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TAXATION OF URBAN PROPERTY OWNED BY INDIVIDUALS WHO ARE NOT RESIDENT IN SPAIN

This guide do not substitute professional advice, which we will be happy to provide on request.

1. INTRODUCTION

If you are not resident in Spain and own urban proper-ty in Spain, you are subject to Personal Income Tax, Property Tax and local Real State Tax.

1.1. REPRESENTATIVE

You are not obliged to appoint a representative before the tax authorities. However, you may appoint one, if you wish, and notify the appointment to the Office or Branch of the Tax Agency corresponding to the place where the property is located.

1.2. TAX IDENTIFICATION NUMBER (N.I.F.)

In Spain each person is assigned a tax identification number (N.I.F.) which must be used on all tax returns and communications addressed to the tax authorities.
In general, the N.I.F. of a Spanish national is his/her National Identification Number (D.N.I.); in the case of foreign nationals, the N.I.F. is their Foreigner Identification Number (N.I.E.). These identification numbers are issued by the Directorate General of the Police. Nevertheless, nationals of other European Union member states and of other states which are party to the Agreement on the European Economic Area who are not obliged to have a N.I.E. may apply to the Tax Administration for a tax identification number (N.I.F.).

2. PERSONAL INCOME TAX
a property is Where owned by a married couple or by various individuals, each one is treated as a separate taxpayer and must file returns separately.
Depending on what the property is used for, the in-come subject to taxation is as follows:

2.1. INCOME FROM URBAN PROPERTY FOR OWN USE

The income to be declared is the amount resulting from applying to the cadastral value of the property, as shown on the Real State Tax (Impuesto de Bienes inmuebles: I.B.I.) receipt, the following percentages:
- 2 per cent, in general.
- 1.1 per cent in the case of property whose cadastral value was revised or modified after 1 January 1994.
This income is chargeable once per year, on 31 December.
If you have not owned the property for the entire year or if it was leased for part of the year, you must declare the corresponding proportion.
- Tax return form: Form 210, using general section 210-A and indicating income type 02.
- Filing period: 1 January to 20 June.
- Place of filing: the Branch of the State Tax Administration Agency corresponding to the place where the property is located.
- Tax rate: 24%.

2.2. LEASED URBAN PROPERTY

The income to be declared in this case is the total amount collect-ed from the tenant, without deducting any expenses.
This income is chargeable when it is claimable from the tenant or when it is collected (if earlier). Each rent due is taxed separately and, consequently, a return must be filed for each rent due.
Nevertheless, collective returns may be filed which may include various chargeable income of one or more taxpayers falling within a calendar quarter. If the collective return includes the income of several taxpayers, the person filing it must be a representative or one of the persons which the law regulating this tax defines as being jointly and severally liable (payer or administrator).
- Tax return form: in accordance with the foregoing, there are two possibilities:
. Form 210. Ordinary return, using general section 210-A and indicating income type 01.
. Form 215. Collective return. Also indicate income type 01.
- Filing period: for ordinary returns (form 210), the deadline is one month after the date on which the rent is due. Collective returns (form 215) relating to a quarter must be filed within the first 20 calendar days of the month of April, July, October or January following the first, second, third or fourth calendar quarter, respectively.
- Place of filing: the Branch of the State Tax Administration Agency corresponding to the place where the property is located.
- Tax rate: 24%.

3.WEALTH TAX:

Non-residents must file a Wealth Tax return if they own property in Spain at 31st December of each year, regardless of the value of the property.

Urban property must be declared at the highest of the following three values:

-The cadastral value, as reflected in the local rates receipt for the year to which the return refers

-The value assessed by the Administration for the purposes of other taxes

-The acquisition price, consideration or value.

The net wealth (which is the taxable amount) is determined by the difference between that value and the charges or liens on the property and the debt principal invested in the property.

There is no tax-free allowance and, consequently, the base of assessment coincides with the taxable amount.

The tax payable is calculated by applying the tax rate approved for the year in question to the aforementioned taxable amount.

Each individual must file a separate return. Accordingly, if a property is owned by a married couple or by various persons, each one of them must file a single return for the corresponding part.

4.PROPERTY AND PERSONAL TAX:

A non-resident whose only taxable property in Spain is a dwelling fundamentally for own use may elect to use a single form for declaring Property Tax on the dwelling owned in Spanish territory and Personal Income Tax on the estimated income from the use of that dwelling.

Form, period and place for filing the return:

- Form: 214. Simplified return for non-residents (dwell-ing for own use).
- Filing period: the entire calendar year immediately following the one to which the return refers.
- Place: the Branch or Office of the State Tax Administration Agency corresponding to the place where the property is located.

5. LOCAL RATES TAX

This is a local tax, i.e. levied by Municipal Governments, which is payable by real state-owners.

All real estate in each municipality is included in a census and has an assigned value (its cadastral value). The amount payable is calculated by applying the tax rate set by the Municipal Government to the cadastral value.

Each year, a Real State Tax payment slip is issued for each property in the census. Municipal Governments normally allow the payment to be made by direct debit to a bank account, which makes it easy for the taxpayer to pay the tax before the deadline and thus avoid surcharges.

The period for payment varies depending on the municipality, but it is normally around the months of September, October and November each year.