The following article is taken from Eye on Spain, www.eyeonspain.com

Non-Resident Taxation In Spain - Part 1

This is the first part of an article, written by the CostaLuz Lawyers Team, intended to answer some fiscal questions for our readers and to help clarify some essential aspects of the Spanish Tax Laws, related to Non-Resident Individuals or organisations.

Q: How can I tell if I am a Resident?

A: On one hand, in Spain, individuals are to be considered Residents if:

On the other hand an entity or organisation is deemed to be a resident of Spain when it meets any of the following criteria:

Taxation paperwork in SpainOtherwise either individual or organisations will be considered as Non-Residents for the whole tax year and taxed accordingly.

Q: How can I demonstrate I am not a Resident?

A: A person or entity may prove its tax residence in a specific country by a certificate issued by the Tax Authority in that country. The period of validity of these certificates is one year.

Q: What happens if I'm a resident of both Spain and another country, according to the tax rules of both countries?

A: In these cases the international agreements, if any, will apply. These agreements describe the tax rules that apply to avoid an individual being considered resident in both countries

Q: As a Non-Resident to which and how many taxes would I be liable for?

A: As a Non-Resident individual or Organisation, you should be aware that there are different levels of taxes in Spain: National, Regional autonomous and Local (municipality) taxes. Specifically these taxes are:

National Taxes:

Regional – Autonomous Taxes:

Local Taxes – Municipality:

You will probably need to comply with one or more of these taxes, according to your economic activities, incomes and/or property owned within the Spanish territory.

Generally speaking, if you are Non-Resident and you obtain incomes in Spain or you own a property within the Spanish territory, you are subject to Personal Income – as well as the property’s presumed income through the Non-Resident income tax (IRNR), Wealth tax (IP - Impuesto sobre el Patrimonio), and Property Tax (IBI – Impuesto sobre Bienes Inmuebles). You might be also deemed a Tax Payer, according to some other regional and local tax laws, in any of the following cases : a) you’ve received any inheritance or gift (ISD), b) You’ve bought a property (ITP), d) you own a motor vehicle (IVM), and a Municipal Tax (BS) if you already own a property in Spain.

In the next part of this article we’ll continue answering some questions related to each of these taxes.

 

 


Comments:

CommentDateUser
Fine start, but nowehere near comprehensive enough for a new owner to know what to do, where to go, and exactly what tax will be payable on the property as a non-resident. Local taxes are relatively easy to sort out unless nobody speaks English in the office, but even they were not able to help Nationally.4/1/2008 10:26:00 AMtrotty110
I am purchasing a new motor yacht in the UK VAT Paid, but it will be permanently moored in Sotogrande. Will this be subject to Spanish wealth tax, even though it is a UK asset?4/1/2008 3:51:00 PMsproggit
I am purchasing a new motor yacht in the UK VAT Paid circa £1m, but it will be permanently moored in Sotogrande. Will this be subject to Spanish wealth tax, even though it is a UK asset? I am a Spanish non-resident. If the answer is "Yes", is there a legal tax avoidance mechanism available?4/1/2008 3:54:00 PMsproggit