Taxes - Fiscal Representation

As a property owner in Spain you are bound to pay certain taxes. 

 

As a property owner in Spain you are bound to pay certain taxes. There are two taxes that have to be paid annually, local rates (IBI) and Non-resident Taxes to the Spanish Revenue, which are based on the rateable value of the property. We provide a comprehensive and professional Fiscal Representation service.

 

There are other taxes, like property rental taxes, capital gain taxes or plusvalía that may not affect you if you are buying the property as a holiday home for your family, but it may affect you at some point if you decide to rent or sell your property. Finally we have included income taxes because our accountant will also be able to assist you with Annual Income taxes if you become at some point a Spanish resident.

Property Tax or Local Rates
Called in Spanish IBI (“Impuesto de Bienes Inmuebles). This is a tax charged by local Councils and paid by property owners.
All property within the Council's area is included on a census and is assigned a value (Assessed Value). The amount of tax to be paid is calculated by applying the tax rate set by the Council to this Assessed Value.
A bill is sent out for payment of this tax every year for every property on the census. Usually, Councils permit the possibility of payment of the tax by direct debit from a bank account, which facilitates payment within the time period set and thus avoids any possible surcharges.
The payment deadline depends on the Council, although it is normally around the months of September, October or November each year.

Non-residents Tax
Non-residents must file a return for this Tax for assets which they possess in Spanish territory on 31 December each year, whatever the value of said assets.
No reduction arises as a result of an exempt minimum, so as a result the amount liable for tax coincides with the taxable base.
The amount of tax to be paid is calculated by applying the tax rate approved for the year to this taxable base.
Every individual must file an individual tax return. As a result, if the building belongs to a married couple, or to several people, each of them must file a tax return, for their share of the property.

In order to help you to organize your finances we include in our web page a self calculator program for the estimation of the Non-resident taxes, but the final figure will be given by our accountant, that will be the one preparing your taxes and file them with the Spanish Revenue to be charged directly from your bank account on December. Normally during June/July you will receive an email from our accountant with the exact figure that will be charged in your bank account.

Calculator

Income Tax Return (for residents)
The basic rule applied to determine residency is the 183 days rule: if an individual spends this amount of time or more during a calendar year in Spain then he or she is Spanish tax resident.

If you are Spanish tax resident you are obliged to declare your worldwide earnings for tax. So even if you generate no income in Spain you will normally still have to submit a Spanish tax return to declare your foreign income. Spain has a 60.100€ tax exemption on foreign earnings which you may be able to use but only if you have paid tax on these earnings already. (This exemption applies to income earned for work carried out physically in the other country.) Adopting the “out of sight, out of reach” approach on the basis that the Spanish tax office will not learn of your overseas earnings is risky. If you are regularly bringing the earnings into Spain to spend then this may trigger an investigation, or if you accumulate cash abroad this may be picked up by the increasingly sophisticated information sharing arrangements between tax authorities. Anyone operating a business physically located in Spain but with national or overseas sales and customers would be expected to submit a tax return and declare the proceeds. Additionally, they should register the business activity as an “autónomo” (self-employed) or company and should account for IVA (VAT).

Property rentals
We remind you that if you are renting your property in Spain, you must calculate QUARTERLY if you are have a benefit or not on that rental since you have to pay a tax on that benefit. If the quarterly result is a loss, then you must only submit an annual form in January with all the figures conveniently documented and justified. Contact us for details on the procedure. Our accountant will help you.

Capital Gains Tax
Non-residents selling their Spanish property have to pay capital gains tax. The capital gain or loss on property sale is computed as, transfer price less acquisition cost (acquisition price and related expenses) and less appropriate minimum depreciation. The acquisition cost is indexed by applying a coefficient published annually by the Budgetary Laws, based on the year of acquisition.
Our accountant handles these matters on your behalf arranging the payment of any tax due in this respect or applying for the appropriate refund if the vendor has made any prior payments on account of this tax.

Plusvalia Tax
In addition to any mainstream capital gains tax on the sale of property there is also a local tax in urban areas levied by Spanish town halls commonly known as the Plusvalia (which literally translates as "gain") on the growth in the value of urban land (excluding the buildings).
The real growth in value of the land is reflected by the allowance of a realistic allowance for inflation, unlike the token allowance in Spanish mainstream capital gains tax.
The tax rate varies depending upon the size of the local population and the length of ownership. For a town of more than 100,000 inhabitants the minimum tax rate is 20 per cent and the maximum 30 percent, with the town hall fixing a rate within this.
Any Plusvalia tax paid is allowed as a cost of disposal in calculating the mainstream capital gains tax.

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