Spain is a beautiful country made for everyone. The sun, the people, the landscapes and the
calm are just a few things that this place has to offer. However, for those who are not tax
residents in Spain, it is important to understand and comply with the corresponding tax
obligations. If this is your case, then you need to keep reading this article.

Who is a non-resident?

A tax resident is a person who spends more than 183 days during the calendar year in Spain, or
the main core of its activities or economic interests is located here. If you do not meet these
requirements, you will be considered as a non-resident.
Whether you own a property in Spain for personal use or rent it out for profit, you must comply
with tax obligations. Two key taxes that non-residents should be aware of are the Non-Resident
Income Tax form (Modelo 210) and Non-Resident Wealth Tax.

Modelo 210: The Non-Resident Income Tax

The Non-Resident Income Tax is a tax levied on income obtained within Spanish territory by
individuals or legal entities that are not resident in Spain. All non-residents in Spain are obliged
to file annual declarations for each property they own, i.e. dwellings, garages, storerooms or
premises.

Moreover, if the property is rented, in addition to the tax declaration that is filed as owner, it is
necessary to submit the tax declaration for rentals to declare the rental income that has been
obtained.

How is the Non-Residents Income Tax calculated and when do you have to submit your
tax return?

This tax is calculated on the basis of a reference to the cadastral value. This value is generally
determined by the local tax authorities and can be based on various factors, such as the
location of the property, its size, its market value, the characteristics of the construction, among
others. It is important to note that the cadastral value does not always reflect the current market
value of the property, as there may be differences due to various factors, such as changes in
the real estate market or improvements made to the property.

The taxable base is calculated as 1.1% or 2% of the cadastral value of the property – depending
on when the last revision of the cadastral value was made.

The rate of the tax for citizens of EU and EEA countries is 19% over the taxable base, and for
non EU citizens is 24% over the taxable base also.

The Non-Resident Income Tax must be submitted to the Tax Authorities in the following
consecutive year, e.g. taxes for the year 2023 must be submitted between 01/01/2024 and
31/12/2024.

What happens if the property is rented?

In this case, two tax return have to be submitted:

1) Annual return for the owner of the property
This return is submitted in the same way as the one indicated in the previous paragraph,
with the difference that the tax has to be calculated considering only the days that the
property has not been rented, i.e. the days that the owner of the property has been able
to enjoy it.

2) Annual tax return for rentals
This tax return has to be submitted to the authorities by 20/01. All rentals made during
the previous year must be declared. You can deduct various expenses associated with
your property, such as community charges, IBI and mortgage costs. It is important to
note that these deductions apply only to EU and EEA residents.

As with the owner's tax return, the tax rate for EU and EEA citizens is 19% over the
taxable rate (incomes minus expenses), and for non-EU citizens it is 24% over the
taxable rate (incomes minus expenses).

Wealth tax in Spain

Wealth tax is a personal and direct tax on personal wealth and is calculated on the basis of the
value of all the taxpayers assets.
Wealth tax is due on 31 December of each year and affects the assets owned by the taxpayer
on that date IN SPAIN.

Assets and rights that are generally subject to wealth tax include, among others:

  • Immovable property (such as dwellings, land, etc.)
  • Movable property (such as vehicles, works of art, jewellery, etc.)
  • Bank accounts and deposits
  • Transferable securities (shares, investment fund shares, etc.)
  • Rights of usufruct, use or habitation
  • Intellectual and industrial property rights
  • Life insurance and deferred income

It is important to make an accurate valuation of all assets and liabilities in order to determine the
correct tax base. Wealth tax is calculated by applying a tax rate to the net value of the
taxpayer’s wealth, which is obtained by subtracting deductible debts and charges from the total
value of the assets and rights owned in Spain. Each autonomous community can establish its
own tax rates and deductions, so the tax burden may vary depending on the taxpayers location.

Non-residents are obliged to submit the Wealth Tax for non-residents in the following cases:

1) When the sum of all assets in Spain on 31 December exceeds €2,000,000 (without the
possibility of deducting liabilities in this case).

2) When the sum of all your assets in Spain on 31 December minus all your deductible
liabilities exceeds €700,000. For non-residents, it is important to consider that only debts
and liabilities linked to assets located in Spain can be deducted. You cannot deduct
debts or charges relating to assets outside Spain.

What happens if you miss a tax payment in Spain? What to do if I forget to submit?

If your tax return is overdue, penalties are incurred based on the duration of the delay.

Late payment interest

If the Wealth Tax return is filed after the deadline without having been previously requested by
the Administration, late payment interest will be applied to the amount that should have been
paid. The late payment interest is calculated from the day following the end of the period in
which the tax return should have been filed voluntarily until the date on which the payment is
actually made.

  • Default interest rate: The default interest rate is updated annually with the General
    State Budget Law. For the year 2023, for example, the rate is 3.75%.

Penalties for Late Submission

In addition to interest for late payment, late filing of the tax return can lead to penalties. The
amount of these penalties varies depending on whether or not the administration has requested
the taxpayer to file the return:

1. Late submission, but voluntary by the taxpayer: If you submit the tax return voluntarily
after the deadline but before any requirement by the administration, the penalty may be
a proportional pecuniary fine. This penalty is generally 5% to 15% of the amount of the
unpaid tax, depending on the time elapsed before the regularisation.

2. Late submission, due to a requirement by the administration: If the return is filed after a
requirement by the tax administration, the penalties may be more severe, including fixed
or proportional fines that may significantly increase the tax cost.

What information do you need to prepare a tax return?

To proceed with the necessary tax calculations, you will require specific documents. These
include a copy of the purchase title, which validates your ownership of the property, and the IBI
bill, which provides crucial information to verify the cadastral value of the property.

Conclusion

Understanding and staying informed about tax obligations in Spain is crucial as a non-resident
property owner. To stay up-to-date and avoid penalties from any kind of legal issues for
residents or non-residents in Spain, contact Albir Abogados so you only have to take care of
enjoying this beautiful country.