Property Tax International's guide to: Spanish
property tax Inheritance
Under current legislation, non-resident individuals are taxed in Spain on income arising from Spanish sources only and are liable to a number of other property related taxes outlined below.
Individuals living more than 183 days in Spain in a given tax year ( these days do not have to be consecutive) are considered as residents for tax purposes, even if they have not obtained a Spanish residence permit.
Spanish Transfer fees
Taxes payable when purchasing a property in Spain:
are payable on purchases and depend on the region where the property is located but generally range between 6% - 7% of the title deed price.
On second hand properties stamp Duty tax is payable @ rates ranging from 0.5% - 1.1% of the title deeds price. Spanish VAT
(IVA) @ 7% is payable on the title deed price of the property if it is been sold for the first time and the seller is a property developer.
For second-hand properties, VAT is not applicable but Transfer Fees will apply.
Spanish Rental Income Tax
Ongoing property taxes payable in Spain are as follows:
rules changed with effect on January 1st 2010. Prior to 2010 income tax was payable at 24% of gross income with no deductions permitted for expenses.
The new tax changes make it possible for EU residents to deduct expenses against rental income provided such expenses are directly related to the rental income generated form the Spanish property. Spanish rental income must be declared and paid one month after the rent is received.
There is also an option for Quarter returns to be submitted. There is no annual balancing tax return to be filed.
Deemed Rental Income
If the property is vacant or is a Lifestyle property Tax on deemed rental income
is payable on urban property. This is calculated @ 2% of the property’s rateable value that has not been evaluated since January 1994; otherwise rate is calculated at 1.1%. You must pay 24% tax on deemed rents.
Income tax returns
Deadline dates for tax filing:
must be filed each quarter or by annually by the 30th June. Deemed Income tax must be filed by 31st December.
Spanish Local Property Taxes (rates) are based on the rateable value of the property and generally vary between 0.4% - 1.1%. Rates depend on whether the property is urban or rural and varies per region. They are generally due from September to November each year. An annual local tax on mains drainage & refuse collection is also payable.
Spanish Capital Gains Tax
Other applicable taxes are as follows:
(CGT) - on the sale of property is charged @ 19% of the gain effectively since Jan 2010 (18% for period 2007-2009). The purchaser must withhold a Public Treasury tax @ 3% of the purchase price and pay it to the Tax Authorities within a month of transfer. A Spanish CGT tax return should be filed within 3 months of the withholding tax paid. Spanish Inheritance Tax
(IHT) - is payable depending on a number of factors: the inherited amount, the relationship between the parties involved and the level of current wealth before receiving the inheritance. Spanish IHT rates vary from 7.65% - 34%.
Rental income received in Spain will first have to be declared before the Spanish tax authorities. You may be liable to declare this income within your resident tax return.
If resident in the UK or Ireland you will have to declare any income received in Spain in your annual resident tax return. There is a double taxation agreement between Spain, the UK and Ireland so double taxation relief applies in some cases. Please contact us for further details regarding double taxation relief and/or filing your Resident Tax Return.
Property Tax International can organise the completion and filing of your Spanish tax returns in addition to advising on your property tax obligations in your home country.
The information provided above is intended as a guide only. While Property Tax International Limited makes every effort to ensure that the information contained herein is accurate, we take no responsibility or liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon.
Page added August 2010