The income derived from the properties (rented or not rented) is subjected to non-resident income tax. However the tax treatment is different depending on whether the property is rented.
IRNR issue may be confusing, overall because there is no equivalent in your country.
Non-residents are liable to pay IRNR if the following conditions apply:
1) You do not reside in Spain,
2) You own property in Spain,
3) Your property is exclusively for personal use and it is not rented out,
4) You do not have other source of taxable income in Spain.
Although you do not earn an income from the property, in the eyes of the Spanish tax authorities you get a benefit from owning a property in Spain and therefore, you have to pay an imputed income tax.
This yearly tax is levied by the Spanish Government and it has to be paid in arrears on a yearly basis. The term for payment goes from the 1st January to the 31st December every year, and the tax paid corresponds to the previous calendar year.
The income is calculated by taking into account the rateable value (by applying different rates -2% or 1.1%- depending on revisions made by the Town Hall).
Tax rate 2017 for Residents of EU, Iceland and Norway is 19% and 24 % for all others.
Payment must be made direct to the Tax Office, for which it is necessary to file a tax return.
The earnings are calculated by taking the gross income that is received from the tenant. Some expenses could be deducted.
The applicable rate is 19% for Residents of EU, Iceland and Norway and 24% for all others.
Tax returns must be filed in a quarterly basis.
If the property has been rented for only part of the year, you will have to file several tax returns, those corresponding to rental income and the yearly one that corresponds to the owner’s direct use.
Please note, tax regulations and tax rates change frequently in Spain, so this information may be out of date. Therefore, it is highly advisable to contact us for the latest information.
Please contact us if you want our firm to file your tax returns by a modest fee.
More info about fiscal representation service.