If you are a non-resident in Spain and own property or real estate in the country, it is crucial that you are aware of your tax obligations. Non-Resident Income Tax (IRNR) is a specific tax that applies to those property owners who are not resident in Spain, but who own property in Spanish territory. Understanding this tax is essential to avoid penalties and optimise your tax situation.
What is the Non-Resident Income Tax (IRNR)?
IRNR is a tax levied on income earned in Spain by individuals or legal entities that are not resident in the country. In the case of property owners, this tax applies even if no direct income is generated from the property (e.g. in the case of a holiday home that is not rented out).
Who is obliged to pay IRNR?
Non-residents who own property in Spain are obliged to pay IRNR. It is important to note that tax residence is determined by the length of time spent in Spain (less than 183 days per year) or by having the centre of economic interests in another country. If you meet these criteria and you own property in Spain, you will have to pay IRNR.
How the IRNR is calculated for Non-Resident Owners
The way the IRNR is calculated depends on the use of the property:
Property Not Rented: If the property is not rented, it is considered to generate imputed rent which must be declared annually. This rent is calculated as a percentage of the cadastral value of the property. The percentage varies depending on the date of the cadastral revision, but is generally 1.1% or 2%.
2. Rented Property: If the property is rented out, the non-resident owner will be taxed on the rental income. From 2021, the general rate for non-residents is 24%. However, residents of the European Union, Norway and Iceland can apply a reduced rate of 19% and deduct certain property-related expenses.
Double Taxation and International Conventions.
One of the main concerns for non-resident owners is the possibility of paying taxes both in Spain and in their country of residence. To avoid double taxation, Spain has signed agreements with many countries that allow taxes paid in Spain to be deducted or compensated in your country of residence.
Declaration and Payment of IRNR
The IRNR tax return for non-residents is filed using form 210 of the Spanish Tax Agency. This form must be filed quarterly if the property is rented, and annually if it is not. It is important to comply with the established deadlines to avoid penalties.
Wealth Tax
In addition to IRNR, non-residents owning property in Spain may also be subject to Wealth Tax if the value of their assets exceeds certain thresholds. In most Autonomous Communities, this tax applies from a net value of 700,000 euros, although the limit may vary depending on the region.
Professional Advice: The Key to Efficient Tax Management
Taxation for non-residents in Spain can be complex, especially when it comes to real estate. That is why having a specialised tax advisor is essential to ensure that you comply with all your tax obligations and take advantage of any deductions or benefits available.
At Christian Barbieux Legal, we offer comprehensive advice for non-residents with property in Spain. We help you to efficiently manage your tax affairs and give you peace of mind knowing that your tax situation is in expert hands.
Conclusion
Non-Resident Income Tax is an important tax liability for those who own property in Spain but are not resident in the country. Understanding how this tax works and complying with the tax obligations is essential to avoid problems with the Tax Agency. If you have any doubts or need assistance with your tax affairs as a non-resident, please do not hesitate to contact us at Christian Barbieux Legal. We are here to help you navigate Spanish taxation efficiently and smoothly.
Non-Resident Income Tax is an important tax liability for those who own property in Spain but are not resident in the country. Understanding how this tax works and complying with your tax obligations is essential to avoid problems with the Tax Agency. If you have any doubts or need assistance with your tax affairs as a non-resident, please do not hesitate to contact us at Christian Barbieux Legal.
