| The main annual taxes that affect people with property in Spain are as follows: |
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| Wealth Tax |
If you are non-resident in Spain then you must pay Wealth tax (the 'patrimonio') on all your assets situated in Spain. These assets will include your house, bank accounts and other possessions with a determined value e.g. stocks and shares; however, the last two must be declared in residence country. The value if your house is the highest of the official estimate that appears in your receipt for local rates (valor catastral), the declared value on the title deed (escritura) or the one that is checked for other taxes by the Inland Revenue (valor compropado). Wealth tax has to be paid on a yearly basis. If your the total number of your assets does not exceed the amount of 26,780,000 pesetas (160,951.04 Euro), the rate to be applied is 0.2%. Although this is a low tax, you must pay it to prevent any problems when you come to sell your property.
For residents, the tax rates are the same but apply to your worldwide assets. The tax only applies if your assets exceed 17 million pesetas (102,172.06 Euro). |
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| Property Taxes |
Spain has rates system called the 'Impuesto de Bienes Inmuebles Urbanos' if you own a property in a town or city, or 'Impuesto de Bienes Inmuebles Rusticos' if it is situated in the countryside or the property is deemed to be 'rustico'. Every owner has to pay property taxes and it is up to you to check your liability for payment with the local Town Hall. On the other hand, after checking your liability for payment, the Council usually sends a notification of your annual receipt but if not, you need to ask for it.
The amount of tax to be paid is based on your rateable value (the 'valor catastral'). In addition to the basic rates, you may also find that your local Town Hall will from time to time introduce taxes and charges to cover local developments and services: Also, you may find charges incorporated into the rates or your water receipts, for drains, garbage collection, etc.
The simplest solution for paying your rates is to make an arrangement for your bank to pay the taxes on your behalf by means of a standing order. Once you have established with the Town Hall that you are going to pay the taxes, you can send the necessary forms to your bank and they will pay them on your behalf. |
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| Income Tax |
| If you are non-resident in Spain, you are taxed on any income arising from a source within Spain, such as your income from letting your property (and this also includes any income paid to you in the UK or elsewhere). Another aspect of Spanish law requires you to include the 2% of the ratable value (valor catastral) of your property as a token rental income paid by yourself to yourself; In this particular case, the tax to be paid is worked out by calculating 25 %of the 2% of the referred ratable value. |
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