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If you live in another country you may find yourself at a complete loss as to how much tax you are entitled to in Spain depending on your circumstances.
Let’s examine it all in detail.
Who is considered a non-resident in Spain for tax purposes?
Firstly, it’s important to understand who is considered a resident and non-resident in Spain.
Being a non-resident in Spain means that a person does not have their habitual residence in our country and does not have the same tax obligations as residents.
In Spain, residency status is primarily determined by the amount of time a person spends in the country during a fiscal year.
Therefore, anyone who spends less than 183 days per year in Spain is considered a non-resident. They may be in the country for periods of time, such as tourists, or have financial interests or properties without being considered residents.
Non-residents are not subject to the same taxes as residents, although they do have to pay other specific taxes.
Taxes paid by non-residents
As we have seen, non-residents also pay taxes in Spain, depending on their situation and the income or properties they have in the country.
In addition to Inheritance Tax, which we will discuss in the next section, non-residents must also deal with the following:
Non-Resident Income Tax (IRNR)
This is one of the most important taxes that non-residents must face.
IRNR applies to individuals and entities without tax residence in Spain but with income derived from the country. This can include rentals, sale of real estate, and investment returns.
The applicable rate varies depending on where the income originates and the tax residence country of the taxpayer, ranging from 19% to 24%. There may also be tax treaties between Spain and other countries that reduce the applicable rate or avoid double taxation.
For example, non-residents renting properties in Spain are subject to a 24% tax withholding on the gross amount of rental income. They are not required to file a tax return but receive the net rent after deducting this withholding. It’s important to consider this when calculating the actual return on investment.
Wealth Tax for non-residents in Spain
This tax applies to individuals who have assets and rights in Spain, regardless of whether they generate income or not.
Therefore, non-residents will also have to pay it if they have properties in Spain that exceed a certain threshold, which can vary depending on the Autonomous Community.
Wealth Tax is calculated based on the net value of assets, after deducting associated debts. The applicable percentage varies by Autonomous Community, where there may be exemptions and reductions based on age or disability of the taxpayer.
Capital Gains Tax
This tax applies when a property is sold in Spain.
It is calculated on the difference between the purchase price and the sale price. The tax rate can vary depending on the holding period of the property and other factors.
Value Added Tax (VAT)
Non-residents are subject to this tax in certain situations, such as the purchase of goods and services.
The general VAT rate in Spain is 21%, although certain products and services have lower rates assigned to them.
Non-residents making purchases in Spain may request a refund of the VAT paid under certain circumstances.
Inheritance and Gift Tax for non-residents in Spain
Inheritance and Gift Tax in Spain is the main tax applied to inheritances and gifts.
The obligation to pay this tax depends on the relationship between the taxpayer and the deceased, the location of the assets, and the tax residence of the taxpayer. For non-residents in Spain, the rules may differ compared to residents.
If a non-resident inherits assets in Spain, they are generally subject to Inheritance and Gift Tax.
The amount to be paid depends on the Autonomous Community where the assets forming part of the inheritance are located. International agreements to avoid double taxation should be considered, as they can reduce the tax burden.
Regarding gifts, non-residents also have to pay this tax. The applicable rate and exemptions depend on the Autonomous Community and the relationship between the donor and the recipient. Gifts from parents to children have lower rates and may be exempt in some cases. Among the taxes that non-residents in Spain have to pay is the Inheritance and Gift Tax. The amount and exemptions are regulated by each Autonomous Community.
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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