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Taxes for non resident in Spain

What’s on this page?

  1. Do foreigners pay taxes in Spain
  2. Taxes in Spain for non-residents
  3. How to register with the tax office
  4. Income tax outside of Spain
  5. Income from the purchase of real estate
  6. Tax penalties for non-residents

So you have moved to Spain and plan to earn income there, and you might be wondering about types of taxes in Spain and whether Spanish taxation will apply to you. Today, a large number of citizens from different countries of the world want to connect their activities, recreation, and permanent residence with Spain - a developed European country with excellent living conditions.

In every region, in every locality, you can find quality housing, a decent job or an opportunity to earn money. You can also use the developed transport system, relax on the beach, enjoy the masterpieces of architecture and try the famous local cuisine.

Do foreigners pay taxes in Spain?

Everyone needs to pay taxes in Spain, both Spanish citizens and foreigners. Taxation applies to all types of income. The main tax is income tax.

Spanish Tax Form

For foreigners, there is a fundamental difference in taxation depending on whether you are a resident or non-resident of Spain.

You are a resident if you:

  • have lived in Spain for more than 183 days (6 months);
  • have a business, a job, or if your family lives in Spain, i.e. your vital interests are in Spain.

Taxes in Spain for non-residents

If you stay in Spain for less than 183 days during a calendar year, then you are a tax non-resident of Spain, and only income received in Spain will be taxed. These types of income include:

  • salary if you are an employee;
  • income from running your own business or freelancing;
  • capital gains in the form of interest or dividends;
  • pensions and benefits.

Tax rates for non-residents are fixed, as opposed to progressive rates for residents.

Type of tax Rate, % Note
Income tax 24 For residents of EU countries 19%
Capital gains tax 19  
Interest income tax 19 No tax for residents of EU countries
Dividend tax 19 No tax for residents of EU countries
Royalty tax 24  
Pension tax 8-40  
Property tax 0.4-1.1 Municipal tax

There are also taxes on wealth and inheritance.

The specifics of the Spanish tax system is that the amount of taxes may vary depending on the region where the taxpayer resides.

Summary: if the source of your income is an activity or assets presented to you by the state of Spain, taxes are mandatory.

How to register with the tax office

Whether you are a resident or a non-resident, you must register with the Spanish tax authority. To do this, within 30 days of your arrival in Spain, you must obtain a NIE (Alien Identity Card) at the police station or at the local office of foreigners. You will need this certificate to carry out any financial transactions in Spain.

NIE for foreigners

At the tax authority, you need to fill out documents confirming your obligations regarding the payment of taxes. Such documents include an application for payment of income tax as a non-resident, declarations of income, including income from owning real estate.

The tax year in Spain is the period from  January 1st  to December 31st.

Income tax outside of Spain

If you own property in Spain, you are not a tax resident of Spain and do not reside permanently in Spain, then you can pay income tax in the country of residence. To do this, you need to confirm with the Spanish tax authorities that you live in another country, and you will be able to pay taxes there.

Income from the purchase of real estate

If you are buying property in Spain, taxes are also mandatory for you.

Often the decision to purchase Spanish property is made based on the desire to spend holidays on the coast or move to the country for permanent residence. In many cases, people also buy property with the intention of renting it out to generate income.

The real estate market in Spain today is extremely dynamic. The advantages of owning your own home or commercial real estate in one of the most developed countries in Europe are indisputable. Moreover, the Spanish authorities encourage the purchase of real estate by foreigners.

You will find a huge number of properties for every taste in every corner of the country - from prestigious large cities and seaside resorts to small towns in the outback. Numerous options are available for you to choose from including apartments, townhouses, bungalows, cottages, penthouses and luxury villas with the most modern solutions regarding architecture, materials used, decoration and communications.

Spanish property

Having made the right decision to buy real estate, you need to clearly understand what types of deductions, including taxes, you will pay. Please note that when buying a property, you should allow for an increase in your expenses, by 10-15% of the value of the property due to various fees that come with such a purchase. These include the following:

  • real estate agency commission;
  • the cost of legal services;
  • mortgage expenses (in case of applying for a mortgage), etc.

Upon becoming the owner of real estate, you begin to receive real or potential (passive) income. The rental of housing will bring you real income. If you plan to live or run a business in your own apartments, you will save money by not having to rent a place. This is passive income.

Non-residents must pay property taxes in Spain on real estate purchased in this country, regardless of whether they plan to use it themselves, rent it out or not. Property taxes in Spain for non-residents include the following:

  • income tax from a non-resident IRNR;
  • property tax IBI;
  • in certain cases, IP wealth tax;
  • garbage collection tax.

Important! Regardless of whether you rent property or not, you are liable to pay income tax. If you do not rent out your property, then the tax rate will be 25% out of 2% of the value of the property. For example, if the cost of an apartment is € 100,000, the calculation will be as follows:

€ 100,000x0.02x0.25=€ 500.

The payment is made once a year.

Income tax (income tax from a non-resident IRNR)

When renting out property, a tax is paid, which is calculated by multiplying the cost of rent by a fixed tax rate of 24% for non-residents (for residents - 19%).

The IBI property tax is mandatory and equal for both residents and non-residents. This tax is municipal, the rates of this tax are set by local authorities and amount to 0.4-1.1% of the property value. This tax is paid once a year.

The garbage collection tax is also mandatory for all property owners, and its rates and due dates are set locally.

If you are a non-resident property owner and do not rent it out, you are still required to file an income tax return once a year. If you rent out property temporarily, then you need to submit quarterly reports to the tax authorities, where you indicate the net income that you received in each quarter.

As a non-resident, you will be subject to wealth tax if your property value is over € 700,000. This tax rate is progressive, with a maximum of 2.5% if the property value is over € 10,700,000.

When selling real estate, a non-resident is obliged to declare the capital gain received from the excess of the sale price over the purchase price of the property and pay tax on this difference. The tax amount is fixed at 24%. Payment must be made no later than three months from the date of sale. In addition, if the seller is a non-resident, then the buyer is obliged to withhold 3% of the sale price of the property and transfer it to the tax authorities.

Tax penalties for non-residents

Penalty for non-payment of tax

In case of late payment of taxes or evasion from them, certain measures can be taken regarding the violator in accordance with Spanish law, such as:

  • accrual of fines and penalties in case of late payment or payment in an incomplete amount;
  • collection of debt;
  • blocking of bank accounts;
  • confiscation of property to pay off a debt;
  • refusal to grant or extend a residence permit.

FAQ

Do non-residents have to pay taxes in Spain?

Yes, they do. The main types of taxes paid by non-residents in Spain are:

  • Income tax;
  • capital gains tax;
  • interest income tax
  • dividend tax;
  • royalties;
  • pension tax;
  • property tax;
  • inheritance tax;
  • wealth tax.

What is the income tax from a non-resident in Spain?

The following types of income of a non-resident are subject to income tax:

  1. salary if you are an employee;
  2. income from running your own business or freelancing.

The income tax rate for a non-resident is 24%.

How is tax calculated for non-residents in Spain?

Taxes in Spain for non-residents are generally calculated at flat rates. The basic tax rate is 24%.

How much taxes do foreigners pay in Spain?

The amount and rates of taxes depend primarily on whether the foreigner is a resident or non-resident of Spain. If you live in Spain for less than 183 days during the year and do not have vital interests in this country, then you are a non-resident, and the main types of taxes for you will be as follows:

  • income tax;
  • capital gains tax;
  • pension tax;
  • property tax.

In certain cases, other types of taxes may apply.

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