Non-Resident with Property in Spain? Imputed Income Tax May Apply to you
Our Tax Partners Garrigues have informed us that if you hold property in Spain you need to report this to the Spanish Tax Authorities whether the property is rented out or empty and you may be subject to imputed income tax in Spain.
Yes, you read this correctly, even if the property is empty!
The following is provided by Garrigues:
“Non-resident individuals in Spain for tax purposes, who in 2017 had properties in Spain that were not rented out, have until December 31, 2018 to file form 210 (“Non-Residents Income Tax return”) to report the “imputed or deemed income” that is deemed to be generated by having those properties at their disposal.
The tax payable annually ranges between 0.21% and 0.48% of the “cadastral value” of the property, depending on the country of residence of the owner and whether or not the cadastral value has been revised in the last 10 years.
While this is not a novelty for this year (i.e. this obligation has existed for a long time), in our experience, not all non-residents who have second residences in Spain are filing this form and reporting this “imputed income” to the Spanish Tax Authorities.
As we have known, the Spanish Tax Authorities are crossing information with the “Spanish Cadastre Office” to detect which taxpayers are not complying with this obligation.
Please note that this obligation does not apply to non-residents who have their properties in Spain through a company, unless that company is located in a “tax haven”, in which case the company shall pay a similar tax (i.e. Special tax on real estate of non-resident entities) which is filed and paid through Form 213 in January each year”.
Haven Financial Advisers View of this
As Independent Financial Advisers in Mallorca, we do not directly offer Tax Advice which is why we are partners with Garrigues who are one of the largest Tax Law firms in Spain. The information about imputed income tax above often comes as a big surprise to people who own a property here in Spain but are not resident here for tax purposes.
Particularly important to note is the fact that the ownership of the property must be declared to the Spanish Tax authorities and tax paid on the deemed “rental” income, whether or not there is in fact, any rental income.
If imputed income tax applies to you please contact one of our financial advisers in Mallorca in the first instance and we will put you in touch with the appropriate person in Garrigues to help you.
