Non-resident tax in Spain: As the owner of property in Spain, you must pay 2 taxes per year on your property:
The first is the Impuesto sobre los Bienes Inmuebles (IBI), which can be compared to your council tax. If you are advised by us during your purchase and we did your conveyancing, you do not have to do anything for this. We will make sure that it is automatically debited from your bank account so you are never late and can’t be imposed any fines. If you are not a client of ours, no worries, you can still read on and we can still order direct debits for you. Just contact us for this.
The second is the non-resident tax. It is popularly called the “Modelo 210”, after the document that is used for this purpose. This article is about this tax, the tax return for non-residents in Tenerife and Spain.
Non-resident tax in Spain
You have to pay the non-resident tax if you meet the following conditions:
You are not a tax resident in Spain. In other words, you do not file your annual personal income tax return in Spain but in another country, like the UK, Ireland, the US and so on. In this situation you are obliged to file a tax declaration in Spain for the property you own and you will be taxed on this property in Spain. After all, the real estate is on Spanish territory.
In other words, subject to exceptions, as in the case of most people who buy a holiday home in Tenerife, you will have to file and pay this tax return. The official name is “Impuesto sobre la Renta de no Residentes (sin establecimiento permanente)”.
The tax return must be submitted by you voluntarily on an annual basis. You will not receive an invitation or message from the government that you have to submit and pay for this. In other words, you have to pay for it yourself voluntarily and the government will not notify you.
But NO WORRIES! For our clients we will automatically take care of this and you will be kept yearly informed by us of the result. After all, we will make the calculation and take the necessary steps for you so that you comply with all obligations and therefore you cannot incur any fines! Would you like us to take care of your obligations and taxes in Spain? Please contact us and we will be happy to help you, for less money than you probably think!
Non-resident tax: How to declare?
The Modelo 210 is the form used for this declaration. The good news is that actually you don’t have to do anything if you let us take care of this for you! You will need to give us some information for us to be able to do this, namely:
Details of the property owner. If there is only one owner, we only have to do one declaration for him/her. For example, if as a couple you are both owner for 50% (you bought it together), both have to submit a declaration for 50% respectively. If you have usufruct and your children have the bare ownership, we will file the declaration in your name. Unfortunately, it is NOT allowed to file a joint declaration as a married couple, 2 declarations must be submitted, 1 per natural person.
The land registry details of your property. The important factors are the land registry reference number, the land register value and the last revision. If this sounds like Chinese (or Spanish) to you, don’t worry, we’ll take care of this for you.
When you sell your property in Spain, the buyer will withhold 3% of the sale price upon purchase. This is mistakenly assumed by many people (including real estate agents) as a fixed tax on the sale. However, this is not correct!
The retained 3% of the sale price is a prepayment of the actual capital gains tax on the sale of real estate, which you must submit and settle within 90 days.
In other words, the withheld 3% of the sale price can be too much or too little and must be settled with the Spanish tax authorities. Notify us in good time when you are going to sell, so that we can fully guide you in the sale of your property and also ensure that you meet your tax obligations.
If the 3% withheld was too much, and you should therefore have paid less tax, we will still reclaim the difference from the Spanish tax authorities.
If the 3% withheld was too little, and you therefore have to pay more taxes, we will submit the additional declaration to the Spanish tax authorities and settle the difference.
What about a divorce?
If you own a property in Spain with more than 1 person, you may decide one day to buy the other out or separate from the other owner(s) or from your partner. When this happens, a new notarial deed will have to be made and signed anyway, just like when you bought it. The procedure is more or less similar to a normal purchase or sale, only that there is a tax benefit for you in this case. Read our full article about divorces in Spain.
There will also be a calculation and declaration of the capital gains tax in Spain.
In other words, just like with a normal sale, the Spanish tax authorities want a piece of the pie and a correct calculation will have to be made and submitted so that you meet your tax obligations. Contact us to fully arrange your divorce/division of property, including taking care of your tax returns, so you don’t have to worry!
What about donations?
When you are going to donate your real estate (to your children, for example), a new notarial deed will have to be made and signed anyway, just like you bought it at the time. Read our full article on the donation of real estate in Spain.
Also when donating, a calculation and declaration of the capital gains tax will also be due in Spain.
In other words, just like with a normal sale, the Spanish tax authorities want a piece of the pie and a correct calculation will have to be made and submitted so that you meet your tax obligations. Get in touch with us to fully arrange your property donation, including taking care of your tax returns, so you don’t have to worry!
Non-resident tax: Summary
Annual declaration before 31 December
You have to declare it yourself, you will not receive an invitation from the government.
Mandatory if you are not a tax resident and you own property in Spain/Tenerife.
We do the tax returns for the whole of Spain, including the Canary Islands
Cost for the calculation and submission of the tax declaration and annual follow-up is 40€ per declaration / 25€ per additional one (garage, storage space, etc.) + 7% IGIC (VAT of the Canary Islands where we are located)
Please contact us to avoid fines and let us take care of these obligations for you