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Taxes in Spain

As a property owner in Spain you will get to deal with a number of taxes. We will inform you about a few of these taxes one by one listed on this page. We only give you global information on the usual taxes. If you would like to get more information or if you are looking for a reliable party that can help you with your registration, please contact us. We have a contact person which is well known on the Costa Blanca and is a specialist regarding taxes (speaks English, Spanish, Dutch, German) Through the rapidly changing regulations within the EU, it is not easy to give correct and concise information on some of the topics. Yet we have tried, with the best intention, to address a number of topics.

Property taxes

When you buy a property in Spain from a person or company, then you will be paying a transfer tax called IVA (VAT). The transfer tax rate is 10%. In addition, the same as in England or any other country there are annual municipal property taxes. The “Impuesto sobre Bienes Inmuebles” (by almost everybody called shortly IBI) is levied by the municipality where you live. In the Comunidad Valenciana the tax is collected by the SUMA offices in every municipality. The easiest way is, if you do the payments of these taxes through a so-called domiciliation (direct debit). You only need to ensure that there are sufficient funds in your Spanish bank account. Have you bought a new property and didn’t you receive a bill from the IBI? Then please check regularly your local SUMA office, whether there has already been a tax (IBI) account. The rate is determined by the municipality, where the property is located, it is usually between 0.3% and 0.9%. The square meters of the property also play a role in calculating the amount. Compared to most other countries, the property tax rates are quite low. Especially on the Costa Blanca.

Income tax for non-residents

Non-residents pay income tax (IRPF) based on a flat rate ´´forfait´´. This tax return should be done before 31 December of the year following the year for which tax was owed. Patrimonio (wealth tax) only has to be paid once your total capital exceeds the €700.000

Income tax for residents

A person is seen as a tax resident in Spain, as soon as he has a residence card of Spain or a foreigner who is more than 183 days per calendar year present in Spain and his occupation, business, business activities and/or economic interests are in Spain. As a tax resident of Spain you must pay income tax on your worldwide income. This income is then taxed in Spain under the Spanish progressive income tax. Residents must submit their tax return IRPF and – if applicable – Patrimonio before 20 June of the current calendar year over the past year. Please note after all there are still options. Having a resident card doens´t mean directly you are also a fiscal resident. There are plenty of people who are resident in Spain, but still pay taxes in there homeland. Please be well informed regarding this specific subject. There are exceptions.

Rental tax

When you as a property owner renting out a property, the cadastral value of the home will be added to your taxable income, this is between 1,1% or 2% (depending on when the value is fixed). All necessary costs you make to create the rent are deductible. This doesn’t apply for a property that you use as a permanent home. Non-residents who rent out their property (since the 1st of January 2012) pay an additional tax for the period in which the property is rented out. The Declaration should be done at the end of each quarter in which the home was rented out. You should declare the net rental income.

Occasional taxes

In addition to taxes above you may have to deal with occasional taxes. The most famous example is the tax on the profit when selling your property. In contrast to the Netherlands in Spain you’ll be charged on profit (what you make on your property) when you sell it. The arrangements for this tax, which are indicated under the income tax, are quite complicated.  At all times in case of a property sale by a non-resident the standard taxrate is 3% from official selling price withhold and paid to the Spanish tax authorities directly. Even then it’s still possible that you need to pay extra or that you get (a part of) the withhold 3% back. Furthermore, you (might) have to pay an extra tax called (Plusvalia) over your sold property, this is a municipal tax on the increase of the value of urban areas.

Other local taxes

Municipalities also raise their road tax (IVTM) and household waste taxes sometimes. These annual taxes are also often collected by the SUMA. As in the Netherlands, Belgium and England they sometimes change the procedures and rates. Here above we’ve tried to give you a little guidance on the taxes in Spain. When you buy a property in Spain it is important to be well informed and stay ahead of all the Spanish taxes. Our honest advice to any of you is : Please be well informed up front, or let a ´Gestor´ typcial Spanish administration office do your yearly taxes. Some only charge a fee of € 100 per year.