Non-Resident Property Taxes in Spain for 2015

  • Francisco
    With over 10 years experience providing expert legal advice and representation to English-speaking clients Francisco is a seasoned professional whose primary focus is to ensure his clients' interests are protected. The following legal services are offered: Real Estate Conveyances, Contract law, Inheritance , Family Law, Tax & Fiscal Advice to Businesses.
  • Antonio
    Antonio has led this law firm, with offices in Seville, Cadiz, Jerez and Huelva for over 10 years. The firm specialises in providing expert legal advice and representation in the following areas: property conveyances, family law, inheritances, contract law, as well as business formation and tax advice.

We are planning to purchase a property in Spain. We have heard that there are taxes payable on property you own in Spain, whether or not you rent it out. Is this true?

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Firstly it should be stated that, upon the purchase of a property in Spain by a non-resident, any taxes and costs associated with the purchase are payable in Spain. In Spain the purchase of a property attracts VAT. If it is a new-build home then this is known as IVA – or IGIC in the Canary Islands, In the case of a second-hand home the value added tax payable is called ITP.

Additionally payable are the legal costs associated with the purchase as well as the Public Notary costs to draw-up the deeds as well as the land registry costs for registration once the purchase is completed. Later there is the IBI tax – a form of council tax – as well as other local charges such as the Rubbish tax and Community Charges relating to the upkeep of the common areas of the urbanisation that you will need to consider.

Another tax that is less well-known is the Non-residents tax (Impuesto sobre la Renta de No Residentes – IRNR) which is a direct tax that is applied to income obtained on Spanish territory by non-resident individuals and companies, unless they are already paying the local income tax payable in Spain (IPRF).

A person is considered to have their habitual residency in Spanish territory if they reside in Spain for more than 183 days in a calendar year. If a person is habitually resident in Spain then they will pay the second, ‘residents’ tax mentioned above – IPRF. However, determining a person’s liability to pay local taxes must include a consideration of whether or not the person is paying a personal income tax in another country and on the existence of a double-taxation treaty with that country.

The payment of non-resident income tax – IRNR – becomes relevant when ownership of property in Spain is considered. In Spain, the ownership of property that is not the primary personal home of the owner is considered to generate an income (rendimiento de capital inmobiliario). The tax rate is 24% and is applied to 1,1% of the ‘catastral’ value of the property. The ‘catastral’ value of the property is not the same as the real value and is much lower. It is value that is calculated in order to provide a ‘tax base’ upon which tax rates are applied. The tax base increases to 2% of the catastral value if the last time the ‘catastral’ value was calculated predates 1994.

Accordingly it is necessary for every property owner to make a simple tax declaration each year in respect of the property they own in Spain.

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