Annual income tax: for non-residents with no rental income
If you own a Spanish property which you do not rent out, then you are still obliged under Spanish tax law to submit an annual tax return and pay the tax due.
The tax is calculated in reference to the official rateable value of the property, valor catastral in Spanish. This value is issued by a branch of the Tax Office known as the Oficina del Catastro, and is updated periodically. In the vast majority of cases, the valor catastral is significantly less than the purchase price of the property.
So an imaginary (or “deemed”) rental income is due on your property. This is calculated as a percentage of the valor catastral, currently 1.1%.
The actual tax payable is then calculated by multiplying by the general tax rate for non-residents, which is currently 24.75%.
In the year that you purchase the property, the tax payable is reduced according the the number of days that you own the property in that year.
The tax is payable by the 31st December following the end of each tax year (equal to the calendar year in Spain), and the form to use is Modelo 210. If you have obtained an electronic certificate from the Spanish Tax Office (Agencia Tributaria) then you can complete and submit this form online.
The tax due can paid in advance at your Spanish bank, by presenting to them a printout of the tax return. They will then process the tax payment and either forward the return to the Tax Office, or give you a payment reference number (NRC) which will allow you to the submit the tax return online subsequently.
However nowadays a much more simple option is available, which is to submit the return online along with the order for the tax to be debited directly to your Spanish bank account (know as domiciliacion). The tax payment will be effected on 31st December.
Quarterly income tax: for non-residents with rental income
If you rent your Spanish property out, then a quarterly tax return is due for every quarter when you have rental income.
The tax return is also Modelo 210 and the tax is payable within 20 days after the end of the quarter.
The instructions for tax return presentation and payment details are exactly the same as with the annual tax return detailed above. At the date of writing of this article, the online version of Form 210 has a peculiarity (or rather an error !) which means that the income cannot actually be declared as quarterly- it must be declared as annual income. However our clients have recently commented to us that, in such cases, tax payments made by direct debit are leaving their bank account promptly, and not at the end of the following year as was the case previously.
Please click here for further information on our tax return filing services for non-residents.