PERSONAL TAX LAW

Income tax and IBI for residents

If you live in Spain for more than 183 days a year (they do not have to be continuous), you are a tax resident here. It is not a choice you have, which you can sometimes get the impression of when you read on the Internet forums, but that is the law. The days do not have to be consecutive, so it is not enough to claim that you have left the country for a few days and that you can then ignore the days you have already been in your Spanish home during the year.

What taxes do you have to pay if you are a resident of Spain? First of all, all those who own a property in Spain must pay IBI – Municipal Property Tax. That tax goes to municipal services and infrastructure that the municipality offers. This tax is paid once a year by both residents and non-residents.

The other tax you have to pay is, of course, Spanish income tax. It is often the person who worries the most when considering moving to Spain permanently.

Income tax in Spain

Most residents must complete a resident tax return before the end of June each year. The tax is paid retroactively for the previous year, the so-called income year. So now this year, before the 25th of June, you pay your tax for income in 2014.

But not everyone has to file a tax return for residents. If you only have a pension that is lower than € 11,200, you do not have to do so if you do not have other income such as interest income or rental income. But we still advise to present an annual declaration because it will then be easier to prove that you are a tax resident in Spain.

You must declare your global income in the Spanish tax return, such as rental income, interest, capital gains on the sale of a home or other asset, even if these are outside Spain. If you work in Spain, you declare your salary according to the “certificado de retenciones”. It also shows how much Spanish provisional tax has already been deducted when paying the salary each month and how much has been paid into the Spanish social security system.

Self-employed people (autónomos) pay their taxes every quarter but must still present an annual tax return where you can see if you have paid too much or too little during the year.

Most people who move to Spain are most interested in knowing how much the tax will be on their pension. If you have been a government employee, you sometimes do not pay tax on that pension in Spain but in your home country. However, this income is considered when calculating the progressive tax rate. If you have SINK tax (Special Income Tax) in Sweden on your other pensions, Sweden deducts a 20% withholding tax when the pension is paid out. Then you pay tax on the gross amount in the Spanish tax return. Thereafter, every year you must send a copy of the Spanish tax return to Sweden and request a refund of the Swedish tax because it is in Sweden that the double taxation must be eliminated.

Taxes if you own a property in Spain:

1.- If you are a resident or not a resident:

If you live in Spain for more than 183 days a year, Spanish law considers you a resident, in which case you are required to declare your annual income here in Spain. If you are a non-resident, you will have to pay two outside taxes.

2.- Property tax that you pay annually:

IBI (municipal tax), calculated according to the “catastral value” of your property and issued each year by the local authorities.

Income tax and / or rent tax: The first is simply paid to own a property and the second if you rent out your property. If you rent out your property, this must be reported in the corresponding Official Register.

3.- IBI:

The property tax or IBI is the municipal tax that must be paid by each homeowner, every year and collected during a period of voluntary payment, depending on the area in which your property is located. You can pay this tax directly in some banks or by direct debit.

4.- rental:

If you rent out your property, you must pay the rental tax in Spain. It is collected quarterly and paid directly to the “Dirección General de Hacienda (AEAT)” / tax office on the following dates:

• April 20th
• July 20th
• October 20th
• January 20th

5.- Income tax:

The Spanish tax authorities consider that if you do not live in a property, you generate income on it, so the tax is paid on this second home even if not rented and must be declared by you on an annual tax return as a non-resident, which must be submitted before December 31 for the previous financial year, that is, if we are in 2015, then it is for 2014.

6.- Consequences for non-payment

In recent years, the Swedish Tax Agency has improved its regulations for controlling violations by foreigners who decide not to pay corresponding taxes. The measures carried out by the Swedish Tax Agency to identify and prosecute tax evaders and / or tax offenders include a system with higher information data regarding monitoring of electricity consumption and other deliveries.

Your notifications: Letters will be sent to your Spanish address and if you are not there to receive them, there are measures (such as being notified on the “BOE (Boletín Oficial del Estado)” / Official Bulletin) by which you are considered informed and finally debts + interest can be debited directly from your Spanish bank account.

Final consequences:

You must pay late payment interest, as well as other possible penalties. Your bank account may be frozen, which will result in payments of bills and other costs being lost. The debt is held against your property until it is sold or transferred. Names in titles of property cannot be changed until the debt is settled.

Finally, you can find yourself in one of the Spanish tax authorities’ anti-fraud tax campaigns.

Thus, for all of the above, it is clear that foreign nationals must have a qualified tax representative in Spain.

What should I do?

We recommend that non-residents get a tax representative. A representative like javaloyes-suarez-grans will help you:

Make sure your non-resident tax is paid on time

represents you before the Spanish tax authorities

can receive notifications

updates you on changes in tax legislation

answer your questions during the year

Javaloyes-Suarez-Grans has a comprehensive tax service for non-residents – which includes a package of services so that the taxes for your Spanish home are properly paid

We help non-residents and residents from all over Scandinavia with their taxes, you are most welcome to contact us.

Capital gains tax – Plusvalia

Anyone who owns a Spanish home that is used as a holiday home will receive a 21% tax on the profit on the day it is sold. Profit means sales price minus overheads for sales. Usually, the seller pays overheads in the form of plusvalia plus brokerage fees. As well as the overheads you had at the time of purchase. This may apply to stamp duty, attorney’s fees, notaries and property registers, etc. The improvement costs incurred are also taken into account. Invoices and building permits are required for this type of cost. Otherwise, it is difficult to get a deduction for improvement costs. The buyer is obliged to withhold 3% of the sale price and submit this amount to the tax office. The seller then has these 3% of the sales sum in his credit when he calculates the capital gain of 21% on the profit.

This is when selling your property!

I have just put my Spanish home up for sale and have heard that one of the taxes I have to pay is Plusvalia. I’ve never heard of that tax before. What is it?

In connection with home sales in Spain, three different taxes arise:

1. ITP (Impuesto de Transmisiones Patrimoniales) – a transfer tax. This tax is paid by the buyer.
2. Capital gains tax (Ganancia Patrimonial) – tax on the profit made on the sale of a home. Paid by the seller.
3. Plusvalia – is the tax levied on the increase in the officially determined value of the land on which the home has been built since it was last sold. The percentage varies depending on where the home is located, how big the land is and how long it has been since it was last sold. This applies to both new and used homes and is paid for by the seller.