Non-Resident Home Owners in Spain and Annual Property Taxes

Non-Resident Home Owners in Spain and Annual Property Taxes

Many non-resident owners of property in Spain are under the misconception that they can forget about submitting their annual tax forms!

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It would be nice but it is not the case. However the good news is, from 2009 the taxes payable will be less than people paid in previous years Ki Residences.

Up until the end of 2007 non-residents with property in Spain were also liable to pay a “wealth tax” (Patrimonio) which was calculated on the value of their assets in Spain (i.e. property, savings, etc.)

It is interesting to note that when Prime Minister Zapatero fulfilled his election promise regarding Patrimonio or “Wealth Tax”, with the introduction of Spanish Law 4/2008 passed on the 23 December 2008, the tax was finally amended by reducing the taxable base to zero.

Is this technically a formal abolition of the Tax? The answer is no. Certainly the effect is that no wealth tax will be paid by either residents, (obligacion personal) or non-residents, (obligacion real).

The law, which ironically was published in the Spanish Government Official Gazette (BOE) on Christmas Day 2008, applies to tax years starting 1st January 2008 onwards which, under the previous scheme would have been payable in arrears in 2009.

The mechanics of the new law mean that the obligation to submit a wealth tax return (Modelo 214) is terminated by applying a 100 per cent deduction to the taxable base.

By reducing the tax to zero but not abolishing it, is the Spanish Government retaining the option to re-introduce the tax in the future? That may well be the case!

So to reiterate, the Patrimony “wealth tax” has to all intents and purposes been done away with. But that does not mean that there are no annual property taxes for Non-Residents to pay. You may remember noticing on previous year’s Modelo 214 forms that there were 2 separate calculations: The Patrimony amount and the “Declaracion de la Renta” amount.

The “Declaracion de la Renta” or “Non Resident’s annual tax return” must still be made and paid!

Taxation, and particularly dual taxation issues are an extremely complicated subject and I would always advise readers who make financial gain from their property in Spain to get a qualified assessment of their own personal circumstances, either directly from the Spanish “Hacienda”, Spain’s Inland Revenue, or from a tax professional.

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