Tax Returns In Spain

Spain operates a system of self assessment for the collection of taxes. Both residents and non-residents with property in Spain are under an obligation to file tax returns there.  (click here for important notice!)

An individual is considered to be non-resident if he does not remain on Spanish territory for more than 183 days in the calendar year and if the principal centre or base of his economic interests lies outside Spain.

In order to help meet the yearly requirement of filing returns it is advisable to appoint a Fiscal Representative in Spain.

The representative is required to acquire the forms, complete them, and pay the taxes due, all within a required period of time.

Where the only asset in Spain is a property it is not compulsory to appoint a Fiscal Representative. However, despite this, failure to use a Fiscal Representative can have several consequences:

(i) All communications from the tax office will be sent to your Spanish address and any delay in receiving that correspondence could have adverse effects.

(ii) Spanish tax forms are complicated and there may be an additional language problem if you are not fluent in the Spanish language.

(iii) Legislation and practice in Spain changes frequently and failure to file returns correctly could incur fines. Briefly, the taxes payable annually to Hacienda in relation to property are as follows:

1) Wealth Tax (Impuestos Patrimoniales)

LATEST CHANGES IN WEALTH TAX LAW

Do you own a property purchased prior to 31st December 2008?

If so then please read on!

On the 23rd December 2008 the Spanish Government abolished the Wealth Tax Law. Previously Non-Residents were obliged to submit a Form 214 or ‘Impuesto sobre el Patrimonis y sobre la Renta de No Residentes’. As this name suggests this Tax was levied on Non-Residents and effectively taxed them on both their income and assets in Spain.

Non Residents owning one or more properties in Spain will no longer be required to pay any Wealth Tax but will still be obliged to the Income Tax for Non-Residents.

How does this effect me?

• Non Residents will no longer be required to submit a form 214 from the 1st January 2009
• Non Residents WILL be required to submit a Form 210 detailing any income derived in Spain
• Deadlines for submission of Form 210 will be 30th June 2009 for all Income Tax derived in 2008
• Taxes payable in Spain from 2009 will be less than that paid in previous years

2) Income Tax (Impuestos sobre Renta)

A non-resident with a property in Spain in his or her own name is obliged to declare 2% of the Valor Catastral as notional income. Tax at a basic rate of 25% is payable on that income.

Appointment Of The Fiscal Representative

For the individual owner, appointment of a Fiscal Representative is relatively straightforward, requiring the completion of a written Authority nominating the Fiscal Representative and payment of the required fee.
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