Tax in Spain

Resident tax in Spain

Foreigners living in Spain are often uncertain as to what constitutes being a tax resident in Spain and whether or not they should change their tax status.

Following changes to the NIE / Residencia / Foreigners Registration Certificate regulations over the past few years, many expats in Spain have become daunted with the current situation and are unsure about current regulations.

Spanish fiscal laws and tax treaties state that if your “habitual residence” is in Spain then you should be registered as a fiscal resident in Spain.

A person is considered to have their “habitual residence” in Spain if:

  • they spend more than 183 days per year in Spain. Sporadic trips outside of Spain are counted within this period, unless tax residence in another country is proven.

If you chose to become a Fiscal resident in Spain then we notify the tax office in your home country to avoid double taxation.

As a Fiscal Resident of Spain, you are required to complete your annual tax returns in Spain (Declaracion de la Renta). These tax returns are submitted in May for the previous tax year.ie. In May 2014, you will submit your tax return for the period 1st January 2013 to 31st December 2013. This return must include your worldwide income not only your income in Spain.

REPORTING OF ASSETS HELD OUTSIDE SPAIN TO THE TAX AUTHORITIES.

For all Tax Residents in Spain with assets over 50,000€ located abroad as at 31st December 2013 must be declared to the Spanish tax authorities by March 2014. This includes all accounts with financial institutions, custodian accounts, real estate, assets held in companies abroad, shares, trusts, etc.

The value of the assets reported is at 31st December 2013: the tax declaration (modelo 720) needs to be completed between February and March 2014.

PLEASE BE AWARE: There is no obligation to file a declaration if you have nothing to declare or if you declared it in 2013 ( for the fiscal year 2012). A new one need only be completed when there has been an increase in asset values of at least 20,000€.

It will be a criminal offence if you don’t report overseas assets. Failure to comply will mean a heavy fine and in some cases a prison sentence. There is no statute of limitation, so the tax offices can ask for information on your assets from the date it was set up.

Non Resident tax in Spain

Spanish tax law states that a non resident owner of a property in Spain must pay Spanish Income Tax. This law applies even if the property is used as a holiday home in Spain and does not generate income from rentals.

The Non Resident Tax Return form (Modelo 210) should not be confused with the IBI (Impuestos sobre Bienes Inmeubles)  payment which is a property tax paid to you town hall.

Many non-resident property owners in Spain are unaware of the obligation to complete the Non Resident Tax Return and are caught out when trying to sell their property.

When a non-resident sells their property in Spain, 3% of the selling price is paid to the tax office, by the seller.  This money is only recoverable once it has been proven that all taxes relating to the property have been paid, this includes capital gains tax and the Modelo 210 non-resident tax form.

‘Your Life In Spain Made Easy’

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