Owning property in Spain comes with tax obligations, even if you’re a non-resident. If you own property in Spain but don’t live there full-time, you must understand the taxes you need to pay to avoid penalties and ensure full compliance with Spanish tax laws. In this blog, Welex, your trusted tax advisers in Marbella, will explain everything you need to know about non-resident taxes over a property in Spain, including Property Tax (IBI), Non-Resident Income Tax, Wealth Tax, and more.

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Who Is Considered a Non-Resident in Spain?

In Spain, non-residents are individuals or legal entities that do not have their habitual residence in Spanish territory. For individuals, the number of days spent in Spain primarily determines residency—spending fewer than 183 days in a calendar year generally classifies someone as a non-resident. For legal entities, the location of their effective management determines residency, and they must operate outside Spain to qualify as non-resident. Despite not being residents, non-residents who own property in Spain are still subject to certain taxes.

Taxes Non-Residents in Spain Must Pay for Property Ownership

Even as a non-resident, owning property in Spain obligates you to pay certain taxes. These taxes include Non-Resident Income Tax (IRNR) and Property Tax (IBI), among others. This applies whether or not you generate rental income from the property.

1. Property Tax (IBI) for Non-Residents

Property Tax, also known as “Impuesto sobre Bienes Inmuebles” (IBI), is a local tax that all property owners must pay, including non-residents. The amount is calculated based on the cadastral value of the property, which is set by the local municipality. Non-resident property owners must ensure that this tax is paid annually, and many municipalities offer direct debit options to simplify the payment process. Failure to pay IBI can result in penalties, so it’s crucial to stay on top of payment deadlines.

2. Garbage Collection Tax in Spain for Non-Residents

In addition to paying Property Tax and Income Tax, non-resident property owners must also pay a local Garbage Collection Tax. The local municipality bills this fee, which covers the collection and disposal of municipal waste. It’s important to note that this tax is separate from Property Tax (IBI). Failing to pay the Garbage Collection Tax can lead to penalties.

3. Non-Resident Income Tax in Spain

Non-resident property owners are also subject to the Non-Resident Income Tax, known as “Impuesto sobre la Renta de No Residentes” (IRNR). This tax applies regardless of whether the property generates rental income.

Calculate the amount you owe based on your property’s cadastral value. Non-residents typically declare an imputed income based on this value, even if they don’t rent out the property. Usually, you declare 2% of the cadastral value as income, but for properties with a cadastral value updated within the last ten years, the rate drops to 1.1%.

The deadline for filing this tax is December 31st of each year, and non-residents are responsible for calculating and submitting their own payments, as the tax authorities will not send a bill.

For more detailed information, you can refer to our blog on Non Resident Income Tax in Spain

4. Renting Out a Property as a Non-Resident

If you’re a non-resident and rent out your property, you will need to declare the rental income and pay taxes on it. The tax applies only to the period when the property is rented. You can deduct expenses such as property repairs, but only if you reside in another European Union country.

5. Wealth Tax in Spain for Non-Residents

Non-residents must pay the Wealth Tax (“Impuesto sobre el Patrimonio”) if their assets in Spain exceed the minimum threshold. This tax covers all assets owned in Spain, such as real estate, bank accounts, and other investments.

For non-residents, the Wealth Tax threshold is €700,000. If your assets in Spain surpass this amount, you must file a tax return. The amount owed depends on the total value of your assets, and you need to declare it to the tax authorities in the region where your property is located. For example, if you own property in Andalusia, you will file your Wealth Tax return with the regional tax authority there.

For more detailed information, you can refer to our blog on Wealth Tax for non-residents

6. Solidarity Tax for Non-Residents in Spain

In addition to the Wealth Tax, some non-residents may also be subject to the Temporary Solidarity Tax on Large Fortunes, introduced in Spain for individuals with assets exceeding €3,000,000. This tax targets high-net-worth individuals and applies to their net wealth after deducting any applicable allowances.

Non-residents are liable for this tax if they hold assets in Spain that meet the threshold. Taxpayers receive a €700,000 tax-free allowance, and they must pay taxes on any amounts above this threshold. The tax accrues on December 31st each year, and you must file it between July 1st and 31st of the following year.

You can read more about the Solidarity Tax in this blog post:

Key Deadlines for Filing Non-Resident Tax in Spain

Understanding the tax deadlines is crucial for avoiding penalties. Here are the key deadlines for non-resident property owners in Spain:

  • Property Tax (IBI) & Garbage collection: Typically due once a year, deadlines vary depending on the municipality.
  • Non-Resident Income Tax (IRNR): The deadline is December 31st each year, based on the previous year’s property ownership or rental income.
  • Rental non Resident Tax: The regulations in this regard have changed in April 2024. Now the law makes two distinctions taxpayer receiving income from the lease with a single payer or with multiple payers. If you want to know more about this, please visit our Rental Income related blog post.
  • Wealth Tax: must be filed by the same deadline as Personal Income Tax (IRPF), which is typically June 30th each year.
  • Solidarity Tax: Filed between July 1st and July 31st, following the tax accrual date of December 31st.

Changes to the Wealth Tax in Andalusia (2023)

In December 2023, Andalusia introduced amendments to the Wealth Tax, which significantly impact both residents and non-residents. Furthermore, these changes apply to all property owners, regardless of their residency status. As a result, both groups should be aware of the new regulations to ensure compliance. The changes establish a new discount system for Andalusian taxpayers, which interacts with the Solidarity Tax. Non-resident taxpayers subject to the Wealth Tax in Andalusia can choose between a variable discount or a 100% discount, depending on their specific tax situation. These discounts aim to prevent taxpayers from paying both the Wealth Tax and the Solidarity Tax.

Consequences of Not Paying Non-Resident Taxes in Spain

Non-residents who fail to comply with their tax obligations in Spain risk incurring fines, penalties, and even legal action. The Spanish tax authorities are strict in enforcing tax laws, and any failure to declare or pay the appropriate taxes can lead to complications. It’s always advisable to work with a professional tax adviser who can help you navigate the complexities of non-resident taxes.

Why Choose Welex as Your Tax Adviser in Marbella?

At Welex, we specialize in assisting non-residents with their tax obligations in Spain. Our team of multilingual tax advisers handles all aspects of Spanish tax law, from Property Tax (IBI) and Non-Resident Income Tax (IRNR) to Wealth Tax and the new Solidarity Tax. We provide personalized services to ensure you file your taxes accurately and on time. Don’t hesitate to contact Welex today for professional advice on non-resident taxes in Spain.

FAQs

  1. Do non-residents in Spain have to pay Property Tax (IBI)?
    Yes, all property owners, including non-residents, must pay Property Tax (IBI) to the local municipality.
  2. How is Non-Resident Income Tax calculated in Spain?
    It is calculated based on the cadastral value of the property. Non-rented properties are taxed at a rate of 2%, or 1.1% for properties with updated cadastral values.
  3. Is the Wealth Tax mandatory for non-residents?
    Yes, if your assets in Spain exceed €700,000, you are required to file a Wealth Tax return.
  4. What is the Solidarity Tax in Spain?
    The Solidarity Tax applies to individuals with assets exceeding €3,000,000, including non-residents. It’s aimed at high-net-worth individuals.
  5. What happens if I don’t pay my non-resident taxes in Spain?
    Failure to pay taxes can lead to penalties, fines, and legal consequences. It’s important to comply with all tax obligations on time.

Conclusion

Owning property in Spain as a non-resident brings with it a range of tax obligations, including Property Tax, Income Tax, and Wealth Tax. Understanding these taxes, along with key deadlines and payment procedures, is essential to staying compliant with Spanish tax laws. At Welex, we are here to help guide you through these requirements and ensure you remain in good standing with the Spanish tax authorities. Do not hesitate to contact our firm!