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Non-Resident Home Owners and Annual Property Taxes

After legislative changes in 2008 many non-resident owners of property in Spain were under the misconception that they can forget about submitting their annual tax forms!

It would be nice but it is not the case.

Up until the end of 2007 all non-residents with property in Spain were also liable to pay a “wealth tax” (Patrimonio) which was calculated on the value of their assets in Spain (i.e. property, savings, etc.)

With the introduction of Spanish Law 4/2008 passed on the 23 December 2008, the tax was amended by reducing the taxable base to zero. Is this technically a formal abolition of the Tax? The answer is no. Certainly the effect was that no wealth tax was paid by either residents, (obligación personal) or non-residents, (obligación real) for the tax years 2008 payable 2009, 2009 payable 2010 and 2010 payable 2011.

By reducing the tax to zero in 2008 but not abolishing it, the Spanish Government retained the option to re-introduce the tax which they did on the 16 September 2011.

However this latest about turn only affected higher-end taxpayers both residents (obligacion personal) and non residents (obligacion real) alike.

Only those with assets of over 700,000 euros (excluding that of their primary residence IF they are fiscally resident) are liable and primary residences with a value of up to 300,000 euros are exempt.

The tax rate will vary between 0.2 and 2.5%, depending on the contributory base after allowances.

Logically if you are fiscally non-resident your primary residence can not be in Tenerife.

The increase in the % of the tax is expected to remain in place for just 2 tax years, 2011 payable 2012 and in 2012 payable 2013

So to reiterate, the Patrimony “wealth tax” is not applicable to all taxpayers.

But that does not mean that if you are not liable for Patrimony there are no annual property taxes for Non-Residents to pay.

The “Declaración de la Renta de Non Residentes" or “Non Resident’s annual tax return” modelo 210 must still be made and paid regardless of the amount of assets a taxpayer has!

Taxation, and particularly dual taxation issues are an extremely complicated subject, not least because of laws regarding touristic letting, and I would always advise readers who make financial gain from their property in Spain to get a qualified assessment of their own personal circumstances, either directly from the Spanish “Hacienda”, Spain’s Inland Revenue, or from a tax professional.

However, in general terms since 2010 the earnings from rented property or sub-let property were calculated on 24 per cent, 24.75% for income from the 1/1/2012 until 31/12/2014 and then

2015 payable in 2016 is:

Contributors who are fiscally resident in the EU, Iceland and Norway: 19,5%
Rest of contributors 24%

and for the tax year 2016 payable in 2017

Contributors who are fiscally resident in the EU, Iceland and Norway: 19%
Rest of contributors 24%

...of the nett income received from the tenant, excluding IGIC.

Even If you DO NOT let out your Spanish property there is still a modelo 210 return to declare and a tax to pay more information here

Changes to Non Residents Income Tax (Property Let Out)

In the Official Gazette (BOE in Spanish) dated 2.03.2010, the Law 2/2010 has introduced a change in the Income Tax Law for Non Residents changing the way they pay Income Tax on properties let in Spain. Up to 2010, non residents tax payers paid 24% ((24.75% for income from the 1/1/2012 until end of 2013) of the gross income on properties let in Spain,they were not allowed to deduct any expenses at all, there were examples when the tax paid could exceed 60% of the actual profit.

The European Union has pressed Spain to change this situation, and with the new Law, you can now deduct all expenses directly connected with the letting of the property: electricity, water, community fees, rubbish collection or local rates, maintenance, cleaning services, interest on mortgage (if applicable), professional fees, exactly in the same way as residents do.

However, it is not always straightforward. If you were letting your property 365 days per year, you could deduct all the expenses, but if you rent only a fraction of a year the expenses have to be pro-rata. For modelo 210 returns on income derived from Spanish property after the 1 January 2011 you will be required to obtain a CERTIFICADO DE RESIDENCIA FISCAL ( A certificate of fiscal residence) from your own tax authority office. This is valid for a period of one year from the date of issue. The certificate must be submitted with your Spanish tax return in order to prove fiscal residence in the UK (or indeedother European state except Spain) Under dual taxation exemptions you may be entitled to deduct the tax paid in Spain from your UK liability.

If the property is only rented out for part of the year, the earnings are calculated as above for the rented period. For the part of the year that it lies empty, the calculation is made as for “Deemed (Rental) Income”: see below.

It is important to point out that holiday letting for short periods of time is subject to very stringent regulations involving the use of an appointed sole letting agent and may only be undertaken on registered Touristic complexes. Income from legal touristic lets also atracts IGIC tax (like VAT) at 7%. Infringement of touristic letting laws is punnished very severely see here and here.

Privately letting your property, which is owned on a residential complex, for lets of 3 months or longer is acceptable and does not attract IGIC although of course Non residents income tax as described above is still payable. You may also be required to provide a certificate of Energy efficiency:

And don't forget the income from letting your foreign property MUST ALSO BE DECLARED IN YOUR OWN COUNTRY (probably the UK if you are reading this) For the UK the form is here .

Under double impositions agreements Individuals who own property in Spain and who are not resident in Spain pay Spanish income tax in respect of the deemed income value (see below) of their Spanish property. This Spanish tax is not creditable against United Kingdom income tax liability because there is no UK tax payable in respect of the deemed Spanish income.

However where Spanish income tax is payable in respect of actual income from a Spanish property and actual rents are taxed in the United Kingdom the Spanish tax payable may be credited against the UK payable on the Spanish rental income.

Anyone treating apartment letting as a business

If someone owns property in Spain, but is not resident in Spain for tax purposes and has at least one office or premises used for managing the letting business and employs one or more people on a full time contract, then the owner is considered to have income through a permanent establishment in Spain and is subject to different regulations.

Property for personal use and NOT let out at all - Renta Imputada - Deemed Income Modelo 210

If your property is left empty, even though you do not let out your holiday home for gain, Spanish law assumes you have what is called a “Deemed (Rental) Income” which is subject to non-resident Income Tax.

The “Deemed (Rental) Income”, which used to be included on the old Modelo 214 form, is now declared on a Modelo 210 form. In 2011 the format of this form has been changed to be more user friendly, being reduced from 7 pages to 3!

However the authorities are cramming a lot more into those three pages than they used to! The following information is now obligatory for ALL owners:

The amount you pay is calculated using the “Valor Catastral” (Rateable Value) of your property in Spain. This can be easily ascertained by looking at the receipt for your “Impuestos Sobre Bienes Inmuebles” or IBI, (often referred to by English speakers as “Rates”) - which is paid to your “Ayuntamiento” annually.

Non Residents Tax - Changes to information available on IBI Bills
As some of you may have noticed if you pay your "Impuestos Sobre Bienes Inmuebles" (local authority rates) through your bank they are no longer giving full details on the bank slips.

If you pay your "Ayuntamiento" directly in their offices annually you will receive a receipt with all the information you need.

If you pay by direct debit and your Ayuntamiento uses the Consorcio de Tributos de Tenerife to collect this on their behalf you can go on line and access a copy of the IBI receipts showing the full information. You will need to have your IBAN bank account number and NIE number to hand. See here -

If your local authority does not use Consorcio (such as Adeje) then it may be helpful to make a trip to your town hall to ask for a printout for 2016 or for Adeje you can email

attaching a scan of the bill payer's NIE and passport and asking for "información acerca del valor catastral de la propiedad con referencia catastral 123456CS1234Y1236BC" (obviously this is a made up number to show you the format of the catastral reference) -you will find this number on an old IBI bill or on your deeds.

Previously this receipt told you whether the rateable value of your property had been revised since 1st January 1994 but from the 2015 tax year the percentage will be dependant on whether the catastral revision date is within the previous 10 years. So the tax rate is only 1.1% if within 10 years of taxable date, otherwise it is 2%. The actual tax payable on the “Deemed (Rental) Income” derived using the coefficient is........

24 per cent for the 2011 tax year

24.75% for income from the 1/1/2012 until 31/12/2014 and then

2015 payable in 2016 is:

Contributors who are fiscally resident in the EU, Iceland and Norway: 19,5%
Rest of contributors 24%

and for the tax year 2016 payable in 2017

Contributors who are fiscally resident in the EU, Iceland and Norway: 19%
Rest of contributors 24%

The deadline for the submission of form Modelo 210 is the 31st December 2017 for income deemed or actually derived in 2016 unless you have more than one property in which case the deadline is the 30th June 2017.

All of the above applies to Non-residents with no permanent establishment but who own a holiday home in Spain

An example of a receipt for “Impuestos Sobre Bienes Inmuebles” or IBI is shown below: The format can vary between Ayuntamientos, or whether you get the receipt direct from the Ayuntamiento or from the Consorcio system. But all the information you need will be on there.

Based on the receipt below here are some examples of the calculation of the tax due for the 2015 tax year payable up to Dec 2016 :

Tax Year 2016 - UK resident Tax Year 2016 - UK resident Tax Year 2016 - NON EU resident
Catastral revision Year 2000 Catastral revision Year 2009 Catastral revision Year 2000
2016-2000=16 ie MORE than 10 years 2016-2009=7 ie LESS than 10 years 2016-2000=16 ie MORE than 10 years
So coefficient in this case is 2% So coefficient in this case is 1.1% So coefficient in this case is 2%
Catastral Value is 33,325.86 Catastral Value is 33,325.86 Catastral Value is 33,325.86
Caculation: Caculation: Caculation:
33,325.86 x 2% x 19,0% 33,325.86 x 1.1% x 19,0% 33,325.86 x 2% x 24%
Tax to declare on modelo 210 = 126 euros 64 cents Tax to declare on modelo 210 = 69 euros 65cents Tax to declare on modelo 210 = 159 euros 96 cents

I wrote (and update) this article with the aim of making non-resident homeowners aware of their legal obligation to submit an annual income tax declaration in Spain; it is not intended to be a crash course on Spanish tax law. As I said that's a complicated subject and peoples's circumstances differ. But what holds true for all, is that no non-resident home owner, whatever their circumstances, is exempt from making a non-residents Income Tax return.

Do you know someone who has owned property for years and never made a declaration? Probably. However, if they are caught, and computerised records are making that ever more likely, they are liable to pay the last four year's tax and probably a hefty fine.

But in any case, when that property is eventually sold or passed on as part of an inheritance, the Spanish Tax Agency can and will check their records, which will show the property is owned by a non-resident and that no tax declarations have been received. The non residents taxes will then need to be paid, including any fines imposed, before the property can be legally transferred, or before any rebate due of monies retained against capital gains can be made. email for more information


If you miss the deadline for presenting theSpanish tax return you risk fines and other additional costs on top of the tax owed. Below is a guide to late submission and non payment fines and uinterest charges. This is a guideline as each case is judged individually and there are sometimes reductions for timely payment of the fine.

Late presentation fine:

Up to 3 months of due date 5% of tax due

Between 3-6 months 10%

Between 6-12 months 15%

More than a year overdue 20%

Interest at 5% is charged on top for payments more than 1 year late

Fines for late submission of a nil return where no tax is due: €100 (€200 if the Tax Office has prompted the tax payer to make a return)

Extra Penalties payable if a late submission is not made voluntarily (ie the tax office has to chase the payer)

Minor infraction 50% of tax + fine + interest

Serious infraction 50-100% of tax + fine + interest

Very serious infraction 100-150% of tax + fine + interest

The lowest penalty is applied if the taxpayer has not deliberately tried to hide the income and if the amount of the tax and fines is less than 3.000€. The penalties for serious infractions apply when forged documents are discovered, fraudulent intentional under declarations have taken place, or there have been repeated infractions after previous warnings.

The Spanish tax office can go back 4 tax years which in real terms is 5 years and 3 months from the end of a tax year.

I believe that at the very least it makes sense to clarify what your tax liability is, and if at all possible keep things up to date, rather than looking over your shoulder and waiting for a fine to drop on the mat, or worse still miss a registered letter because you are not in Tenerife all the year and suddenly find amounts garnered from your Spanish bank account.

Local Taxes

There are two local property taxes which are both based on the property's theoretical rental value according to the local land registry, and are adjusted in line with inflation. The rates of tax will vary from region to region due to the varying rates of tax imposed by the regional and local governments.
Local property tax ( Impuesto Sobre Bienes Inmuebles (IBI) )

This is the main local property tax affecting owners of properties in Spain payable yearly to the Town Hall. The amount of the tax is calculated by reference to the valor catastral (official value of the property) registered in respect of all properties in Spain . The percentage charged varies from area to area, and is roughly 0.5% to 1%.
Local mains drainage and refuse collection tax - "basura y alcantarillado"
(Not to be confused with "agua" which in some ayuntamientos is paid to a private water company))

This local tax payable by property owners is related to rubbish collection and drainage. The amount to pay varies from area to area, and should be paid to the local Town Hall every year together with the local property tax mentioned above.

As a non-resident property owner in Spain , you are still liable for income tax, value added tax wealth tax, capital gains tax and inheritance tax.

Remember, if you do not speak Spanish, or you simply can't face grappling with the Spanish Tax Authorities on your own, let The One Stop Problem Shop take the strain and assist you with it, along with the many other forms of bureaucracy you encounter in your daily life in Tenerife

Call us on 922 86 74 78 or email

UK And Spain Tax Residence Issues source: Blevins Franks

The UK government published a consultation paper in June 2011 outlining its proposals to introduce a statutory definition of tax residence from 6th April 2012. It is based on the principle that where someone is resident is more than just a question of where they spend their time. While the proposed tests do not completely eliminate day counting, they also impose a requirement to reduce the number of connecting factors to the UK.

There are different rules for “Leavers”, “Arrivers” (individuals who have not been UK tax resident in the previous three UK tax years) and “full time workers abroad” (working under contract/s of employment with a minimum of 35 hours each week). You need to make sure you follow the rules for your specific situation – it is not always as straightforward as you may think.

There are five newly defined connecting factors, which are:

1. Family in UK (spouses/civil partners and children under 18)

2. UK accommodation accessible to you as a place of residence

3. Substantive employment in the UK

4. UK presence in previous years (more than 90 days in either of the previous two tax years)

5. More time in the UK than another single country (this factor only applies to leavers)

Looking at the Leaver category, if you spend less than 10 nights a year in the UK in a tax year you will never be considered UK resident, even if you have connecting factors. If you spend over 182 nights a year in the UK, or if your only home is in the UK and you spend more than 10 days in the UK per year, you will always be considered UK resident regardless of how few other connecting factors you have.

Otherwise, whether or not you are UK tax resident depends on the number of nights you spend there in a UK tax year (ending midnight 5th April) and how many connecting factors you have. As a Leaver, if one connecting factor applies you can spend up to 119 nights in the UK without being UK tax resident; if you have two factors it reduces to 89 nights; if three factors 44 nights and if four or more apply you can only spend nine nights before being deemed UK tax resident.

We welcome these new rules as, if approved, they are much clearer and will provide more certainty. Nonetheless they are still complex and confusing to the non tax specialist and while they are no longer subjective and vague like the current guidance, the rules do remain complex.

You also need to consider the Spanish tax residency rules. Again, these are not based solely on day counting and while you are considered tax resident in Spain if you spend over 183 days a year here, you could also become resident if your “centre of economic interests” (principal assets or source of income) or “centre of vital interests” (spouse/dependant children) is in Spain.

It is possible to fulfil both the UK and Spanish residence criteria simultaneously, in which case the UK/Spain tax treaty has “tie breaker” rules which override both the UK and Spanish domestic residence position. You need to review the terms of the treaty to establish where you are tax resident – there are many cases where a British expatriate could be found to be UK rather than Spanish resident.

Where Are You Better Off Being Tax Resident – The UK Or Spain?

The Spanish tax system is very different from that in the UK and many other countries. Many people who have moved to Spain or are planning to do so inadvertently find it complex and potentially expensive from a tax perspective. In our experience, however, when you understand all the intricacies of the Spanish tax rules, it often makes more economic sense to be tax resident in Spain rather than in the UK.

Many people often do not realise just how much tax they could potentially save by taking advantage of Spanish tax compliant opportunities to protect their assets from the various Spanish taxes.

With the right advice it is often possible to significantly lower income and capital gains tax on your savings and investments. It may also be possible to reduce your wealth tax liability if your taxable wealth is above the threshold.

British expatriates who have retired in Spain may also have the opportunity to move their UK private pensions into QROPS (Qualifying Recognised Overseas Pension Schemes) and considerably improve their tax position.

When it comes to inheritance taxes, in some situations your heirs would pay less tax if you are resident in Spain rather than the UK, but this depends on many factors including the number of beneficiaries. Spanish assets are always liable to Spanish succession tax, but in many Spanish regions the tax could be reduced to virtually nil for your spouse and children if you are habitually resident in that region.

Just how much tax you would save as a Spanish resident depends on your assets and income, but it is certainly worth investigating


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