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Personal Income Tax (IRPF – Residents) or Non-Residents Income Tax (IRNR): Which one should I submit?

IRPF or IRNR: an important decision when it comes to fulfilling our tax obligations.  When the tax settlement periods begin in our country, this task takes on special relevance.

Therefore, it is important to bear in mind that there are many people who acquire a property for the first time in Spanish territory. This fact alone obliges the buyer to pay certain taxes in Spain and he/she does not know which taxes he/she has to pay.

The law firm and the requirements for taxation

A good law firm of tax experts in Real Estate Law must provide reliable, clear and efficient advice to foreigners acquiring property in Spain. Any individual or legal entity that does not reside in our country must pay Non-Resident Income Tax, or IRNR. However, if they are considered a tax resident, they must pay Personal Income Tax, or IRPF.

In international real estate law, the question of taxation for non-residents is also crucial.

A lawyer in Spain, as well as a good lawyer for foreigners, must know how to clear up these questions.

In addition, the person would also have to pay the Impuesto de Bienes Inmuebles or IBI. The responsibility for collecting this tax corresponds to the Spanish Town Halls.

In areas of high real estate and tourist activity, this problem is of particular importance. Therefore, a law firm in Madrid specialised in Civil, Tax and Real Estate Law must know how to solve them properly.

But also in other areas with a high level of activity in this area, it is important to have lawyers who are knowledgeable in this area. For example, a good law firm in Alicante or a law firm on the Costa Blanca. In these geographical areas, property purchases by foreigners have also been gaining importance.

From the 6th of April until the 30th of June, residents in our country will have to pay Personal Income Tax, or IRPF. However, non-residents have until 31 December 2022 to pay non-resident income tax, or IRNR. This is another important reason to know which of the two taxes is necessary and obligatory.

The Real Estate lawyer and the tax to be paid

An online or in-person lawyer should be able to advise us wisely on which of these taxes, IRPF or IRNR, we should pay.

In order to find out which of the two taxes applies to us, we must pay attention to the physical residence criterion set out in Law 35/2006 on Personal Income Tax. Article 9.1 of this Law establishes that the taxpayer has their habitual residence in Spain if:

  • Stays more than 183 days in Spanish territory, within the same calendar year. The exception is if the taxpayer proves that he/she is resident for tax purposes in another country. If that country is considered a tax haven, the Spanish Tax Administration may require the individual to prove 183 days of residence in that country, within the same calendar year. Stays under cultural and humanitarian agreements with the Spanish authorities do not count for these purposes.
  • The main core of their economic interests (either directly or indirectly) is in Spain. The taxpayer will also be presumed to be habitually resident in Spanish territory when his or her spouse, who is not legally separated, and his or her dependent minor children reside there.

Therefore, the most decisive criterion is residence in Spanish territory for more than 183 days during the calendar year. Therefore:

  • Stay LESS than 183 days NON-RESIDENT TAX.
  • Stay of MORE than 183 days PERSONAL INCOME TAX.

Note: Once the period of stay and the tax to be paid have been determined, it will affect the whole year. In the case of personal income tax, you will be taxed on the worldwide income obtained during the full year.

The real estate lawyer and the application of the rule

A lawyer specialised in tax and real estate matters, or a lawyer for foreigners, must be familiar with the practical application of Law 35/2006. Some practical examples can be given:

  • If the taxpayer stays in Spain for less than 183 days in the same calendar year. He/she will have to pay IRNR tax. The same applies to Spanish citizens who have changed their country of residence and stay in Spanish territory for a period of less than 183 days. In both cases, the non-resident must have a certificate of residence in another country.
  • If the taxpayer has obtained a residence permit in Spain, but has stayed in Spain for less than 183 days in the same calendar year, then IRNR must be paid. In his or her home country, he or she will have to file a tax return for the full year.
  • If, on the other hand, the taxpayer has obtained a residence permit and has stayed in the country for more than 183 days in the calendar year. In this case, he/she will have to pay personal income tax on all his/her income, including that of his/her country of origin. To avoid the person having to pay tax twice, the international agreements to avoid double taxation, signed between Spain and their country of origin, will be applied.

So, here are the keys to deciding whether the IRPF or IRNR is applicable. They can be applied by an Imont Legal & Taxes lawyer in Madrid, as well as by an Imont Legal lawyer in Murcia, and in other areas of great tourist and real estate activity.



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