Non-residents have to pay taxes too!

For non-residents living in Spain, it can be difficult to know what taxes you are responsible for paying. Many people are unaware that non-residents have to pay taxes in Spain too. In this blog post, we will discuss the various taxes that non-residents have to pay in Spain, as well as what you need to do to comply with the Spanish taxation system.

Income Tax

Non-residents have to pay taxes too! (1)

As a non-resident in Spain, you are subject to Spanish Income Tax on your income earned in Spain. This applies whether you are an employee or self-employed, and includes income such as wages, pensions, rental income, dividends, capital gains, and other income.
Your tax liability is determined by whether or not you are considered a resident of Spain for tax purposes. Generally, non-residents of Spain are taxed at a flat rate of 24% on their Spanish-sourced income. However, certain deductions may be applicable if certain criteria are met, such as if you have paid taxes in another country on the same income or if you are living in Spain for a certain number of days per year.
Income earned outside of Spain, as well as income generated from investments abroad, is not subject to Spanish taxes. It is important to note that Spanish tax authorities may require you to prove that you are indeed not a Spanish resident for tax purposes, and may ask for evidence such as your passport or residency permit from your country of residence.
It is important to be aware of your Spanish tax obligations when moving to Spain, so it is highly advisable to consult a qualified Spanish tax adviser who can help ensure that you are correctly filing your taxes and advise you on the best way to manage your finances.

Wealth Tax

Non-residents have to pay taxes too! (2)

Spain imposes a Wealth Tax, also known as Impuesto Sobre el Patrimonio or simply Patrimonio. This is an annual tax on the net worth of a person who resides in Spain or owns real estate located in Spain. The Wealth Tax applies to both residents and non-residents alike, regardless of whether they are Spanish citizens or not.
For those that have a taxable net wealth of between 700,000 euros and 2,000,000 euros, the tax rate is 1.3%. If the taxable net wealth is greater than 2,000,000 euros, the rate is 2.5%. For non-residents, the tax is levied on their assets located in Spain only, rather than their worldwide assets.

In addition to these tax rates, there are several deductions available to taxpayers. Those with the property may be eligible for a deduction of up to 15% of the taxable base. In addition, each individual is eligible for a standard personal allowance of 700,000 euros.
If you are a non-resident in Spain and own real estate in the country, you will be liable to pay Wealth Tax. It is important to take into account all deductions available to you and to pay the tax on time in order to avoid incurring interest or fines.

Inheritance and Gift Tax

In Spain, non-residents have to pay Inheritance and Gift Tax when they inherit or receive a gift of property located in Spain. The tax is calculated on the value of the asset transferred and is based on the relationship between the recipient to the donor.
Inheritance tax rates range from 7.65% to 34%. For example, if the beneficiary is a grandchild or great-grandchild of the deceased, the rate is 7.65%, but if the beneficiary is unrelated to the deceased then the rate is 34%.
Gift tax is calculated at the same rates as inheritance tax.
For both taxes, non-residents are exempt from paying up to €16,000. There are also various deductions and exemptions that can be applied depending on the circumstances, so it is advisable to seek professional advice.
Finally, for non-residents who do not have a fiscal residence in Spain, it is mandatory to appoint a fiscal representative in order to file their taxes. This fiscal representative will be responsible for declaring the taxes due and filing all relevant paperwork with the Spanish Tax Authorities.

Real Estate Tax

Non-residents who own property in Spain are subject to a tax on the real estate they possess. This tax is called Impuesto Sobre Bienes Inmuebles (IBI). It is payable to the local authority and is calculated according to the assessed value of the property. The rate of IBI varies from municipality to municipality but is usually between 0.3% and 1.1%. Non-residents may also be liable for capital gains tax if they sell their property at a profit.
Non-residents are also required to pay a Municipal Tax for Rubbish Collection (Impuesto de Basuras). This is a fixed rate based on the area of the property and is paid to the local council.
In some cases, non-residents may have to pay a Non-Resident Income Tax (Impuesto Sobre la Renta de No Residentes) if they receive income from their Spanish property. This includes rental income, capital gains, and other types of income such as certain types of royalties. The tax rate is generally 19%.
Finally, non-residents may also be subject to a Wealth Tax (Impuesto Sobre el Patrimonio) if their assets are worth more than €700,000. The rate of this tax varies depending on the value of the assets and ranges from 0.2% to 2.5%.
It’s important to keep in mind that these taxes may vary depending on the individual situation and it’s best to consult with a qualified tax advisor to ensure you are compliant with all of your tax obligations as a non-resident in Spain.

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