Hi All.

I have a problem with my spanish income tax on rental income. Where an apartment is let in Spain, as a non resident, I am exposed to a flat rate of 24% on the gross rent, without any deductions for legitimate expenses such as repairs, service charges, depreciation of furniture etc. In essence, it is a tax on turnover as opposed to profit.

However, I understand that if I was Spanish resident I would be allowed such deductions in arriving at my taxable rental income.

In my case, given my legitimate expenses on my apartment, the 24% Spanish tax will exceed the rental profit I have made on this apartment.

Up to 2007 Spain charged non residents 35% Capital Gains Tax while residents were charged 15%. This was discriminatory to EU citizens and a case was taken to the European Court. The Authorities were forced to change. Both residents and non residents are now charged 18%.

Surely, a similar discrimination applies to the differinig rules for residents and non residents for Income Tax on rental income. I don't know of any juristiction that taxes rental turnover as opposed to profit. Both the UK and Ireland charge profit. Does anyone know if this situation is likely to change or if there is any case being taken to Europe on this issue.

I do appreciate that many non residents do not declare Spanish rental income, and given the flat 24% rate, suddenly I understand why but I wish to be fully compliant as I am a tax advisor myself.  From the discussions on your forum, nobody has discussed this point.  

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Hi & welcome.

My Husband & I own a villa as non residents & we do NOT EVER rent our villa out NOR allow others to use it so we (each) fill in the simplified 214 form which covers renta tax (also wealth tax). We find it unjust that we are not earning profit yet are taxed as if we were.  

See http://www.heddon.co.uk/dhills/things/wealth.htm

It's 25% x 1.1% not 25% x 2%. Our fiscal rep works it out as this, as do others, including Dream Hills info.

" I do appreciate that many non residents do not declare Spanish rental income " (Think you might have your answer).

Sorry I cannot help you further.

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HI,

I appreciate that you are annoyed to be inputed rental income when you don't actually rent your Villa, this is basically just an additional way for the Spanish Authorities to milk non residents who purchase property.

My problem is a little different.  I do not have a problem paying Income Tax on the profit I make if I rent but a charge of 24% on gross rental turnover amounts to more that the net profit I would make from the apartment. 

I do not believe it is legal under European Law for the Spanish Revenue to charge more on rental income for non resident EU citizens than Spanish residents.  They had to change the rules for Capital Gains Tax and I am hoping that they will have to change the rules for Income Tax on rental income for non residents.

Regards,   TaxLady

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Maria, who is a member of EOS & a lawyer who helps us all here with many problems will advise you.

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