Payment of Taxes

a) Non-resident and resident income tax payments

b) Payment of capital gains tax, gift tax and death duties

c) Property taxes

a) Non-resident and resident income tax payments

Most people owning property in Spain do not realise that, resident or non-resident, you are obliged, by law, to make a tax declaration each year. This does not always involve paying taxes.

If you become a resident in Spain, you should complete a tax return form each May/June, based on your property, bank accounts and sometimes the cars that you own. The tax year in Spain runs from January to the end of December.

The property tax is paid by virtue of ownership of a property and is calculated from 50% of the ‘catastral’ value (if you do not have your house registered at the ‘Catastro’ office then the value is calculated from the ‘escritura’ or house deeds).

50% of the catastral (or ‘escritura’ ) value of the property X 1.1% X 24%. (these are the percentages charged for 2009)

Although both residents and non residents need to do a tax declaration there is a difference in that residents are expected to declare their world-wide assets, while non-residents are only required to declare the property and other assets they own within Spanish territory.

If you are non-resident in Spain for tax purposes, you will be taxed on any income arising from a Spanish source. If you let your property in Spain legally, any declared income arising will normally be charged as Income Tax.

B).Payment of income Tax, capital gains tax, gift tax and vehicle tax.
If you are working, or have a business here, you will need someone to look after your affairs, help you with VAT returns, social security payments and the yearly tax declarations, just as you would have an accountant in the UK.
Alpujarra Conect, using their own experience of living and working in Spain, can talk to you initially about your business and financial affairs. We can then introduce you to a reputable accountancy firm that will be able to do this work for you or indeed accompany you on visits to this firm to translate for you. You will be then able to rest in the knowledge that everything has been taken care of in this respect.

Capital Gains Tax is payable on the profits made on the sale of property and other assets. The gain is generally the difference between the sale and purchase values. The purchase value is the purchase amount plus the expenses and taxes that were paid with the purchase. The sale value is the sale amount minus the expenses and taxes that were paid in the sale.

If the tax withheld is not paid, the liability for the tax is attached to the property.

Gift tax This tax applies to the beneficiaries of the inheritance or gift. Even if the beneficiaries are not residents of Spain, they must pay this tax when the assets or rights are located in Spain. The tax rate starts at 7.65% and rises to 34% for assets with a value above 815,000€. If the beneficiary is a child (under age 18) of the deceased, then the tax rate on the assets is reduced to 5%.

Motor Vehicle Tax Paid annually by all vehicle owners to the local town hall. Motor Vehicle Tax (impuesto sobre vehículos de motor)
Filing period: between September and November of each year.

This tax is based on the age and the power of the vehicle

Basura (Rubbish Collection Tax) tax payable by all property owners to the local town hall Municipal Tax.
Filing period: Varies depending on the municipality.

The amount you pay varies depending on where you live.

C).Property taxes IBI
The I.B.I. is the “Impuesto sobre Bienes Inmuebles“, which could be translated as “property tax”. This is a municipally levied tax.

If you are not in Spain during much of the year, we can arrange a standing order at the bank in order to pay this tax or we can notify you of the cost and arrange payment.

In any case, don’t wait until the Town Hall chooses to notify you of the tax as, by then, you might owe late fees.

The ‘Catastro’ Office is in the capital town of each province and organises the payments of your yearly taxes on the house and the land.

This office contains all the details of each property, whose taxes have been paid and the name and details of the registered owner. Each property has a map detailing its rightful owner, the square meters, the name of the house or land bordering it and whether it pays taxes or not at the moment.  Also mentioned are rights of way, public and private tracks and water channels and their relative rights of passage. If it is a terraced house, the ‘Catastro’ information indicates party walls and other shared elements such as the roof or outside walls.

Once you have bought a property it is highly advisable to put this tax receipt into your name so that you can prove you are paying the rates. It is also needed in various situations such as requesting a building permit or asking for a mortgage from the bank. Alpujarra Conect can help you through this process and make sure that all the right taxes are being paid on your property.