TAXES TO PAY WHEN RENTING A PROPERTY IN SPAIN AS non resident (model 210)

When you own a property in Spain and you are NON SPANISH RESIDENT,  and you do not use it as permanent residence, EVERY YEAR, you have to present tax declaration on your property, and this, even if the property is rented, or non rented. And this is done through an ANNUAL TAX DECLARATION for the IMPUTED INCOMES (2 % Cadastral Value /year)..

And, when you rent a property, and you receive an “income”, then, you have to declare in the same moment you receive the income, in a QUATERLY DECLARATION.

When you rent a property, you receive an “income” which is subject of the  Spanish “Income Tax” in Spain, which varies depending if you are “Spanish tax resident” or “Spanish non resident”.

If you are resident, then the tax is the Resident Income Tax (IRPF-“Impuesto de la Renta de las Personas Físicas” – MODEL 100), and if you are non resident, the tax is the Non-Resident Income Tax (IRPFNR-“Impuesto de la Renta de las Personas Físicas No Residentes” – MODEL 210).

If you are “Spanish Tax resident”, then you have to declare your rental incomes in our ANNUAL TAX declaration (model 100).

But, if you are a Non-Spanish Tax Resident, then you have to declare your incomes in the Non Resident Income Tax (model 210) in the following way:

– QUATERLY:  When you are renting your property, you have the declaration of these incomes in the same quarter of the year in which they are generated. So, here in this post, we have consdiered the case in whcih rent is for “tourism” purposes, but, also, you may rent for “residential” purposes. In  both cases, you have to declare the incomes in the correspondent quarter of the yeat.

 “Residential rent”: It means, when you are renting for “residential” purposes, with medium-long term of families or individuals renting it for “living” and not for “tourism”.

– ANNUALLY – IMPUTED INCOMES: As resident, or as non tax resident, you have to make the annual declaration of taxes (IRPF /IRPFNR).  So, for the periods of time of the year where  you are non-renting the property, as non resident, there is a tax to pay (we call this “Imputed Income” ), and this is declared in at the end of the following year.

 


 An example:

You are non-resident and obtain rent for touristic property in February 2022.

1.- Quarterly declaration: You have to declare that income in the same quarter. Presentations of these declarations must be done before 20 days after the end of the quarter. In the case of the example, the incomes from rent from the quarter January-March, should be declared in the tax declarations to submit before the 20th of April 2022.

The rest of the year 2015 there is not further rent on the property.

2.- Annual Declaration: Then, before the end of the following year, 2016, you have to present the declaration of taxes, and pay for the time that the property has not been rented.

So, please, be informed that, when renting a property for touristic purposes,  together with your LEGAL obligation to register your property, you have the TAX OBLIGATION to declare the income QUARTERLY, and then, ANUALLY, for the rest of the year.


Do I have to pay VAT?:

There is a big confusion in the market about this question. Purely, Renting incomes are not subjected to VAT.

So, if you use your property for both, residential or touristic purposes, YOU DO NOT HAVE TO PRODUCE INVOICE, and the transaction IS NOT TAXED BY VAT.

But, this is just in case the incomes you receive are ONLY FOR RENT. But, when you offer other services similar to hotel, like:

– Restaurant, food, breakfast

– Cleaning inside the apartment

– Washing towels, sheets, etc.

In these cases, you have to PRODUCE INVOICE and charge VAT on your service.

The requirements will be:

– Produce invoice to each of your guests

– Charge VAT (10 %)

– Declare VAT quarterly

– Declare VAT annually

– To register as business professional in the Tax office

– To declare Income Tax quarterly

– To declare Income Tax annually

  • Clarified the above, we will consider now how to pay the incomes received through a holiday home.

    To the net amounts received from the rent, in case you are resident in any of the EU countries+Icelnad+Norway,  you can reduce:

    – The proportional interest (not capital) of the mortgage (or any  other type of credit used to buy the property) paid for the acquisition of the property.

    – The proportional Council Tax, Garbage collection, House insurance, Community charges, etc.

    – The proportional reform, maintenance, furniture, equipment, water, electric, internet, etc.

    – Marketing, publicity, lawyers, etc.

    – Amortizations of property, furntiure an home appliances

    IMPORTANT NOTE: In case you are resident in a country outside EU (USA, UK, Canada, Mexico, Russia, etc), then, you cannot deduct the above expenses from the tax base.

    Thus, the most important difference in the SPANISH INCOME TAX FOR NON RESIDENTS are the following:

    • EU residents+Norway+Iceland:
      1. Base of the tax can be reduced from the expenses listed above
      2. Tax rate: 19 %
    • Non EU residents
      1. Base of the tax CANNOT be reduced by any items. So, the amount of incomes received by rent will be taxed in full.
      2. Tax rate 24 %

     An example:  

    “A” has a house in the Costa Blanca, which is not being used as permanent home, and he decides to rent it through Airbnb, or any other similar platforms.

    • Declaring the rent obtained: The house is valued in 150.000 EUR, and the total rent obtained has been of 6.000 EUR in 4 months, May, June, July, August of 2022.
    1. Council Tax. Yearly is 500 EUR. So, 500/12*4 = 166,6 EUR. This is the proportional amount of Council Tax during the 4 months period in which the house was rented.
    2. Mortgage interests: “A” has paid that year 1.200 EUR of mortgage interests, so, 400 EUR corresponds to the rental period.
    3. Community charges: Yearly are 600 EUR, so, 200 EUR corresponds to the rental period.
    4. Garbage collection: 150/year. So, 50 EUR corresponds to the rental period.
    5. House insurance: 350/year. So, 33,1 EUR corresponds to the rental period.
    6. Payment of marketing fees: 300 EUR
    7. Water, electric, gas, internet: 450 EUR corresponds to the rental period.

    TOTAL EXPENSES: 1.599,7 EUR. This will be the total amount that “A” may deduct from the incomes received. So:

    6.000 – 1.599,7 EUR = 4.400,3 EUR

    The amount of 4.400,3 EUR pays 836,057 EUR in taxes, as per the scale below:


    I.- TAX RATE FOR 2022 –  Incomes obtained by rent of properties of NON FISCAL RESIDENTS :

    • 19% for EU Nationals + Iceland + Norway: From the base of the tax, these nationals  can deduct from the following concepts: -electric, water, electric. Council Tax (IBI), community of owners, expenses of reforms, maintaining and repairing of the property, mortgage interests and amortization.
    • 24% for NON EU Nationals (USA, UK, Canada, Mexico, etc.): From the base of the tax, these nationals CANNOT DEDUCT ANY of the above expenses, so, the base of the tax is taxed in full at 24 %.

    II.- RATE FOR SPANISH TAX RESIDENTS 

    TAX RATE FOR REGULAR INCOMES

    IncomesTax Rate
    Up to 12.450 €19 %
    12.450 – 20.200 €24 %
    20.200 – 35.200 €30 %
    35.200 – 60.000 €37 %
    60.000 – 300.000 €45 %
    + 300.000 €47 %

     

    TAX RATE FOR SAVINGS

    IncomesTax Rate
    Up to 6000 €19 %
    6000 – 50.000 €21 %
    50.000 – 200.000 €23 %
    + 200.000 €26 %

    And this declaration of tax should have been done in 2 declarations, made on the proper quarter of the year 2021. In this way:

    – The rent obtained in May and June, should have been declared in the quarter declaration made before the 20th of July 2022.

    – The rent obtained in July and August, should have been declared in the quarter declaration made before the 20th of October 2022.

    • Declaring the rest of the year: As the house is not a permanent home, then, “A” must declare, and pay, for the rest of the year the house is not destined as economical regime. So, this is paid:

    – In the annual declaration of Income Tax. If “A” was Spanish resident, before the end of June 2022, and if “A” was non resident, before 31.12.2022.

    WHAT HAPPENS WITH THE PROPERTY FOR THE PERIOD WHICH IS NOT RENTED DURING THE YEAR?

    In case the property rented is not your PERMANENT HOME, then, you need to pay a tax for the time not rented. This tax is an average of 0,4-0,5 % calculated from the Catastral value, and it is declared before the end of the FOLLOWING year.

    In the case of the example, this tax for the «empty» property during the year 2022, should be presented before the end of 2023