Non-residents with Spanish property: Calculating and paying the tax due

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.

Non-residents: Claiming the tax refund on the sale of your Spanish property

Over the twelve years that I have been practising in Spain, I have taken on work from several non-resident clients who wish to reclaim the overpaid tax on the sale of their Spanish properties. Over that time, the tax rates and returns have changed, while one thing has stayed the same: it’s an awfully slow process !

Over this period, the average time for refund payment is between 12 and 18 months; but recently the payment of all refunds has slowed down even further. A useful option for a Spanish government with a cashflow problem !

However there is a way to make your refund application more user-friendly to the Spanish Tax Office (Agencia Tributaria), which I will outline here.

Firstly, the basics.  When a non-resident sells their Spanish property, they do not receive the full sales proceeds. Instead, the purchaser is required to withhold a percentage of the sales price, currently 3%, and pay this over to the Tax Office on behalf of the vendor. The vendor then has three months from the date of sale to submit a final tax return (Form 210) along with which they either pay the extra tax due on the sale, or claim the refund due to them. Of course if there is extra tax due then this is payable immediately; whereas if there is a refund due, the vendor is in for a long wait !

Since 2007, a vendor who makes a gain on the sale of their Spanish property has been relatively happy, because the capital gains tax rate for non-residents (which used to be 35%) has been equalised to that of Spanish residents.  The universal rate, which was 18% just a couple of years back, has now been increased significantly to the following percentages:

First 6,000 Euros:          21%
6,000 – 24,000 Euros    25%
24,000 + Euros              27%

However,  in many cases where a non-resident sells their Spanish property, a final refund will be due. As we all know, property prices in Spain have fallen quite dramatically over the last few years, and even if the vendor sells the property at more than they purchased it for- after taking into account the allowable costs of purchase and sale (e.g. agency, legal and Notary fees) the final gain is often less than the 3% tax that they pay on the sale of the property.

So in such cases, how do you get your money back from the Tax Office ? Well, there used to be a form specifically for this purpose, Form 212, however recently that was abolished and now the generic non-residents’ tax return, 210, must be used. This can be submitted in person at the local Tax Office here in Spain, or online through the Agencia Tributaria website. We prefer to do everything online where possible; one of the reasons for this being that we know that the return is definitely “in the system” as opposed to a manual return which could be left gathering dust in some forgotten in-tray in your local Tax Office !

In order to submit returns online, it is necessary to obtain an electronic certificate from the Agencia Tributaria. We have an accountants’ certificate which means we can submit returns on behalf of our clients, however any individual can also obtain an electronic certificate by pre-booking a visit (cita previa) to their local Tax Office and taking along proof of their identlty (passport and NIE).

Now onto the actual refund reclaim. Most of the details required are basic such as the name, NIE and address of the vendor(s), the address of the property that was sold, the sales proceeds and allowable purchase cost. The most important part of the return, however, is the proof of the original payment of tax when the property was sold. It is vital that you obtain this from the purchaser or their representative as soon as you can. The actual return that they are required to file is Modelo 211 and you should ask them for a copy of this. They key reference number in this document, which you must state in your refund reclaim, is the numero de justificante.  Your return will only be accepted online is this number is in the correct format.

Having submitted your return online, is there anything that you can do except wait (without holding your breath) for around 18 months or more ? Well yes, there is. In almost all cases, the Tax Office require actual proof of the sales and purchase price of the property; and normally they request this in writing, to the Spanish notifications address that you specified on your refund claim return. Remember that if you are no longer in Spain then you will need to arrange either someone to act on your behalf or have a Spanish address that can be used for at least two years for the reception of post.

In this letter, the Agencia Tributaria normally ask for a copy of the Deeds (Escritura de Compraventa) of both the sale and original purchase of the property, as well as invoices for any other costs that you have claimed such as refurbishment work. It is therefore vital that you keep these documents after the sale of your property.

Now you can actually preempt this letter from the Tax Office by scanning these documents and sending them online. You will find this option under aportar documentacion complementaria of the Form 210 section of the Agencia Tributaria website.This is an easy process and just requires an electronic certificate as with all online returns. Although it can take a couple of months from the online submission of these documents until they are actually reviewed by the relevant local Tax Office, you can follow the submission status online so you know when they have been read.

Of course, submitting these extra documents online early is not going to guarantee that your tax refund is paid any quicker. However it will make the official in charge of reviewing your claim happier because it saves them having to spend the time drafting the initial letter to write to you. And a happy official is the kind that you want to be dealing with.

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