Non-Resident Income Tax in Spain

Non-Resident Income Tax in Spain

Spain’s non-resident income tax (IRNR) is a direct tax levied on income obtained in Spanish territory by individuals and entities that are not residents of Spain.

If you are not a resident of Spain and you own an property in the country, you will be subject to the IRNR and real estate tax. When one property is owned by a married couple or several people, each of them is considered an independent taxpayer, so they must submit separate statements.

I own an urban property in Spain. What do I have to pay?

When you own urban real estate for your own use, in most cases, the amount you must declare is 2% of the property’s cadastral value, which is included on your receipt of property tax (IBI). For real estate whose cadastral value has been revised and has come into force during the tax period or within the ten previous tax periods, you must declare 1.1 % of the property’s cadastral value.

You should declare a portion of this amount if you have not owned the property throughout the year or if it has been rented out for a period of time during the year.

Income from rental properties

In general, the amount that must be declared is the full amount received from the tenant, without deducting any expenses. However, taxpayers who reside in another part of the European Union (EU)—and since 1 January 2015, in Iceland and Norway—may deduct the expenses foreseen in the Tax Law on Personal Income, provided that they can prove that the expenses are directly related to income obtained in Spain and that they have a direct economic link that is inseparable from the activity carried out in Spain.

Are the profits from selling a property subject to taxation for non-residents?

Yes. The profits produced from the sale of a property since 1 January 2015 are calculated as follows:

  • The acquisition value is the real amount for which the property was purchased, to which the cost of the expenses and taxes inherent to the acquisition, excluding interest (which would have been paid by the transferring party), will be added.
  • The sales value is the real amount for which the sale was made, reduced by the cost of the expenses and taxes inherent to the conveyance, which are paid by the seller.

Please note that there is a partial exemption for the sale of urban real estate bought between 12 May and 31 December 2012. This partial exemption does not apply:

1) In the case of natural persons, when the property has been acquired or conveyed to his or her spouse, to any person united to the taxpayer by kinship, in a straight line or collateral, by consanguinity or affinity, up to the second degree included, to an entity, taxpayer or any of the aforementioned persons, in which any of the circumstances established in article 42 of the Commercial Code takes place, regardless of the residence and the obligation to formulate consolidated annual accounts.

2) In the case of entities, when the property has been acquired or conveyed to a person or entity in case of any of the circumstances established in article 42 of the Commercial Code, regardless of the residence and the obligation to formulate consolidated annual accounts, or the spouse of the aforementioned person or any person linked to him/her by kinship, in a straight line or collateral, by consanguinity or affinity, up to the second degree included.

I want to sell my property in Spain. Will I receive the full sale price?

The person who acquires your property, whether or not that person is a Spanish resident, is obliged to withhold and deposit 3% of the agreed sale price at the Tax Office. For the seller, this withholding is a payment of the corresponding capital gains tax derived from the conveyance. Therefore, the purchaser will deliver to the non-resident vendor a copy of model 211 (by means of which the withholding has been deposited) so that the latter can deduct the withholding from his or her capital gains. If the amount withheld is higher than the fee to be paid, the excess will be refunded. In the event that the withholding is not paid, the property will be subject to payment of the lesser amount between the withholding and the corresponding tax.

Where does this tax apply?

This tax will be applied throughout Spanish territory, without prejudice to the provisions of international treaties and agreements that have become part of the internal legal system, in accordance with Article 96 of the Spanish Constitution.

Income obtained without a permanent establishment

What are the different tax rates (subject to the IRNR) applicable to income obtained by taxpayers who are not Spanish residents?

Tax year Until 31-12-2006 2007–2011 2012–2014 2015 2016 to present
Tax rate 25% 24% 24.75% Residents of the EU, Iceland and Norway All other taxpayers Residents of the EU, Iceland and Norway All other taxpayers
Until 11-07-2015:

20%

From 12-07-2015:

19,50%

24% 19% 24%

 

For dividends and other income derived from participation in the equity of an entity, the tax rate varies according to the year of accrual.

 

Tax year 2003–2006 2007–2009 2010–2011 2012–2014 2015 2016 to present
Tax rate 15% 18% 19% 21% Until 11-07-2015:

20%

From 12-07-2015:

19.5%

19%

 

For interest and other income obtained from the transfer of an individual’s capital to third parties, the tax rate varies according to the year of accrual.

 

Tax year 2003–2006 2007–2009 2010–2011 2012–2014 2015 2016 to present
Tax rate 15% 18% 19% 21% Until 11-07-2015:

20%

From 12-07-2015:

19.5

%

19%

 

Welex is your tax advisor in Marbella. Our lawyers and economists provide legal and labour-related tax and accounting advice based on experience in order to offer legal security to our clients. We offer our professional services in Marbella and throughout Spain.

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