this against.

Norway, although not in the EU, Norway is a member of the EEA and also has a Tax treaty with Spain that allows for income tax paid in Spain to be credited in Norway and vice versa. Even when challenged further, Norway states Spain's non-resident income tax is not an income tax when there is no actual income.

My opinion is that if you are a non-resident and state that you have no earnings from a property you own in Spain on your tax return, then the responsibility lies with the Spanish Tax office to dis-prove this statement in order to claim income tax against you. Checking this out is quite an easy action for them to undertake.

Spain wishes to promote itself to the rest of Europe, but this Non-residents income tax applied when there is no actual earnings or rental is definitely not the way to go about it. I for one who has historically paid all my taxes and looking to purchase a larger property in Spain in the future, I am now looking to either transfer my property to a uk/eu company or pull out of Spain altogether, either way Spain, will lose my taxes and the other sizeable financial contributions I make throughout the year. because of this petty tax.

I know the world is getting much worst with its financial woes, and countries are now fighting each other to retain their own share of tax revenues, but how can there be a legal claim for income tax when there is no actual earnings or income, unless you live under junta rule that is!

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