Tax Obligations for Foreigners in Spain – Either as a Non Resident Property Owner or as a Resident
According to the Spanish Law each individual living in Spain for more than 183 days a year should be a tax resident in Spain, and therefore would be obliged to pay taxes in Spain for their worldwide income. If you are a property owner in Spain, even if you do not reside here, you are obliged to make a declaration every year too.
Many foreigners living in Spain permanently, (for more than 183 days a year), or foreigners that do not reside in Spain but own property here, do not pay any taxes in Spain. Some do not submit a tax declaration because they are not aware of the Spanish Tax Laws, and others because they are afraid of paying high taxes, etc., Whatever the reason, it is important to be aware that ignorance of the law is no excuse, A Tax declaration must be submitted annually, and taxes should be paid when applicable by all tax residents, and property owners, (whether resident or not), in Spain.
Up until now, the Spanish Inland Revenue has not been controlling the situation of those foreign property owners or of those foreigners living permanently in Spain, despite the fact that authorities have always been aware of these important groups of people. Now, the situation has changed, due to the financial crisis, the Spanish Government intends to tighten up its control to ensure that taxes are paid where due.
Therefore it could be time to formally become a tax resident in Spain, by submitting your annual income tax return in Spain. This should be done annually during the months of May and June.
This could be advantageous as it would allow foreign residents to:-
- Confirm to the Spanish tax authorities without doubt, that they, the tax resident, is living in Spain, and paying taxes when applicable.
- Have the legal right to receive a health card which allows access to the Spanish Public health system.
- Avoid the 3 % withholding tax when a real estate property is sold. This tax is applicable to foreigners who sell a property and cannot prove that they are a tax resident in Spain.
- Benefit from the inheritance tax advantages, and the allowances applicable to tax residents in Spain (i.e. no inheritance taxes between spouses on the main home).
- Be considered a tax resident in Spain, thus avoiding the annual income tax applicable to non-resident foreigners who are owners of a real estate property in Spain (tax form 210).
- Vote in the local elections, thus actively partaking in local policies.
Tax in Spain
It is important to mention that most foreigners living in Spain are pensioners with low monthly pensions, so they should be aware that they probably will not have to pay any income tax in Spain as the result of their tax return would most likely be zero. However, it is still recommendable to submit an annual tax return, (even if the result is zero and no tax has to be paid), to enable them to be able to take advantage of the above points.
If you are foreigner living permanently in Spain (for more than 183 days between 1st January 2014 and 31st December 2014). I would strongly recommend that you submit an annual income tax return during the months of May and June 2015, for the tax year 2014. By doing so, confirming to the Spanish Tax Authorities that you are, without doubt, a tax resident in Spain, you will avoid any potential problems, or fines, and will have all the legal rights that the Spanish Laws recognizes are due to all individuals residing legally in Spain and duly making their Tax declaration here.
If you own a property in Spain and only come here for holidays, or for periods that total less than 183 days per year, then you are still required by law to make a tax declaration. This is tax is based on the value of the property/ies owned. The declaration should be made annually. Each owner / part owner should make their own declaration individually, by the 31st December each year.
As a property owner in this country you must by law make one or other of the above tax declarations depending upon your circumstances.
For further advice on these matters, or to arrange a FREE, no obligation meeting to discuss your particular circumstances in detail, please contact Denise Molony on mob. 669 428 998, or contact us by e-mail on mail@manilvasolicitors.com or by tel. 952 901 225.
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MARBELLA SOLICITORS GROUP
Jose M. Lopez-Avalos – Solicitor
Tel. 952 901 225 – mail@marbellasolicitors.com
