I am a member of the Tenerife Law Society since 1989 with a dedicated team for anyone who needs an immediate answer or long term solution to any practical or legal issues appertaining to any property or business investment in Spain. View all posts by J. Escobedo
FULFILLMENT OF YOUR TAX OBLIGATIONS IN 5 STEPS
(1) APPOINT A TAX REPRESENTATIVE
It is not only of utmost importance to pay your taxes on time, but also to be up to date of all legislation changes, the period when the taxes have to be paid, the tax rate modifications and also being able to receive on time all the communications from the tax office. This is why for non-resident owners the appointment of a professional tax representative it is really advisable. Keep in mind that the time to react when receiving a formal tax request from the Spanish tax office is normally very short and should the letter be not replied before the dateline, or the tax is not paid on time, surcharges and fines could be imposed. Compliance with this requirement is simple, it only requires signing a form and let your tax representative notifying the appointment to the nearest Administration of the Tax Agency corresponding to the location of the property.
As lawyer, I have registered myself as a collaborator of the Spanish Tax Administration and I can, therefore, deal with all my clients’ tax affairs online.
(2) GET YOUR TAX IDENTIFICATION NUMBER (NIE)
In Spain every person has a Tax Code (NIF) which must be stated on any tax return and in all communications addressed to the Tax Administration.
As a general rule, the Tax Code of persons of Spanish nationality will be their DNI (Spanish National ID), and for foreigners, it will be the NIE (Foreigner’s Identity Number). These identifications must be requested at the nearest Spanish National Police headquarters. The NIE certificate is necessary for all foreigners when they are going to buy a property or opening bank accounts in Spain.
The process of getting your own NIE certificate can be complicated to those persons not used to Spanish bureaucracy. My staff can help you to get your own NIE.
(3) PAY YOUR NON-RESIDENTS’ INCOME TAX
When a property is owned by a married couple or by several people, each of them is in Spain an independent taxpayer, and therefore they must file separate tax returns (Mod 210).
No matter if the property is rented or not, in Spain taxable incomes are those from property own use or rentals (short term, holiday and long term)
Our office can assist you with this tax and we have the necessary resources to fulfill your tax duties online.
(4) DECLARE THE INCOME FROM LEASED PROPERTY
The income to be declared will be the whole amount received from the lessee, without deducting any expenses.
However, in the case of taxpayers residing in another Member State of the European Union and since January 1, 2015, also in Iceland and Norway, for the determination of the tax base, they may deduct the expenses provided it is proven that they are directly related to the income obtained in Spain and that they have a direct connection with the activity carried out in Spain.
This income is understood to accrue when required by the lessor or on the collection date, if earlier.
My administration department can help you with your personal accountancy of your rental income. We can also assist you to submit your tax returns on time on April, July, October, and January every year.
(5) PAY YOUR LOCAL TAX – IBI (PROPERTY TAX)
This is a local tax, that is, levied by the Municipal Councils, which must be paid by owners of real estate property.
All the real estate properties of every municipality are included in a census and have an assigned value (rateable value). The amount to be paid is obtained by applying the tax rate established by the Municipal Council to the rateable value.
A bill for the payment of the Tax is issued every year for every property included in the census. Usually the Municipal Councils establish the possibility of direct billing the payment in a bank account, which ensure that this is done within the established payment period and surcharges are avoided.
The period for making the payment varies in every municipality, although it is usually around the months of September, October and November of each year
My administration department can help you with setting up your standing orders and checking if there are any outstanding local taxes, by getting outstanding tax bills certificate from the Town Hall.
Taxation of real estate property owned by non-resident individuals in Spain (information updated to 2020)