Obligations of non-residents in Spain

The obligations of non-residents in Spain may be somewhat different from those of individuals or legal entities residing in Spain.

Therefore, if you carry out any economic activity or earn income in any way in Spain, it is important to know that you have tax obligations in this country.

What obligations do non-residents in Spain have?

The tax obligations of non-residents are not the same in all cases; they vary depending on several factors. These variables include the source of their income in Spain, their country of residence, and whether or not there is a double taxation agreement between Spain and that country.

As a general rule, individuals considered non-residents of Spain must pay taxes on the following income generated within Spanish territory:

Property income. Refers to income received from the rental of properties located in Spain.
Income from business activities. Profits obtained from conducting business or professional activities in Spain.
Investment income. Dividends, interest, and capital gains related to investments in Spanish assets.
Capital gains. These are the profits generated from the sale of assets located in Spain, such as stocks or shares and real estate.

In order to comply with their tax obligations, non-residents must:

Obtain a Foreigner’s Identity Number (NIE). This number is required for all tax procedures in Spain.
Appoint a tax representative. To act before the tax authorities on behalf of the non-resident.
File the Non-Resident Income Tax Return (Form 210). This is filed once a year to declare the income earned in Spain during that year.
Enter the applicable taxes. Apply and pay the tax rates established for non-residents.

Obligations regarding income from real estate

According to Spanish law, income from real estate obtained in Spanish territory is considered to be income derived directly or indirectly from real estate located in Spanish territory or rights related to it.

In these cases, you will have to pay the Non-Resident Income Tax.

As a general rule, the taxable base will consist of the full amount, that is, without deduction of any expenses.

For taxpayers residing in another Member State of the European Union or in a place where there is an effective exchange of information, the following expenses may be deducted from the tax base:

For individuals. Expenses stipulated in the Personal Income Tax Law may be deducted, provided the taxpayer proves that they are directly related to income earned in Spain and that there is a direct economic link to the activity carried out in Spain.
For legal entities, deductible expenses will be in accordance with the provisions of the Corporate Income Tax Law, provided the taxpayer proves that they are directly related to income earned in Spain and that they have a direct economic link to the activity carried out in Spain.

The applicable tax rate is the current general tax rate:

Residents of the EU, Iceland, Norway and Liechtenstein: 19%
Other taxpayers: 24%

Deductions:

Donations, under the terms provided for in the Personal Income Tax Law and the Law on the tax regime of non-profit entities and tax incentives for patronage.
The withholdings that have been made on the income.

Obligations regarding income from business activities

Income from business activities carried out without a permanent establishment will be subject to Non-Resident Income Tax (IRNR), but their obligations are similar to those of resident companies, including the filing of Corporate Income Tax.

Obligations regarding investment income

Investment income is the profit obtained from stock dividends, cryptocurrency sales, interest from bank accounts, and deposits in Spain, among other things.

These investment incomes are taxed through the Non-Resident Income Tax (IRNR) using Form 210.

Obligations regarding capital gains

Capital gains taxes will be due when the change in assets occurs.

They will be required to pay taxes under the IRNR, applying 19% to the taxable base. The obligations of non-residents in Spain are somewhat different from those of residents. However, it is important to be clear that they must pay tax on income from rental property, income from economic activities, investment income, or capital gains. Applying the appropriate tax rate in each case will comply with the obligations established by Spanish regulations.

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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