wealth and income tax

The reason that I posted was to reply to a suggestion that the tax rates might vary between the costa blanca and the costa del sol. Most of the information in this forum tends to relate to the costa blanca.

In my situation (costa del sol) my solicitor has informed me that future payments of renta tax will be VC X 2% X 24%

. Up to now because we did not have a VC the rate used was

Price in Title deed divided by 2 multiplied by 1.1 % and then 24%

But for future as the VC is issued they are claiming that the rate will be

VC X 2% X 24%

All posters on this site say its 1.1% and only 2% if the VC has not been revisited since 1994

I have queried this with them and awaiting reply, maybe the rates are different depending on the area but I doubt it. My tax for this year has already been paid using the first calculation (NO VC). I think the payment date for people with more than one property (apartment & garage on separate title deeds) is in June or July.

Anyway that’s my situation

Doc,

I don't think the rules vary according to area, and I think the information you have found on this site so far is correct.

I am looking at a leaflet issued by the Agencia Tributaria (Hacienda) office in Torremolinos on how to complete Form 214 - I think the calcualtions are the same even if you use 210 or 215, with respect to "Renta". It doesn't mention 1994 specifically, although that date can be found from numerous other sources. Instead, It gives 2% of valor Catastral as the taxable base, or 1.1% if your property is in one of 35 different locations listed - from Nerja to Estepona. It then goes on to give an example, calculated at 2% of VC, in brackets stating "for the property is in Marbella". Marbella is not included in the list of 35 locations. Your profile doesn't state where your property is, but you put "PS RE: Marbella tax office" at the bottom of one of your posts. Does this mean your property is in Marbella? If so, I'm guessing the valor catastrales in Marbella have not been revised since 1994. (Probably too busy passing brown envelopes around to get round to t!) Even if it is a new property, the VC refers to the land value, so it is perfectly possible that this is the case. Anyway, your IBI receipt will show the date of the last revision.

Finally, to clear the matter up, I quote direct from the booklet, in English, titled Taxation of Non-Residents, which is available from Hacienda offices free of charge:

Earnings derived from real estate

Urban buildings not rented

Nonresident taxpayers titleholders of urban buildings, which they use for themselves and not invlove in economic activities, or that are left empty, are subject to nonresident income tax. To this effect, the owner must calculate as income an amount of 1.1% of the building's assessed value or "valor catastral" (2% if the assessed value has not been revised or modified since 1 January 1994). The tax rate on the income thus calcualted is 24% (until 31 December 2006 it was 25%).

All spelling and/or grammar mistakes in the above are theirs not mine! This, as I said, is straight from the horses mouth so to speak. The Agencia Tributaria has jurisdiction over all of Spain, not any one area or another. The booklet I have is dated July 2007. There may have been modifications to legislation since then, but I am not aware of any. 

I hope this clears up any uncertainty.

Roberto,

Property is in Estepona

the form 210 states:

Delegacion de Malaga,   Administracion de Marbella.

I am still awaitng reply from solicitor  re; 2% or 1.1% of VC , maybe because of bank holiday in spain this week they might be a delay in replying.

I am trying to confirm information from solicitors because i believe that a tax rebate will be due to me .

property purchases 2001   , Licence of first occupation  only issued in oct 2008

Up to now and including this year the renta was based on the half the purchase price multiplied by 1.1%

Estepona town hall in november2008 billed us for IBI for  05 06 07 & 08. All to be paid by end of 08

This totally unfair because the renta tax that have been paying is 3 times (for years 05 06 & 07)more than what would be due if using the VCX1.1% formula

Because of the large rise in VC for 08  the tax ipaid for this year is twice as much as it should be.

I would have thought that the justification for the higher payments if no VC issued was that we were not paying IBI. Now that the IBI charges are backdated I believe that the renta tax calculations should be revisited using the backdated issue of VC.

All very interesting.!

andy 

The leaflet I have clearly includes Estepona in the list where the applicable rate should be 1.1%.

I agree it all seems very unfair. Unfortunately, I don't think the IBI payments are in any way connected to the renta tax, since IBI is a local municipal tax and renta is a national tax. But it just doesn't seem right that you have been penalised due to the town hall taking so long to sort out the IBI and VC. I wonder if there's any recourse for you?

It seems Estepona Town hall is in a bit of a mess. There's an article in today's Costa del Sol News (page 5) about the corruption chaos, specifically the "Astapa" case. Can't find the article online, but if you do a search for it you'll find plenty of others.

Don't forget UK tax

If you rent out your Spanish appartment or house you will have to declare any income to the UK tax authorities as well as the Spanish.

Do not ignore this as there is now fairly close cooperation between the two tax authorities and the Revenue scan the letting adverts.

YOU have been warned

Hi - I'm in the UK at the moment and unable to personally deliver my form 214 and am finding it difficult to file online.

Could someone please tell me if it is possible to post the form from the UK. If so where can I post it to?

Also what are the consequences if payment is not made by 31st December?

Thanks in advance.

Andrea

Thanks for reply ,

received confirmation from solicitors that renta tax will be calculated using 1.1% as multiplier

Not 2% as they  earlier claimed. Thanks for your help.

I now have a further query in relation to Valor Catastral and Base Imponible

As I said in previous postings the Town Hall backdated the VC for years 05, 06, 07& 08 and have now issued bills for the 4 years.

Reading the statement it seems that the Base Imponible is used for calculating the IBI.and the coefficient has increased to 1.1%. I note that in year 07 the VC is the same as the BI and am I to assume that the BI at some stage will equal the 08 VC of 251,547 ?

The VC has increased 400% and at 1.1 % it means a potential IBI of 2,760 euro . This cannot be right or is it?

Year 05 VC 62,378 and Base Imponible (BI) 59,758 * 0.85

         06 VC 62,378      (BI)    61068 * 0.85

        07 VC 62,378        (BI)   62378 * 0.85

       08 VC 251,547      (BI)   81295 *1.1%

Hi Doc

The deemed income is calculated at 1.1% of VC i.e. 1.1% x 251,547 = €2,767.02.

The non resident income tax rate is 24%, so your non resident income tax will be 24% x €2,767.02 = approx €664.08.

Don't forget that there's also a new filing deadline for non resident's income tax following the abolition of wealth tax - it's now end June as opposed to end year.

The IBI is a different tax - equivalent to council tax in the UK.

Hope this helps.

Neil

Hi

Both AECE (Asociación Profesional de Expertos Contables y Tributarios de España) and the Agencia Tributaria have advised that you should use form 210 only, and the filing date is end June latest. If you file after end June you will be fined.

Thanks

Neil

www.stalwartwealthmanagement.com
 

I have already asked at the tax office, and they told me that even if you have more than one property you could pay until the end of the year.

Mar Durio
Calle Ancha 30, 2º
E-11201 Algeciras
(t) +34.956.092.687
(f) +34.956.092.697
m.durio@costaluzlawyers.es
www.costaluzlawyers.es

Hi Mar

Don't trust what they're telling you at your local tax office. We have a new system following the abolotion of wealth tax, and the chances are that the person you've been speaking to doesn't fully understand the new rules - we come across this kind of thing all the time at various tax offices throughout Valencia, Murcia and Andalucia.

My firm belief is that it's best to file the return by the end of June as advised by both AECE & the Agencia Tributaria - the instructions for the new 210 form are very clear (See the electronic version of the 210 available from the Agencia Tributaria website or alternatively those attached to the paper version if you collect in person) in that it must be filed before end June in the year following the assesment. To do otherwise risks a fine. It's also clear from both sources that you can no longer use the old 214.

Right now the tax offices are sending out fines for all sorts of minor infringements, and on top of this they're also questionning virtually all refunds, even where it's very clear that a refund is due.........it seems like the tax man doesn't have any money!

Thanks

Neil

www.stalwartwealthmanagement.com

Hi Neil.

This is my slant on things..................

The June deadline for submission of the 210 form has always been June........as this form was used for RESIDENTS  Wealth Tax, which had a nil% taxation value.

Now the Wealth Tax for Non Residents has been withdrawn along with the 214 form, NON RESIDENTS will also use the 210 form to declare La Renta only.

If a Fiscal Representative pays NON RESIDENTS taxes on their behalf, yes, the 210 form has to be submitted by the end of June.

If you pay your La Renta yourself in 2009, then you will still have till the end of December to submit the 210 form

The non resident income tax rate is 24%, so your non resident income tax will be 24% x €2,767.02 = approx €664.08.

The amount quoted in red above, isn't this the amount you have to pay on the rental income if you are renting your property out.

I've always understood that La Renta was only a nominal sum and the bulk of the money I pay annually was due to Wealth Tax not La Renta.  That's why a lot of regions were reluctant to accept the new legistation, as they would loose a lot of the income derived from it.

Hi Fibby

Where residents had a nil declaration for wealth tax there was no need for them to file a wealth tax return. If they had a wealth tax liability they had to file a return using Modelo D714.

Non residents have always used Modelo 210 to declare actual rental income i.e. where they are actually renting their property out. Imputed rental income i.e. where the property isn't rented, was always included in Modelo 214, but now that wealth tax has been abolished Modelo 210 must be used to declare the imputed rental income.

The following is a direct translation of an extract from the Instructions for completing the declaration using Modelo 210, and is supplied by the Agencia Tributaria: -

'The period for presentation of declaration is:

For declarations with either a payment or a zero return [Note, a zero return would exist if actual rental income is less than allowable expenses].

- In general it will be one month from the date that the income is declared [Note, this means one month from the end of the tax year and applies where there is actual rental income].

- Imputed rental income for urban properties will be declared between 1st January and 30th June following the tax year in which it arises.'

There's no reference, either on Modelo 210 or on the Agencia Tributaria website, to indicate that the date of presentation is extended if you are filing the form in person.

I'd really appreciate it if you could let me know where you've heard that the taxpayer can file the return late if they file in person, as I can't find any official (written) confirmation of this.

Thanks

Neil

www.stalwartwealthmanagement.com

Hi Semijubilada

24% is the income tax rate for non residents.

It looks to me from 'the doc's' post like the town hall has revalued the properties in his/her area, and this would explain why the imputed rental income is so high (and the tax).

Before the revaluation the tax would almost certainly have been less than half of the new amount - in the absence of a valor catastral the taxable value is taken as half of the escritura value, and I bet that 'the doc's' escritura value is almost the same as the new valor catastral.

Historically, the Valor Catastral was a relatively (to the purchase price) low amount, and hence the non resident's return was always fairly cheap.....but if the town hall revalues the tax bill will undoubtedly go up.

Given the state of Spain's economy I think we're going to start seeing a lot of these revaluations.

Thanks

Neil

www.stalwartwealthmanagement.com

Hi Neil,

Yes, I did understand that the 210 form was used by Non Residents declaring actual rental.

I did say that this was my "slant on things", so I am not implying that I have seen in writing that Non Residents filing their own returns, have till the end of December to do so.

I am merely gathering information from various sources and putting my own thoughts here on EOS

So, having said that, I personally think, that for people that are Non Resident of Spain, and who wish to file their own tax return, they will still be given till the end of December to do so. (I am waiting for  for a reply to an e-mail on this subject from the tax office)

To change the goal post dramatically for people in this situation, without giving enough warning, would be unfair.

Many non residents only visit Spain once a year, so now, you can imagine an influx of owners rushing to Spain before the end of June to file their tax returns!

This is why, the December deadline was originally intiated for the 214 form surely, so non residents had a longer timescale in which to pay in person?

I do not doubt your thoughts on the end of June timescale, as you have shown, there is nothing in the Guidance notes relating to any end of December date...........what does concern me though, is the Tax Office itself!

I have no faith in them..because..............

I have seen that the 210 form has changed since they tweaked it for Non Resident's use...................I accessed it 2 months ago, then again this week, and it was different!

If they can change the form willy nilly, then they can change the guidance notes!

As you must have worked out by now, I sell a Guide to paying your own taxes in Spain and am being hampered in updating it due to unclear information from the tax office and watching the 210 form's format change!!!!

Also, the 210 form is supposed to be a simplified version, it's anything but!!!!

Kind regards,

Hi Fibby

I agree, and I do sympathise, but if you get the deadline wrong in your guide people will get fined..........it's best to go with the official notes for the time being, and if the AC issue's an advisory to the contrary, then change the guide retrospectively by issuing an addendum by e-mail. The worst that can happen in these circumstances is that people pay early.

I to have been trawling the net to find other references to the extended deadline, and I have found a couple... they seem to stem from tax offices in Andalucia. But as I say in my post in response to 'Mar Durio', the people you speak to at the tax office often get things wrong, and they'll deny they ever spoke with you if you try to bring them to task after things have gone wrong.

As I say, I do sympathise, but I'll be advising all of my clients to file before 30th June in order to avoid any risk of a fine.

Thanks

Neil

www.stalwartwealthmanagement.com

Absolutely Neil!

I have many enquirers wanting to have an updated version, but there is no way I would issue it with wrong information or deadlines.............

It's so frustrating though.......I am still trying to work out how to fill the 210 form in, so updating my Guide is not happening anyway at the moment!

Any pointers would be gratefully recieved          but I know we have a clash of interests here!!!!!

Kind regards,

Hi Fibby

Everything you need to know about filling in the 210 is in the instructions - note though that the instructions quote the rate of non resident's income tax as 8% when in reality it is 24%. Aside from this, there are no other errors as far as we know.

Thanks

Neil

 www.stalwartwealthmanagement.com