As we are approaching the end of the year it is important to remind our readers that before the end of the year taxes needs to be filed and paid. In order to avoid penalties for late payment we recommend contacting urgently your advisor or a lawyer in case you have purchased a property in Spain before 2019 or after.
Non – Residents Tax ( Form 210 ) – filed by 31/12/20
If you are not tax resident in Spain and own property, Form 210 must be filed which refers to a “non-residents “ tax (in Spanish “Impuesto sobre la Renta de no Residentes – IRNR ).
This tax is levied based on a hypothetical rental from the property.
The income to be declared is the amount resulting from the cadastral value of the property, as shown on the Real Estate Tax receipt (I.B.I. or Impuesto de Bienes inmuebles) in the following percentages:
- 2.0% in general.
- 1.1% in the case of property whose cadastral value was revised recently.
As established in art. 24.5 LIRNR, in the case of a non-resident, the imputed income of real estate located in Spanish territory will be determined in accordance with the provisions of the Personal Income Tax Law.
The art. 85 of Law 35/2006 of November 28 of Personal Income Tax, provides that ‘In the case of urban real estate, in both cases not affected by economic activities, nor generating income from capital, excluding the habitual residence and the land not built, will be considered as imputed income the amount that results from applying 2 percent to the cadastral value, being determined proportionally to the number of days that correspond in each tax period.
In the case of properties located in municipalities in which the cadastral values have been reviewed, modified or determined by means of a general collective valuation procedure, in accordance with the cadastral regulations, and have entered into force in the tax period or in the within the ten previous tax periods, the percentage will be 1.1%
However, there is some room for interpretation of the this tax rule. In many towns like Almuñecar the revision of the cadastral value of the property has been carried out on an annual basis since 2015., with an increased on around 30%, but the tax office does not consider it as modification, so they apply 2% of the cadastral value instead of 1.1%.
To the resulting amount a tax rate is applied:
For residents of the EU, Iceland and Norway the tax rate is 19%, for residents of other countries it is 24%. (Note to UK nationals: Brexit without an agreement will mean that they will be taxed at the higher rate )
If you have not owned the property for the entire year or if it was leased for part of the year, you must declare the corresponding proportion
The place of filing is the branch of the State Tax Administration Agency corresponding to the place where the property is located
If the property has been let, the form 210 is filed quarterly with the payment of each tenancy agreement you had during the previous 3 months.
How can I be classified as non-resident?
The general rule is if you spend more than 183 days (not necessarily consecutive) in Spain you are deemed a tax resident. You can also be classed as tax resident if your principle base of business is in Spain or if your partner or dependant children live in Spain.
Notification of World-wide Assets ( Modelo 720 )
As a tax resident the form 720 must be filed annually by the 31st March if you have assets outside of Spain exceeding 50,000 Euros as at the 31st December. No tax is applied to these assets but can be used to check if all income on those assets are being declared.
Assets are grouped into three and the €50,000 refers to each group and not the total.
- Bank Accounts (All accounts combined and the final three months averaged to determine the €50,000 limit ).
- Investments .
- Property ( purchase price not current valuation )
Note : Assets over the limit must still be filed even if held in joint names However, the share and value of each person are noted. It there are several assets under the limit but in the same group, they must be added together and if over €50.000 stated on the form.
Asset values not in Euros will be converted at the rate of exchange as at 31st December.
In following years the form 720 need only be filed if any assets in the groups have increased by 20.000 Euros.