Non Resident tax in Tenerife

Non Resident tax in Tenerife:

  • If you are a fiscal resident in a European country (including Iceland, Norway and Liechtenstein), you can deduct expenses and you pay 19% of the profit.
  • If you are a fiscal resident in a non-European country, you can´t deduct any expenses and have pay 24% of your gross income.

Due to the high demand of explanation of this tax and the documents related to the filing of these taxes we have compiled an overview on this page.

If you rent out your property in Spain, you will also owe taxes to the Spanish State. Don’t forget that if you rent out for a short period of time, you will also have to comply with the rental license for your property. Spain has taxing rights, since the property is located on its territory and the income is therefore generated here.

Non Resident tax in Tenerife: IVA/IGIC

To start… a rental activity in Spain is equated with a commercial activity and is therefore subject to the VAT rules that Spain has, the 21% IVA on the mainland and the 7% IGIC on the Canary Islands. (excluding other regions)

THERE ARE NO MORE EXCEPTIONS TO THIS RULE AS OF JANUARY 2024. This means that the standard rule is that every landlord is subject to IGIC in the Canary Islands and must charge this to his customers/tenants.

Non Resident tax in Tenerife: Deductions

The costs that may be deducted from the rental income for EU citizens (you are Irish, Polish…, have a second residence in Spain that you rent out) are the following:

  • Costs associated with the repairs and conservation of the property.
  • Interest on your mortgage loan (note: this loan must be registered in Spain!)
  • Taxes, such as the council tax (IBI/SUMA)
  • Other costs: water, electricity, etc.
  • Personal services: such as the cleaning, our invoice for the submission of your tax return, etc.
  • You can also write off your purchase costs, but we are not in favor of this. This makes the chance of an incorrect calculation when reselling very high, especially if you change gestor/consultant somewhere along. It is better not to do this, and to deduct these costs for 100% from the capital gains tax in the event of a resale. More information about this on our page about sellers taxes.

These costs can only be deducted and contributed pro rata to the rented nights!

Non Resident tax in Tenerife: Calculation

In a simple example: You have rented 60 out of 90 nights in the past quarter (January, February, March) and for this you have received € 1,000. All costs that can be deducted amount to € 200.

Then we have the following calculation:

  • 60/90 = 66.67% of the nights of the past quarter were rented.
  • 66.67% of the total costs may be deducted: 200€ x 66.67% = 133.34€
  • taxable income: €1000 – €133.34 = €866.66
  • €866.66 x 19% = €164.67 to be paid to the Spanish tax authorities.

This example does not take into account any IGIC you owe.

Non resident tax in Tenerife: Returns

IF YOU RENT OUT ON SHORT TERM/HOLIDAY RENTAL IN THE CANARY ISLANDS or LONG TERM TO A COMPANY IN THE CANARY ISLANDS:

You must complete the form that you can find here on our website under this page: www.sebleeson.com/M210TEN every three months before the following dates, so that we have the necessary basic data to do the calculations for your return:

  • 1 to 6 JANUARY for the rented period from October – November – December
  • 1 to 6 APRIL for the rented period from January – February – March
  • 1 to 6 JULY for the rented period from April – May – June
  • 1 to 6 OCTOBER for the rented period from July – August – September

Then we calculate the taxes for that period;

You will be notified of the amount due on our account (including our charges);

You transfer this amount to our client account;

We submit the declaration and pay the Spanish tax authorities.

Please note: we do NOT send you proof afterwards that everything has been submitted and paid for, however we do keep a record of this in our computer system in case there should ever be an audit or if you specifically request it.

IF YOU RENT OUT ON SHORT TERM/HOLIDAY RENTAL IN SPAIN or LONG TERM TO A PRIVATE PERSON IN THE CANARY ISLANDS or LONG TERM IN SPAIN:

You must complete the form that you can find here on our website under this page: www.sebleeson.com/M210AEN before January 6 so that we have the necessary basic information to do the calculations for your tax return.

Then we calculate the taxes for that period;

You will be notified of the amount due on our account (including our charges);

You transfer this amount to our client account;

We submit the declaration and pay the Spanish tax authorities.

SHORT TERM RENTAL / VV

For the model 210 all expenses must be deducted without IGIC, therefore the gross amount before IGIC if specified on the invoice.

  • Ordinary expenses: water, electricity, rubbish, IBI, community fees, insurance, mortgage interests… can be deducted only regarding the days of the rental.
  • Other ordinary expenses such as cleaning, maintenance, accountant fees, Airbnb or similar commissions can be deducted in full, as they normally are related to the days of the rental. On our quarterly online form, you indicate the total (in full). Please do not add our accountancy fees as we take these into consideration automatically.
  • Extraordinary expenses: these are larger items that will remain in the property for a longer period, such as furniture, electrical appliances… these can be deducted at a maximum of 10% annually (depreciation) but also regarding the days of the rental.
  • The value of the property (construction) and the expenses of the purchase can also be deducted with a maximum of 3% annually (depreciation) but also regarding the days of the rental. We do not recommend deducting these amounts as if you sell or donate the property in the future, the amounts deducted must be added to the purchase amount and you will end up paying a higher tax in the future, as the tax office won´t allow you to deduct the expenses twice.

You must keep all the invoices for the expenses deducted for 4 years, as the tax office can request them at any moment in time. All invoices must be paid by transfer or card, and the invoice must specify the suppliers and clients full name, identification numbers, address and the concept of the invoice must be detailed to the property. This means that a cash ticket from your favourite hardware store is NOT a valid invoice and therefor cannot be deducted.

In case of inspection the tax office can review the expenses and if the invoice aren´t correct they will recalculate the taxes without these expenses, and you will have to pay the difference in tax along with surcharges/fines.

For the model 420 we need the full amount of IGIC paid in the quarter, as this amount can be deducted from the 7% IGIC that you have to pay on your income.

Important: The IGIC can only be deducted if the property is only used for rental purposes. If you use the property for your own use or for family members, you can´t deduct any IGIC paid out on expenses at all.

LONG TERM RENTAL

Quarterly: model 210 (19% or 24%) and no model 420 (IGIC 7%) in long term rentals. However, if the tenant is a company, there is IGIC and retentions to be filed and paid.

  • Ordinary expenses: water, electricity, rubbish, IBI, community fees, insurance, monthly mortgage interests, maintenance, accountant fees… can be deducted only regarding the days of the rental.
  • Extraordinary expenses: these are larger items that will remain in the property for a longer period, such as furniture, kitchen appliances, a TV…these can be deducted at a maximum of 10% annually (depreciation) but also regarding the days of the rental.
  • The value of the property and the expenses of the purchase can also be deducted with a maximum of 3% annually (depreciation) but also regarding the days of the rental. We do not recommend deducting these amounts as if you sell or donate the property in the future, the amounts deducted must be added to the purchase amount and you will end up paying a higher tax in the future, as the tax office won´t allow you to deduct the expenses twice.

You must keep all the invoices for the expenses deducted for 4 years, as the tax office can request them at any moment in time. All invoices must be paid by transfer or card, and the invoice must specify the suppliers and clients name, identification numbers, address and the concept of the invoice must be detailed to the property. This means that a cash ticket from your favourite hardware store is NOT a valid invoice and therefor cannot be deducted.

In case of inspection the tax office can review the expenses and if the invoice aren´t correct they will recalculate the taxes without these expenses, and you will have to pay the difference in tax along with surcharges/fines.

IMPORTANT UPDATE (Q1 2024) We are pleased to inform you about a significant change in tax legislation affecting landlords who rent out their properties long-term. From now on, according to the recent fiscal adjustment, landlords renting their properties to the same tenant for extended periods will no longer be required to file quarterly tax returns. Instead, they will only need to file once a year.

This update significantly simplifies the tax process for landlords and reduces the administrative burden associated with quarterly tax filing. Now, you only need to worry about filing once a year, providing you with greater convenience and efficiency in managing you tax obligations.

ANNUAL TAXES & RETURNS

  • Model 425: a summary for the IGIC (model 420) paid in the year.
  • Model 210 annual: for the non-rental days of the property or days for your own use. Also, full year tax for garages, storage rooms… This yearly tax is based on the value of the property in the Catastro and it is calculated at 1,1% or 2% depending on the year of the revision of the value.
  • Model 210 negative: This applies to clients who work with tourist operator and have retentions on their invoices. The tourist operators pay the tax into the State Tax Office in your name during the year, and in February you can apply expenses to get some or all those taxes back (only if you are a fiscal resident in a European country). The expenses are applied as mentioned above.
  • Model 210 cero: This applies to clients who in one or more quarters in the year have more expenses than income. In January you present a tax form with the total amounts of income and expenses and the model 210 is presented at cero.
  • Model 347: a summary of the amounts that go over 3.005€ in the year with suppliers/clients.

Clients who work with tourist operators and don´t have retentions on their invoices must present this tax form presented to the Spanish State Tax Office.

Clients who work with touristic operators and do have retentions on their invoice do not have to present this tax form presented to the Spanish State Tax Office.

  • Model 415: a summary of the amounts that go over 3.005€ in the year with suppliers/clients.

Clients who work tourist operators and don´t have retentions on their invoices must present this tax form presented to the Canarian Tax Office.

Clients who work with touristic operators and do have retentions on their invoices must present this tax form to the Canarian Tax Office.

OTHERS

  • Model 400: This tax form to inform of any changes in the Canarian Tax Office, related to contact information, changes in the IGIC registration…

If you want to read information directly form the Spanish Tax Office, this can be done on their website.

Non Resident tax in Spain: Our fees

Non Resident tax in Spain: we charge the following costs to calculate, file, pay and monitor all taxes for you. These are flat-rate prices that include everything necessary, so that everything is always in order:

PROPERTIES LOCATED IN THE CANARY ISLANDS:

  • SHORT TERM/HOLIDAY RENTAL: €120 per quarter per person/declaration. (incl. the IGIC declarations)
  • LONG TERM TO A COMPANY: €120 per quarter per person/declaration. (incl. the IGIC declarations)
  • LONG TERM TO A PRIVATE PERSON: €180 per year per person/declaration. (annual declaration)

PROPERTIES LOCATED IN SPAIN:

  • SHORT TERM/HOLIDAY RENTAL: €180 per year per person/declaration. (annual declaration)
  • LONG TERM: €180 per year per person/declaration. (annual declaration)

Exceptions/adjustments: per Modelo from €70.

Contact us without obligation, our team is ready for you!

Non Resident tax in Spain