Spanish taxes for non-resident property owners

What taxes do non-residents with properties in Spain pay?

Non-resident taxpayers with properties located in the Spanish territory are subject to taxation in Spain regardless of whether the property is for personal use or rented out.

The most relevant property taxes are Real Estate Tax (local tax known as "IBI"), Non-Resident Income Tax (IRNR) and, in some cases, Wealth Tax (IP). These taxes apply to any non-resident property owner including Spaniards who currently reside abroad.

Property taxes in Spain for non-residents

Real Estate Tax (IBI) 

The Real Estate Tax is a local property tax, usually known as IBI, collected by the local tax authority where the property belongs (e.g. Ayuntamiento, Patronato, SUMA, Consorcio de Tributos, etc.).

All properties are registered in a census and assigned an administrative value (cadastral value). Each council determines a local tax rate that ranges from 0.4 to 1.1% that, along with the cadastral value, is used for the calculation of the Real Estate Tax.

The local tax must be paid annually and for each property included in the census. Deadline varies in each municipality, but usually between September to November. 

For the Real Estate Tax non-residents don’t have to file a specific tax return but make sure that the payment is made within the deadline. 

Non-Resident Tax (IRNR). 

Non-resident taxpayers are also liable to non-resident tax (IRNR) if they have a property in Spain. This tax must be submitted to the Agencia Tributaria (national tax authority) through the Spanish Tax Form 210 known as "Modelo 210". 

What does the Spanish Form 210 tax? Among other types of income, the "non-resident tax" is a tax levied on the ownership, rental and transfer of property.

I. Own-use real estate

If you are a non-resident property owner who does not rent out your property, you must declare an imputed or deemed income.

Imputed income is an income that the tax office "invents" for keeping a property empty or for personal use. It is a legal presumption that any property that is not your main residence allows you to obtain an income, a rent for it. If you do not do this, the tax authorities do not have to lose their share of this potential income that the property could be generating. That is why you must impute an income for owning urban property even if it is empty.

The income to declare will be 2% of the property cadastral value if this value has not been reviewed in your municipality within the last ten years. Otherwise, a 1.1% reduced rate applies. The same rule applies to Spanish residents.

The tax rate is 24%. However, for residents of the European Union, Norway and Iceland 19% apply.

Imputed income must be declared via form 210 within the following calendar year after the due date (31st December).

Example of imputed income 

Klaus, a tax resident of Germany, owns a flat in Alcudia, Mallorca, where he spends two months of the year. For the rest of the year, the flat remains empty. The cadastral value in 2021 is 65000 euros. 

- Taxable base 2% x 65000 = 1300€ (Imputed Income)

- Tax rate is 19%.

- Tax liability: 1300€ x 19% = 247€.

The term to file form 210 for the 2021 tax year is from 1st January to 31st December 2022. 

II. Rental property

All double tax treaties signed by Spain consider that income from real estate can be taxed in the State where the property is located. In the event of double taxation, it will be the other State that will have to eliminate it. Therefore, if non-residents obtain income from renting out their Spanish property, they will have to deal with the non-resident tax.

The term to file and pay the non-resident tax is the first 20 days of April, July, October and January in relation to the income accrued in the previous calendar quarter.

Important note: Starting from the 2024 tax year, the declaration of rental income will shift to an annual basis, with the deadline for submission set between January 1st and January 20th of the following year. 

Form 210 must be filed for each type of income and each payer. However, in the case of income from rented or sublet property not subject to withholding tax (e.g. rental of a house), it may be grouped quarterly in a single form 210 for each property, even when there are several payers (tenants).

Taxation on rental income varies depending on the country of residence. 

Residents of the European Union, Norway, Iceland and Liechtenstein.

The main difference is that, in order to calculate the tax liability, expenses can be offset from rental income. 

The Non-resident tax law considers the expenses foreseen in the Income Tax Law (IRPF) are deductible provided that they are directly related to the income obtained in Spain.

Residents of the European Union, Norway, Iceland and Liechtenstein are taxed at a flat rate of 19%.

Example: Rental Income from a property of an EU resident.

Louise, a resident of Belgium, rented his flat in Manilva (Malaga) for April and May 2022 for a total of 3000€. During that period, the expenses related to the rent have been 1000€. For the rest of the year, the property remains empty.

- Taxable amount: 3.000 – 1000€ = 2000€.

- Tax rate: 19%.

- Tax payable: 19% x 2000 = 380€.

The deadline to file Form 210 and pay 380€ is from 1st July to 20th July 2022. 

In addition, in 2023, he will have to file Form 210 declaring an imputed income for the days during which the property was empty or not rented in 2022.

Residents of other countries

These taxpayers cannot deduct any expenses from rental income and the tax rate is 24%.

Therefore, the taxation of non-resident property owners who are not residents in an EU country, Iceland, Norway or Liechtenstein is much higher.

Example: Rental income from a property of a non-EU resident

Michael, a UK resident, rented his flat in Mijas for April and May 2022 for 3000€. During this period, the expenses related to the rent were 1000€. For the rest of the year, the property remains empty.

- Taxable base: 3000€

- Tax rate: 24%.

- Tax payable: 24% x 3.000 = 720€.

From 1 to 20 July 2022 Michael will have to file form 210 and pay 720€. 340€ more than Louise although she has obtained the same income.

III. Sale of a property 

When a non-resident sells a property located in Spain, the purchaser is obliged to withhold 3% of the value of the sale and pay it to the tax authorities within 1 month from the date of the sale, using form 211. This withholding tax is considered a payment on account of the tax payable by the non-resident for the capital gain obtained from the transfer.

The gain or loss is calculated as the difference between the transfer value and the acquisition value (including expenses and taxes for both transactions). If the property has been rented, the acquisition value must be reduced by the amount of the depreciation corresponding to the rented period.

The tax rate is a flat rate of 19% and it applies to any non-resident regardless of the country of residence.

The purchaser must provide the non-resident seller with a copy of Form 211 so that he can deduct the amount withheld from the resulting tax liability. If the amount withheld exceeds the tax payable, a refund of the excess may be requested.

The deadline for filing Form 210 in the case of the sale of property by non-residents is 3 months. This period is counted from the end of the period of 1 month that the buyer has to file Form 211.

If the result is negative, the seller is entitled to request a refund of the 3% withholding.

Wealth Tax

Non-resident individuals are also subject to Wealth Tax but only for the assets and rights located in the Spanish territory.

Generally, there is an exemption threshold of 700000 euros, which is also applicable to non-residents.

The tax is due on 31st December and must be declared through Form 714. 

The filing term is the same that applies to residents in the income tax campaign (between April and June of each year). 

They must only file a tax return when the tax liability is payable or if the value of the assets and rights located in Spain is greater than 2 million euros, even if the tax liability is null.