Taxation of urban buildings owned by non-resident individuals

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by Gonzalo Blanco

IF you are a non-resident in Spain and the owner of an urban property located in this country, you will be subject to Non-Residents’ Income Tax and to a local Property Tax.

Non-residents must file a Property Tax return if they own property in Spain by 31 December of each year. When a property is owned by a married couple or by several people, each of them is an independent taxpayer, and therefore must file separate tax returns.

The income to be declared will be the amount resulting from applying the following percentages to the rateable value of the property, which is stated in the Property Tax (IBI) bill:

In general, 2%. In the case of properties whose taxable value has been reviewed or modified and this has become applicable within the tax period or the ten previous tax periods, 1.1%.

This income is understood to accrue once a year, on 31 December.

Form: form 210, declaring income type 02.

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 resident in another European Union member state and, from 1 January 2015, also in Iceland and Norway, they may deduct the expenses provided for in the Personal Income Tax Act for the determination of the gross tax base, provided that it is certified that such expenses are directly related to the incomes obtained in Spain and have a direct and indissociable link with the activity performed in Spain. This income is understood to accrue when it is requirable by the lessor or on the collection date, if earlier.

Form: form 210, declaring income type 01.

Capital Gains taxes

The person who purchases the property, even if he/ she is resident or not, is obliged to withhold and pay to the Treasury 3% of the agreed price. This payment is to be considered in the case of the vendor, as an advance payment of the tax corresponding to the transaction. Therefore, the purchaser has to forward to the non-resident vendor a copy of form 211 that has been used for the payment of the withholding in order for the vendor to be able to deduct this amount from the tax due to be paid, as a result of the assessment of the capital gain. If the amount withheld exceeds the tax due, the vendor may request a tax-refund.

Filing period: Three months after the end of the deadline of the period for payment of the withholding. The purchaser has to make the payment of the withholding no later than one month after the date of sale.

Tax rate: 19% -20%

Refund of the withheld surplus. Form 212 In the case of capital losses, or if the withholding made is greater than the full liability, you will be entitled to the refund of the withheld surplus. The refund procedure commences with the filing of the tax return form. If applicable, the Tax Agency will make a provisional settlement within the six months following the end of the established period for the filing of the form. You can discount all the fees and any estructural reform. Source :Agencia Tributaria

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