Spanish tax on rental income
Spanish tax on rental income: 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. The general rule for non-residents (so you are not a tax resident in Spain) is that you will have to hand over 19% of your NET INCOME to the Spanish tax authorities as an EU citizen. As a non-EU citizen this is 24% and you are not entitled to deduction of costs.
Spanish tax on rental income: 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)
This means that the standard rule is that every landlord is subject to VAT and must charge this to his customers/tenants. However, there are exceptions to this, which we would like to discuss and go over with you personally, because every situation is different.
- You are an employee/labourer and the rental income in Spain is less than €30,000 per year: You can request an exemption.
- You are self-employed and the combined income of both your self-employed activity in your home country + rental income in Spain yields less than €30,000 per year: You can request an exemption.
- You are self-employed and the combined income of both your self-employed activity in your home country + rental income in Spain generates more than €30,000 per year: You are subject to VAT.
- You jointly own the property with someone else: You are subject to VAT. The only exception to this is if you are married and 1 of the spouses is an employee/laborer and the rental income in Spain is less than €30,000 per year; then you can request an exemption because we then only submit the VAT return for 1 person instead of both.
- The owner is a company: You are subject to VAT.
Spanish tax on rental income: 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!
Spanish tax on rental income: 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.
Spanish tax on rental income: Return
There are 5 declarations per year:
–> 1 per trimester; both your Modelo 210 (19% – 24% taxes) and your Modelo 420 (7% IGIC);
–> and also a fifth declaration (in January of the following year) for all days that there was no rental, on which you will also be taxed nominally.
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.
Spanish tax on rental income: Our fees
Spanish tax on rental income: we charge the following costs to calculate, submit, pay and follow up on all taxes for you, so that you are always in order:
70€ per declaration (per person).
This means that if you are with 2 owners, 2 declarations must also be made per quarter.
Contact us without obligation, our team is ready for you!