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IurisConsulting Property Lawyers Income Tax |
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The key factor in determining the Spanish personal income tax regime applicable is the residence. Individuals are deemed to be resident in Spain for tax purposes if they are physically present in Spain for more than 183 days in a calendar year and/or their main centre of professional or business activities or economic interests is located in Spain. In the absence of proof to the contrary, an individual is presumed to be resident in Spain if his spouse and dependent children (with ages of less than 18 years) are resident in Spain. Residents are taxed on worldwide income, including capital gains and deemed income in certain cases.
The key factor in determining the tax regime of non-resident individuals is whether or not they have a permanent establishment in Spain. Non-residents without a permanent establishment in Spain are taxable on their gross Spanish sourced income and on capital gains arising from assets located in Spain. However, non-residents may also be taxable on deemed income in certain cases. Thus, for real estate used by the owner or not leased, the law presumes an income of 1'1% or 2 % (depending if the "catastral" value has or not been modified and updated from January 1994) of the cadastral value. And if the property does not have a "catastral" value yet (new properties), the law presumes an income of 1'1% to be applicable to the 50% of the value assessed to the real estate in accordance with the principles of valuation of the wealth tax, which require the assessed value of a house to be the highest of the following three amounts:
ˇ The cadastral value (which appears in the IBI receipt). Tax rate is 25%, so the taxable amount is, therefore, 25% of the estimated income. Therefore, any non-resident individual who owns a property in Spain is liable to Deed Income tax and must file annual returns. The liability takes effect once a year on December 31. Spanish Inland Revenue deems that the owner of the property is receiving an annual income from it. A Spanish resident tax representative must be appointed in the same circumstances as described for corporate entities and they are generally not entitled to personal allowances and tax credits. Tax return form to be filed is Form 210 and the filing period from 1st January to 20th June. The tax rate applicable to non-resident individuals is 25% of the gross income and 35% on capital gains. Non-residents must file a tax return within 30 days from the date the income is collected. This tax return can be filed monthly or quarterly in certain cases. However, tax treaties may reduce or even eliminate the taxation in Spain so please do not hesitate to contact us so that we can advise if tax treaties are applicable in your particular case. Simplified tax return form 214 (for both Income and Wealth Tax). There is a simplified tax return for non-residents in the case of a dwelling used as the taxpayer's own residence. With this form 214 a taxpayer may file both Income Tax and Wealth Tax together. The owner who occupies a dwelling which constitutes his or her sole property may use the simplified tax return form 214 in order to submit the tax return for:
The filing period is the calendar year after the one which the tax refers to, and the place of filing is the Regional tax Authority which the estate belongs to.
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