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People who do not reside in Spain are taxed slightly differently when they have ties to the country, either through income or ownership of real estate.
However, the IBI is not one of the most complex cases, as it is applied in a similar way to how it is for residents.
What is the IBI?
IBI is the Real Estate Tax, a local tax that must be paid by owners, usufructuaries, or individuals with rights over real estate, such as flats, houses, parking spaces, offices, and other properties.
Who is required to pay the IBI
As previously mentioned, the IBI is paid by those who hold any of the following rights over properties of any type (rural, urban, or with special characteristics):
- From an administrative concession over the properties or the public services to which they are subject.
- From a real right of surface.
- From a real right of usufruct.
- From the property right.
The person responsible for paying is the taxpayer who holds one of the rights listed above.
As a general rule, when the property is rented, it is the owner who must pay the IBI, as established by the Urban Leasing Law (LAU). This is because the property belongs to them.
However, it is possible for the landlord and tenant to come to an agreement that the tenant will be responsible for part or all of the tax. To do this, a written agreement must specify who will pay the tax, the percentage, and how it will be settled.
It is very important that the agreement is clear and signed by both parties since, for the competent Administration, the owner is the one responsible for paying the tax and will be held liable for any penalties due to non-payment or delays.
In these cases, the owner typically pays the tax to the Town Hall and subsequently demands reimbursement from the tenant for their share.
Taxes paid by non-residents in Spain
If you own a property in Spain, even if you do not reside in Spain, you will have to pay taxes related to your property rights.
The taxes that apply in this case are the Real Estate Tax (IBI), the Income Tax for Non-Residents (IRNR) and also, in some cases, the Wealth Tax (IP).
Real estate tax (IBI)
As we have already mentioned, this is a tax levied by the Town Hall of the municipality where the property is located.
It is commonly known as a contribution, and its amount varies depending on the cadastral value of the property.
Non-resident income tax (IRNR)
The IRNR must be paid by the owner of a property located in Spanish territory and residing abroad.
Depending on the use given to the property, the taxable income may vary.
Wealth tax (IP)
The owner of a property located in Spanish territory is subject to the Wealth Tax (IP) even if they do not have their habitual residence in Spain.
Under current regulations, this tax must be paid, and its accrual date is December 31 of each fiscal year.
However, it should be noted that there is a minimum exemption of 700,000 euros, which is also applicable to non-residents.
The form they must use to file their wealth tax return is the same as the one residents submit, form 714, and it must be filed within the same period as for residents.
This applies to taxpayers whose tax liability results in an amount payable. It is also applicable to those whose assets and rights exceed 2 million euros, even if their tax liability is negative.
How is the IBI calculated?
The starting point is the cadastral value of the property, to which the tax rate set by the Town Hall of the municipality where the property is located is applied.
For the calculation it would be necessary to take into account:
- The cadastral value of the property, which adds the value of the land and the value of the construction, which is the taxable base.
- The tax rate of each Town Hall, within the margins set by the Local Tax Law.
As we have already mentioned, the IBI is a local tax that must be paid by anyone who holds a property right, including non-residents in Spain. The amount varies depending on the municipality, which sets the tax rate applied to the cadastral value of the property.
Further information
This article is part of our service Taxes in Spain for foreigners. Visit this section where you will find all the useful information on this topic, including a complete guide Taxes in Spain for non-residents and foreigners.
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