Non-resident properties located in Spanish territory are subject to taxation in Spain. Taxes must be paid on real estate acquired in Spain. Regardless of whether the property is available for own use or is rented.
The first thing to know is what is a NON-RESIDENT for the Tax Agency.
The condition of non-resident is for those persons who do NOT fulfill any of these three characteristics:
– If they stay in Spanish territory for more than 6 months, in a calendar year.
– If the core of economic interests and activities are based in Spain.
– In the case of some civil servants who, by reason of their position, have been transferred abroad.
This tax, among other income, is levied on the holding, leasing and transfer of real estate of non-residents.
I am going to focus on how the real estate itself and its possible lease are taxed.
1.-Property for own use
A non-resident owner of a property located in Spanish territory who rents and/or keeps it empty has to declare by imputation of income.
The imputation of rents is a yield that stipulates Treasury for maintaining an empty property. It considers that any property that is not a habitual residence allows to obtain an income or a rent for it. If this is not the case, the Treasury does not forgive the part that corresponds to him of the yield that could be generating the property. For that reason it is necessary to impute an income for being the owner of a property even if it is empty.
The income to declare will be 2% of the cadastral value of the property if this value has not been revised in the last 10 years or 1.1% if it was revised in this period. This is the same income imputation regulated for residents. The tax rate applied is 24%. For residents in another European Union State, Norway and Iceland it will be 19%.
2.- Non-resident property rented by a non-resident
In the IRNR a tax return must be filed for each type of income and each payer. But in the case of income from leased or subleased real estate not subject to withholding, they may be grouped by quarter in a single form 210 for each property. They will do so even if they come from several payers (tenants) as long as a specific code of type of income is indicated.
The taxation of real estate income is very different depending on the country of residence.
Residents in the European Union, Norway and Iceland: Deductible expenses may be subtracted from the total income. The IRNR Law considers deductible the expenses foreseen in the IRPF Law as long as it is proved that they are directly related to the income obtained in Spain. It is not allowed to apply the reduction of 60% of the net yield when the tenant uses the property as his permanent residence.
Residents of the European Union, Iceland and Norway are taxed at a rate of 19%.
Residents outside the European Union, Iceland or Norway: These taxpayers cannot deduct any expenses. The taxation of real estate of non-residents in the European Union, Iceland and Norway is much higher than that of EU residents and non-EU residents.
This differentiation has been brought to the attention of the European Commission because it is contrary to the free movement of capital.
FILING DEADLINES.
These vary depending on the type of income involved. Thus, the deadlines are as follows:
– Income derived from the sale of real estate: in the maximum period of three months once the period of one month has elapsed from the date of transfer of the real estate.
– Imputed income from urban real estate (not rented): if the property has been empty at any time during the year, a Form 210 must be filed for that period. The declaration must be made during the calendar year following the date of accrual.
– Income from rental of real estate: income must be declared by means of form 210 quarterly during the first twenty calendar days of the months of January, April, July and October, in relation to income whose accrual date falls within the previous calendar quarter.