Non-resident Taxes in Spain. The mystery holiday home tax! Don't put your assets at risk. I am non-resident in Spain. What should I be paying? If you are non-resident in Spain you have to pay two types of tax each year: Local Taxes (Council Tax, IBI) These taxes are paid directly to your Town Hall or via the SUMA offices. Government Taxes (Income Tax) These taxes are paid to the Agencia Tributaria (Tax Authority). Own a property as a non-resident? Then you must pay income tax on your holiday home. In Spain, if you have a property it is automatically considered as a type of income and all owners named on the Title Deed should present an annual declaration for each property owned. Most owners are still unaware of this. It is important to understand that this is an Income Tax on your property and is separate from, and in addition to, the Local Tax/IBI/SUMA (which is an annual payment on the actual bricks and mortar). It does not relate to income in terms of your wages or your pensions, but only to property ownership. If I rent out my property, do I have to pay tax on this income? Yes. Apart from the taxes mentioned above, you will also need to pay: Government Taxes (Rental Income Tax) An Income tax declaration should be presented to the Tax Office for any rental income received. I live in Spain for more than 183 days each year. When you live in Spain for more than 183 days in one calendar year you become legally liable to be charged Spanish Income Tax as a Resident. The 183 days do not have to be consecutive. Four good reasons why you shouldn't ignore Non-Resident Income Tax 1. The Spanish Government needs to claw in more income via taxes. 2. They are closing in on the many non-resident property owners who are not presenting the MANDATORY annual tax return and the residents who should pay tax in Spain on their worldwide income and do not. 3. The Tax Authority has linked up with the Land Registry system and now knows who owns every property. 4. Electric companies are now obliged to supply data to help identify which homes are continuously occupied by residents or tenants. The consequences of non-payment Late declaration and payment will incur a fine. Ignorance of the law or the system is not accepted as a reason for late or non-payment. Property and bank accounts can now be embargoed until back taxes and fines are settled in full. Worried? Only if you do nothing and mistakenly believe the myth that you are still somehow “below the radar” or that all your tax affairs are “taken care of in my country”. The solution What you should declare and how to declare it can be confusing. Taxes can be taxing enough in your own country. The recession has made the Spanish tax authorities extremely vigilant. Let us help you to remove the stress of worrying about your tax situation:
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