November , 2017
How do you fulfil your income tax obligation in Spain in the event that you are a non-tax resident? Following you will find some aspects to consider when filing Spanish tax declaration form number 210. The so-called Tax on Non-Resident Income (IRNR) concerns individuals and legal entities who do not have a fiscal residence in Spain, but generate some type of income in Spain.
The most common case on the Costa del Sol concerns all non-residents who own a property in Spain. Whether the property is intended for rent or for the personal enjoyment of the owners, the Spanish Treasury considers that income is generated (the so-called Deemed Income Tax) and owners are obliged to declare this through a tax declaration.
Let’s focus on the latter case of property owners who use it for their personal use, and the main points to consider when producing and presenting the declaration. This tax will be accrued after the year ends; first, you have to consider the date of purchase in the first settlement, because it will only be taxed for the days that have elapsed from that purchase date until the end of the year.
From the following year, the calendar year is already taken into account.Example: If I buy on 10 December, the first year will only be taxed for the days that elapse until the 31st (21 days).The value of the property is determined by the Catastral Reference as long as this data has been published; otherwise, we use the value of the purchase statements that appears in the Purchase Title Deed, and we apply 50 per cent to obtain this data reliably. On this amount (the Catastral value or 50 per cent of the purchase title deed), 1.1 per cent is applied if the Catastral value has been reviewed for less than 10 years or two per cent if longer than 10 years.
This resulting amount is what the Inland Revenue considers “Income” and on which the tax is applied. The tax percentage applicable in 2017 is 19 per cent. If the property belongs to more than one person, the ownership percentages corresponding to each owner are applied. As you can see, the theory does not always resolve all of your concerns. That is why at Welex we have a team of professionals who can advise you about the procedures for processing and settlement.