Taxes for non-residents in Spain

Looking for your dream house or flat in Spain, but you won't be domiciled there? Then this well-organised guide is ideal reading. Indeed, there are some things to consider if you own something in Spain as a non-resident.

Property tax (IBI = Impuesto sobre bienes inmuebles)

This withholding tax is payable by everyone who owns something in Spain, whether they are domiciled there or not. The basis of this withholding tax is the cadastral value of your property. To get an idea of how much you would have to pay per year, it is best to divide your purchase amount into tranches of €100,000. For each tranche, you will pay around €200 per year.

Example: my purchase amount is €240,000. I am going to have to pay about €480 per year in IBI.

Income tax for non-residents (IRNR = Impuesto sobre la renta de no residentes)

An income tax applies only to non-residents. If you are resident in Spain, you may simply ignore this tax. Whether you rent out or not at all, an income tax has to be paid. So there are 2 scenarios.

1) Renting to third parties: the Spanish tax authorities will tax 19% on the net rental income and therefore not on the full rental amount. From this full rental amount, you can deduct a lot of costs, such as maintenance costs, depreciation, financing costs, repairs, etc.

Example: last quarter my total rental income was €6,000. With all my expenses deducted, I come to €4,500. 19% of this is therefore €855 in income tax.

2) There is no rental: in this case, they have no rental income to base themselves on, so they will apply a formula to the cadastral value of your property. From that value, they are going to take 1.1%, which counts as a "virtual rental income". The 19% income tax is levied on this amount.

Example: my cadastral value is estimated at €185,000. From this, 1.1% is taken, which amounts to €2,035 as virtual rental income. 19% of this amount is therefore €386.65 to be paid on an annual basis.

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