PERSONAL TAX LAW

IRPF and IBI for residents

If you live in Spain more than 183 days a year (not necessarily continuously), you are a tax resident here. It is not optional, it is a legal obligation. 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 then you can ignore the days you have already been in your Spanish domicile during the year.

What taxes do you have to pay if you are resident in Spain? First of all, everyone who owns property in Spain must pay IBI – Impuesto Municipal sobre Bienes Inmuebles (Municipal Property Tax). This tax is for municipal services and infrastructure provided by the municipality. This tax is paid once a year by both residents and non-residents.

The other tax to be paid is, of course, the income tax (IRPF). It is usually the one that is of most concern when considering moving to Spain permanently.

Income tax in Spain

Most residents must complete an income tax return before the end of June each year. The tax is paid retroactively for the previous year, the so-called income year.

But not everyone has to file a resident income tax return. In Javaloyes & Suárez we will study your case and we will inform you, according to your income, if you should pay tax or not.

You must declare your global income in the Spanish income tax return, such as income from rent, interest, capital gains from the sale of a house or other asset, even if they are outside Spain. If you work in Spain, you declare your salary according to the “withholding certificate”. This also indicates how much Spanish provisional tax has already been deducted when paying your salary each month and how much has been paid to the Spanish Social Security.

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

Taxes if you own a property in Spain:

1.- If you are resident or non-resident:

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

2.- Real Estate Tax (Impuesto sobre Bienes Inmuebles) which you pay annually:

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

3.- Income and/or rent tax: The former is payable simply for owning a property and the latter if you rent it out. If you rent your property, you must declare it in the corresponding Official Registry.

4.- IBI:

The Impuesto sobre Bienes Inmuebles or IBI is the municipal tax that each owner must pay, every year and which is collected in voluntary payment period, depending on the area in which your property is located. You can pay this tax directly at some banks or by direct debit.

5.- Rent:

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

April 20
July 20th
October 20th
January 20th
6.- Income tax:

Hacienda considers that if you do not live in a property, generate income in it, so the tax is payable on this second home even if it is not rented and must be declared by you in an annual income tax return as a non-resident, which must be filed before December 31 of each year.

7.- Consequences for non-payment

The Spanish Tax Agency in cases of non-payment will send you notification with the amount of the economic penalty that you will have to pay.

Final consequences:

You will have to pay interest for late payment, as well as other possible penalties. Your bank account may be blocked, which will result in the loss of payments of invoices and other expenses. The debt is held against your property until it is sold or transferred. Names on title deeds cannot be changed until the debt is paid off.

Finally, you may be involved in one of the Spanish Tax Agency’s anti-fraud tax campaigns.

Therefore, it is clear that foreigners should have a qualified tax representative in Spain such as Javaloyes & Suárez.

What should I do?

We recommend non-residents to get a tax representative. A representative like Javaloyes-Suarez will help you:

make sure that your non-resident taxes are paid on time
represent you before the Spanish tax authorities
can receive notifications
update you about changes in tax legislation
answer your questions throughout the year
Javaloyes & Suarez has a comprehensive tax service for non-residents – including a package of services to ensure that your Spanish property taxes are paid correctly.

We help non-residents and residents with their tax affairs, we invite you to contact us.

Capital Gains Tax – Plusvalía

The capital gains tax is a municipal tax payable by sellers on the sale of real estate in Spain.

The calculation of this tax depends on several factors. At Javaloyes & Suarez we will inform you of the exact amount of your capital gains tax if you want to put your house up for sale.

This is when you sell your property!

I have just put my Spanish house up for sale and I have heard that one of the taxes I have to pay is the Plusvalia. I had never heard of this tax, what does it consist of?

In connection with the sale of homes in Spain, three different taxes arise:

ITP (Impuesto de Transmisiones Patrimoniales) – a transfer tax. This tax is paid by the buyer.
Capital Gain – a tax on the profit made on the sale of a property. It is paid by the seller.
Plusvalía – a tax on the officially determined increase in value of the land on which the property has been built since the last time it was sold. The percentage varies depending on the location of the property, the size of the land and the time elapsed since the last sale. It applies to both new and used homes and is paid by the seller.