A New Year Resolution You Should Keep - Pay Your Spanish Taxes

Published on 07/12/2010 in Taxes in Spain

TaxIt's coming up to the end of the year. Time to reflect, plan your new year resolutions and perhaps hope that 2011 is a better one financially. So what will your new year resolutions be? No doubt, like most people there will be something in there about cutting down, giving up or doing more. Somewhere on that list should be  - I must sort out my taxes.

Whether you are a resident or a non-resident, you should be paying tax. That won't come as a surprise if you are a resident in Spain but for those of you who are reading this back in the cold and frosty UK, it might. We find that most non-residents don't have difficulty understanding the concept of paying IBI - that's the local council tax, or what used to be called rates in the UK. It's the second-home income tax or imputed income tax that causes more of a problem.

I've lost count of the number of times people have said 'but I can't pay income tax in Spain, I don't live there'. You might not, but paying income tax if you are a property owner is a legal requirement. The logic goes like this. If you rent out your Spanish home then you are expected to pay income tax on any rent you collect. That seems straight forward enough. If, however, you have a Spanish home that isn't your main residence, it doesn't matter whether you rent it out or not, the Tax Authority believe that you could. Therefore you should pay income tax anyway. This is the second-home or imputed income tax.

You can be forgiven for finding it confusing, it is. Perhaps the easiest way of thinking about it is that if you are a non-resident you should be paying two taxes on your home - however you choose to use it. If you're not then it's time to make that new year resolution. The 31st December is the final day for making your non-resident tax declaration.

"I know lots of people who aren't paying any tax at all and they've never been found out". That's another statement we hear quite a lot. At one time it might have been true but times are changing. Only last week we received a phone call from a lady living in London who had received a letter in English from the Tax Authority in Alicante. It explained that if she didn't settle her property taxes quickly, her house would be sold at property auction.

This is no mythical scenario. It's a real case that could have turned into a real disaster. Fortunately, the lady in question was able to act in time and we are currently helping her to address the problem. She'll still have her house for the new year but we wonder how many can expect a similar letter hidden amongst their Christmas cards.

Imputed Tax is not that expensive. It's a once yearly payment that doesn't compare to many other taxes you might be used to paying. For example, on a property worth 140,000 Euros on the title deed with a catastral value of 40,000Euros you would expect to pay 192 Euros for the year.  In the current climate it's just not worth taking the risk - contact a reputable fiscal representative, make your tax declaration and celebrate new year knowing there's at least one resolution you might actually keep.

Written by: Susan Partridge

About the author:

Susan Partridge Helme is a Tax Adviser in Ábaco Asesores. She has twenty five years experience dealing with resident and non-resident Spanish tax declarations, supplementary taxation and international taxation agreements.

If you want to know how to protect your property and the precious time you spend in it, you are welcome to join our Seminar on-line. In a little less than half an hour we will explain your tax obligations as a non-resident home-owner in Spain and what happens if you don't meet them: please, click here.

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Vangie Scotford said:
30 October 2012 @ 10:47

I cannot get the province list to stay on long enough to
select, a choise on the new form 210, which has to be filled in online. It won't let me save it until I fill it in.It says error please fill the province in. I am using iPad 2 any one else having this problem.

Michelle said:
03 February 2012 @ 12:47

Hi can anyone help? I am a 'new' non resident in Spain. I have not received any IBI requests nor am I eligible (yet) for the yearly home owner tax. However, I have been charged 29 Euro for non resident and it has been taken directly from my bank. Can anyone enlighten me as to what this might relate to? I have asked the bank to clarify but have not recieved a reply.

Sarah said:
07 December 2010 @ 22:10

IBI and Basura can be organised so that it comes out of your Spanish bank account automatically. You still receive the bill in the post so you know how much and when it will be taken but the annual income tax talked of above has to be submitted each year on Form 210. I think also the annual car tax can also come out of your bank automatically. This was supposed to happen last year but didn't so had to deal with it myself. We shall see if it has been set up correctly this year! Regarding the annual tax, why pay a ridiculous amount when it can cost you £20 or nothing at all?

spanishblanco said:
07 December 2010 @ 21:29

i have also done my own for the last 3 years, as i once used a lawyer and also did my own which i asked her to check, they realised theirs were wrong and used my figures!

Brenda Green said:
07 December 2010 @ 21:07

I use a firm in Spain who are worth their weight in gold. They charge one fee of a little over 100 euros each year for me and my husband and deal with our annual tax forms and our IBI which took a lot of sorting out when we first bought our house. I like the fact that I have someone in Spain who is up-to-date with everything and they keep me informed about changes and will translate any mysterious letter that I find in my post box when I arrive. As my representative they recently received a letter for me at their office from the tax office about an additional tax payment I had to make, something to do with the Deed value, and they dealt with it on my behalf and got me off paying quite a big amount so I really feel their fee is money well spent and that is why I wanted to add this comment.

Derek said:
07 December 2010 @ 20:33

I can only echo what Karl said I to have used this firm for the last two years, I send our completed forms to our bank in Spain and let them make the payment for me.
Spanish web site for Tax forms e.t.c follows this link (you can Translate it in Google)


karl said:
07 December 2010 @ 19:04

great bit of info will be doing my own also why pay solictor.

Sarah said:
07 December 2010 @ 16:46

It is a myth that this tax has to be paid through a lawyer and when I was vcharged nearly 200€ last year, vowed to sort it out myself in future. I however found a firm in the UK who did all of the paperwork for £19.95 and came to Spain for a visit and paid it myself at a bank. If you cannot do this, they will pay it for you for £30. This can be done only if you have one property in Spain, you will have to use a lawyer if you own two or more properties. The process was really easy and will do the same next year, I may even do it completely myself next year as I have copies of all five forms which previously my lawyer refused to hand over. I don't seem to be able to copy and paste a link but you can google spanish tax forms.co.uk



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