This form is a multi-faceted form for use by non-residents to pay tax in Spain on income streams like rental income, capital gains on property sales and imputed income. It can only be completed online. The deadline is 31st December following the end of each tax year. For example, if you purchased a property in July 2022, your first tax return will be due by 31st December 2023.
For example if you are an European citizen, own a property in Spain as a non-resident and you do not rent it out you have to declare your property on this form every year and pay taxes accordingly. How much is this tax and how can you calculate it?
First you need to take your IBI bill (Municipal Property tax). On this bill you will find a figure called “Valor Catastral”. Attention! Not the “Valor Catastral Suelo” which is the value of the plot.
There is a difference between EU citizens with 19% tax, and non-EU owners (British nationals living outside of the EU, Iceland and Norway) who pay the higher tax rate of 24%.
To see how much income tax equates to, let’s now use the example of a property with a cadastral value of €100,000 x 1.1% is €1,100. You will therefore pay tax on €1,100 per year.
An EU resident will pay a tax rate of 19% of the calculated €1,100. This equates to €209 per year.
In comparison to a non-EU resident which will pay 24%. This equates to €264 per year.
More than half of foreign property owners are not aware of this tax. That is one of the reasons why the buyer has to retain and pay 3% of the sales price to Spanish tax authorities when the seller is a non-resident. This is a provision for taxes due but this is not a tax.
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We can help you navigate through the bureaucracy of the Spanish tax system. Our dedicated advisers help at every step of the way.