It is common belief that non-resident have no tax obligations in Spain because they “pay their tax for their worldwide income back home”.
Whereas it is quite true that one has to pay tax for worldwide incomes in the country in which one resides, in some cases, such as when the income derives from a property located in other country, the liability incurs in that country but it may then be deducted from the tax liability in one’s own country of residence.
There are treaties to avoid double taxation between all countries in the EU. In practice, if you have a property in Spain and pay your worldwide tax in another EU country you first will have to declare and pay for your income in Spain and later report this payment in your usual annual tax return so that it may be deducted from it.
In Spain, non resident owners of properties must file their tax for rental income quarterly, that is in April, July, Oct and January in respect of business in the previous three months. The tax has to be filed individually by every co-owner of the property. This includes husband and wife if the property is owned by a married couple.
How much tax?
The Amount of tax is a percentage of the balance after deducting allowable expenses. In 2016 the tax rate percentage is 19%. You can estimate your tax liability using the online tool on the Limit Consulting webpage. The tool also allows you to submit your figures to us if you choose to use our services.
What expenses can I offset against my rental incomes?
Examples of common expenses.
Purchase of necessary utensils, furniture, etc…
Maintenance and repairs.
Services and Utilities: water, electric, cleaning, etc… as long as they are paid by the owner.
Legal fees: accountant, lawyer,
Town hall fees and community charges such as IBI, waste-collection, street-lighting,…
Depreciation of durable goods
If the total of expenses exceeds the income, the remainder can be left carried forward to other years, with a maximum of 5 years.
Limit Consulting can file your tax for this quarter