Among the most common taxes paid by foreigners who own a property in Spain and live there for less than 183 days in a calendar year are considered to be the Council Tax (abbreviated as «IBI» in Spanish) and Non-Resident Income Tax (NRT).
Do you know the key facts about this last one — Non-Resident Tax (NRT)? In this article we will answer the most frequently asked questions about this tax.
What information is included in the tax return?
The following data are included in the tax return form:
— Personal information.
— Tax Identification Number (NIE).
— All details about the property.
— Bank account number in Spain for direct debit.
How do I calculate the taxable base for NRT?
The taxable base is calculated on the basis of the cadastral value of the property, applying 1.1 % — if the cadastral value has been revised within the last 10 years or 2 % — if not.
What is the cadastral value and where can I find it?
The cadastral value is the monetary valuation assigned to the property by the Administration on the basis of different criteria. It is usually lower than the market value.
The cadastral value can be found in the Council Tax (IBI) receipts. If you have the latter paid by direct debit, you can download the receipt via your online banking.
What can be done if there is no cadastral value?
If the cadastral value is not yet available, which quite often happens to newly built properties, the tax base is calculated by dividing the market value of the property in question by 2 and applying 1.1%.
What are the tax rates applied?
The tax rates applied are between 19 % (for residents of an EU/EEA state, including Iceland, Norway and Liechtenstein) and 24 % (for residents of other countries).
Residence does not refer to citizenship, but to the place where you spend more than 183 days a year. For example, a citizen of Sweden residing in Australia would be taxed at a rate of 24 %.
What are the deadlines for filing the taxes?
You can file your Non-Resident Tax return throughout the calendar year following the tax due date, normally from April to December.
You can file the tax by setting up direct debit until mid-December or by making the direct payment to the Tax Agency until 31 December of the current year.
But is it possible to pay the tax by international direct debit? Not at the moment. The Tax Agency currently only allows to set up direct debit for the tax in a Spanish bank account.
When is the tax debited from the account?
The NRT is debited on December 31st, if it falls on a working day, otherwise on January 1st or 2nd.
What tax is paid in the year of purchase or sale of property?
Non-Resident Income Tax (NRT) is always paid in the year of purchase or sale of any property in proportion to the number of days it has been in your possession.
Finally, you should know that, if you do not file your taxes on time, you can always do so by submitting the forms for the previous years.
So, here are the keys to dealing with the payment of the Non-Resident Tax in the most appropriate way. If you have any other questions, please contact our lawyers at https://www.imontlegal.com/.
Our tax experts specialised in international real estate law will offer you the best financial guidance, will be able to answer your questions and support you at all times.