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Firmalex > Latest posts > Taxation of the properties of non-residents in Spain

Taxes on real estate in Spain can be a significant burden whether you have it for your own use or for rent.

The taxation of the properties of non-residents in Spain falls mainly on the Non-Resident Income Tax and the Real Estate Tax.

Taxation of real estate in the Non-Resident Income Tax

The income obtained by non-residents in Spain for properties located in Spanish territory must be taxed through the Non-Resident Income Tax.

The way to pay taxes depends on the type of taxpayer and also on the type of income that has been obtained:

  1. In the case of a non-resident individual taxpayer:
  • If the property is unoccupied or is for own use, imputed income from urban properties is obtained.
  • If the property is rented, income from leased properties is obtained.
  • If the property is sold, a capital gain is obtained.
  1. In the case of taxpayer legal person or non-resident entity:
  • If the property is rented, income from leased properties is obtained.
  • If the property is sold, a capital gain is obtained.
  • If the entity is resident in a tax haven, it may be subject to the Special Tax on Real Estate of Non-Resident Entities.
Properties for own use

Non-residents in Spain who hold ownership of urban real estate for their own use in Spanish territory have to prepare and submit the Non-Resident Income Tax (IRNR).

The term to do so is until December 31 of the year following the year in which the fictitious income was obtained. To calculate the base to which the taxable percentage is applied, 2% or 1.1% of the cadastral value is normally used.

Regarding the amount paid, it is different for non-EU residents and non-EU residents. For people residing in the European Economic Community the rate is 19% and for those living in other countries it is 24%.

Properties intended for rent

People who do not reside in Spanish territory and have rented properties are considered, as a general rule, not to operate through a permanent establishment in Spain. This is so because in Spanish tax regulations the rental of real estate is not included in any of the cases that are included to be considered a permanent establishment.

However, if properties are rented and there is at least one person employed with a full-time employment contract to be in charge of the rental activity of the property, said activity will be considered to be of a business nature through a permanent establishment.

If non-residents have positive income from the rented properties, they must submit form 210 quarterly for each property and spouse, being able to group in each one of them all the payers they have had, that is, all the tenants.

Regarding the way of calculating the bases and the percentages that are applied, it is again distinguished according to the place of residence. In the case of residents of the European Union, they can deduct certain expenses from income in proportion to the time the property has been rented and 19% is applied to the result. On the other hand, landlords who do not reside in the European Economic Area will not be able to deduct related expenses and must pay 24% of total income.

There may also be a situation in which a property has been leased for part of the year and the other part has been enjoyed by its owner. In these cases, both types of income must be declared. On the one hand, the income derived from the rent, gross or net depending on the landlord’s residence, every three months and the fictitious income for the time of use by the owner, which may be declared until the end of the following year in the IRNR.

Property Tax

The Real Estate Tax (IBI) is a local tax, with an annual periodicity that falls on the real estate of the municipal area, whether rustic, urban or with special characteristics.

This tax falls on the owner of the property, regardless of where he resides. Therefore, among the taxes for non-residents there is also the IBI.

The accrual period and the payment date will depend on the Town Hall of the municipality where the property in question is located. The taxation of the properties of non-residents in Spain is done mainly through the Non-Resident Income Tax. It will be different depending on whether the property has been used by the owner or has been leased, and also whether you reside in the European Union or outside of it.

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