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1. What tax obligations does a non resident property owner have once he has acquired a property in Spain? You must be up to date in respect of the payment of IBI Tax and Non-Resident Income Tax beginning from the tax year you acquire the property. For example if you acquired the property in 2009 then from that year onwards you are obliged to remain up to date in respect of your obligations for all tax years that you continue to own the property. 2. What is IBI ("Impuesto sobre bienes Inmuebles")? It is the nearest Spanish equivalent to the Council Tax that exists in the UK. It is a local tax paid annually to the Town Council where the property is situated. Although the tax demand is often sent to you through the post to your Spanish address (at times to your address in your country of residence) there is no obligation on the Council to do so and therefore it remains your responsibility to request from the Council the tax demand and pay it within the time limits established. 3. What is the nature of non-resident income tax payable by individuals owning property in Spain. This is an annual Government tax and is based on the value assigned to the property on the IBI tax demand. If you have bought a new property and no value for the property has yet been assigned then you pay tax on 50% of the value stated on the title deed and in respect of the days in the relevant tax year you have owned the property. The relevant tax rate as established by the Spanish Inland Revenue is then applied to that value to calculate the tax due. 4. When is the tax payable by non-residents owning property in Spain? Whether you own one or more properties in Spain, (if you have purchased in addition a garage and or storeroom which are included in the same title deed then you are understood to have purchased one property), the deadline for payment is 30th June of the year following the year for which the tax is levied. In other words if you wish to submit your tax declaration for 2009 then the absolute deadline is 30th June 2010. 5. What was Spanish Wealth Tax? Prior to tax year 2008 when this tax was abolished, Non Residents also had the obligation to declare Wealth Tax. This was a Government tax that you were liable to pay merely as a result of owning property in Spain as at 31st December each year. For the purposes of this calculation no account was taken of the amount of time during the year you owned the property. The tax was calculated on the higher of the values as stated on the Title Deeds or of the IBI Tax demand issued for the tax year in question. Once the relevant value was known one was allowed to deduct for example debts affecting the property such as a mortgage created at the time the property was originally purchased. This deduction equated to the amount shown as outstanding in respect of the mortgage at the end of the relevant tax year. Thereafter the calculation of the amount due was based on a progressive sliding scale dependant on an individual’s net wealth. 6. When was Wealth Tax payable? The deadline for payment were the same as for income tax and therefore depended on whether you were the owner of what is considered to be one property or not. 7. What Tax Declaration Forms are used in order to pay Non- Resident Income and Wealth Tax? If you are the owner of one property it is possible to make a single declaration on Form 210 per person named on the title deed. If you are the owner of more than one property however, each person named on the title deed has the obligation to declare Form 210 per property. 8. What are the potential consequences if I do nothing? If you do not pay the IBI Tax then ultimately it is possible that the property could become the subject of a charge registerable at the Land Registry in favour of the taxing authority.
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