Owning a property in Spain involves certain tax obligations, even if you do not reside in the country. If you own real estate in Spain without residing there permanently, it is essential to understand the relevant taxes to avoid penalties and ensure compliance with Spanish tax regulations. In this guide, we will explore the taxes that non-resident owners must pay, such as the Property Tax (IBI), the Income Tax for Non-Residents, and the Wealth Tax, among others.

Who is considered a non-resident in Spain?

In Spain, a non-resident is any individual or legal entity that does not have their habitual residence in the country. For individuals, the main criterion is the number of days spent in Spain: spending less than 183 days in a calendar year generally means being considered a non-resident. For legal entities, residency depends on the location of their effective headquarters, which must be outside Spain to be classified as non-resident. Despite not living in the country, non-residents who own property in Spain must fulfill certain tax obligations.

Tax obligations for non-residents with properties in Spain

As a non-resident owner, you will need to pay various taxes related to your property in Spain, such as the Income Tax for Non-Residents (IRNR) and the Property Tax (IBI), regardless of whether you generate rental income.

1. Property Tax (IBI)
   The IBI is a municipal tax that all property owners must pay, including non-residents. It is calculated based on the cadastral value of the property, which is set by the municipality. It is important to ensure it is paid each year to avoid penalties. Many municipalities allow for bank direct debits to facilitate payment.
2. Garbage Collection Fee for Non-Residents
   In addition to the IBI, non-resident owners must also pay a local fee for garbage collection, which covers waste collection services. This fee is separate from the IBI and must be paid according to the deadlines set by the local municipality to avoid surcharges.
3. Income Tax for Non-Residents (IRNR)
   This tax applies to all non-resident property owners in Spain, regardless of whether they receive rental income. It is based on the cadastral value of the property, and the imputed income is usually 2% of this value or 1.1% if the cadastral value has been updated in the last ten years. The declaration must be made before December 31 each year, and non-resident owners are responsible for calculating and paying this tax.
4. Wealth Tax
   If your assets in Spain exceed the threshold of 700,000 euros, you will be required to declare the Wealth Tax. This tax applies to the value of all assets you own in Spain, including real estate and bank accounts. The declaration must be submitted to the autonomous community where the property is located, following the established deadlines.
5. Solidarity Tax for Large Fortunes
   Recently introduced, this tax affects individuals with a wealth in Spain exceeding 3,000,000 euros. Non-residents who exceed this threshold must declare and pay this tax between July 1 and July 31 of the year following the tax year, which ends on December 31.

Penalties for non-compliance

Failure to meet tax obligations can result in economic penalties and legal proceedings. To avoid these consequences, it is highly recommended to consult a tax advisor specialized in Spanish legislation.

Why choose our tax advisory services?

Our team at Welex offers personalized services for non-residents, ensuring compliance with tax regulations in Spain.