Taxation of urban buildings owned by non-resident individuals

1.- General considerations

If you have the condition of non-resident in Spain and are the owner of an urban property located in this country, you will be subject to Non-Residents' Income Tax and to a local Property Tax.

In addition, Capital Gains Tax has been temporarily re-established for the tax years 2011, 2012, 2013, 2014, 2015, 2016 and 2017.

1.1. Representative

Except in the cases of residents in countries or territories with which there is no effective exchange of tax information, there is no obligation to appoint a representative before the Tax Administration. However, a representative can be designated voluntarily if so desired, notifying the appointment to the Delegation or Administration of the Tax Agency corresponding to the location of the property.

1.2. Personal Tax ID number (NIF)

In Spain every person has a Tax Code (NIF) which must be stated on tax returns and in communications addressed to the Tax Administration.

As a general rule, the Tax Code of persons of Spanish nationality will be their DNI (Spanish National ID), and for non-Spanish nationals it will be the NIE (Foreigner's Identity Number). These identifications are processed with the Directorate-General of the Police. However, foreigners who do not have a NIE, either temporarily when obliged to have it or definitively in not being obliged to have it, must request the issuance of a an ID number from the Tax Administration when they are going to carry out operations of a taxable nature or significance.

2.- Income tax for non-residents

When a property is owned by a married couple or by several people, each of them is an independent taxpayer, and therefore they must file separate tax returns.

Depending on the allocation of the property, taxable incomes are:

2.1. Revenues attributed to urban properties of own use.

The income to be declared will be the amount resulting from applying the following percentages to the rateable value of the property, which is stated in the Property Tax (IBI) bill:

Accruals until 2014

  • In general, 2%.
  • In the case of properties with rateable values reviewed or modified from 1 January 1994, 1.1%.

Accruals from 2015

  • In general, 2%.
  • In the case of properties whose taxable value has been reviewed or modified and this has become applicable within the tax period or the ten previous tax periods, 1.1%.

This income is understood to accrue once a year, on 31 December.

The proportional part of the said amount will be declared if the owner of the property has not been the owner all the year or if the property has been leased for a period of time.

Tax rate
Year of return2007-20112012-201420152016 and following
Tax rate 24% 24.75% Residents in the EU, Iceland and NorwayOther taxpayersResidents in the EU, Iceland and NorwayOther taxpayers
19.50% 24% 19% 24%

Form: form 210, declaring income type 02.

Filing methods:

  • on paper, generated as a result of printing the form contained in the web portal of the Tax Agency.
  • online, via Internet.

Filing period: throughout the calendar year following the year of accrual.

Direct billing of the tax payment: in the event of online filing, payment can be direct-billed until 23 December.

2.2. Income from leased property

The income to be declared will be the whole amount received from the lessee, without deducting any expenses.

However, in the case of taxpayers resident in another European Union member state and, from 1 January 2015, also in Iceland and Norway, they may deduct the expenses provided for in the Personal Income Tax Act for the determination of the gross tax base, provided that it is certified that such expenses are directly related to the incomes obtained in Spain and have a direct and indissociable link with the activity performed in Spain.

This income is understood to accrue when it is requirable by the lessor or on the collection date, if earlier.

Tax rate
Year of return2007-20112012-201420152016 and following
Tax rate 24% 24.75% Residents in the EU, Iceland and NorwayOther taxpayersResidents in the EU, Iceland and NorwayOther taxpayers

Until 11-07-2015:

20%

From 12-07-2015:

19.50%

24% 19% 24%

Form: form 210, declaring income type 01 or, for grouped income of several payers, 35.

Form 210 will be used both to declare separately each accrual of income and to declare jointly several incomes obtained in a determined period.

Several incomes obtained by the same taxpayer may be grouped together provided that they correspond to the same income type code, originate from the same payer, are subject to the same tax rate, and also, if deriving from an asset or right, they originate from the same asset or right. However, in the case of income from leased or sublet properties not subject to withholding, these can be grouped, applying the same requirements except with regard to income from the same payer, however, when property income from several payers is declared on a grouped basis, it is necessary to state the specific income type code: 35.

The grouping period will be quarterly in the case of self-assessments with positive (payable) result, or annual for self-assessments with result nil or refund.

Filing methods:

  • on paper, generated as a result of printing the PDF form contained in the web portal of the Tax Agency.
  • online, via Internet.

Filing period: depends on the result of the self-assessment:

  • With positive result: within the first twenty calendar days of the months of April, July, October and January in relation to the income whose accrual date falls within the previous calendar quarter.

    Direct billing of the tax payment: in the case of online filing, payment can be direct-billed between the 1st and 15th days of the months of April, July, October and January.

  • With result nil: from 1 to 20 January of the year following the accrual year for the declared income.
  • With refund result: as of 1 February of the year following the accrual of the income declared and within a period of four years from the end of the period for filing the return and depositing the withholding. The deadline for filing the self-assessment will be understood to conclude on the date it is filed.

2.3. Capital gains derived from the sale of buildings.

The obtainment of a capital gain as a result of the sale of a property constitutes an income subject to taxation. This income is understood to accrue when the capital change occurs.

In general, the gain will be determined as the difference between the transfer and acquisition values.

  • Gains accruing from 1 January 2015

    The acquisition value will be formed by the actual amount for which the transferred property was acquired, to which will be added the amount of any expenses and taxes inherent to the acquisition, excluding interest, paid by the transferor.

    If the property that is now transmitted had been leased, the value thus determined must be reduced in the amount of the repayments corresponding to the lease period.

    The transfer value will be the actual amount for which the transfer has been made, reduced by the amount of any expenses and taxes inherent to the transfer paid by the seller.

  • Gains accruing until 31 December 2014

    The acquisition value will be formed by the actual amount for which the transferred property was acquired, to which will be added the amount of any expenses and taxes inherent to the acquisition, excluding interest, paid by the transferor. According to the year of acquisition, this value will be corrected by applying review coefficients which are established annually in the General State Budget Act.

    For properties transferred in 2014, the coefficients are the following: 

    Year of acquisitionCoefficient

    1994 and previous

    1995

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    2012

    2013

    1.3299

    1.4050

    1.3569

    1.3299

    1.3041

    1.2807

    1.2560

    1.2314

    1.2072

    1.1836

    1.1604

    1.1376

    1.1152

    1.0934

    1.0720

    1.0510

    1.0406

    1.0303

    1.0201

    1.0100

    However, when the investments were made on 31 December 1994, the coefficient 1.4050 will apply.

    The application of a different coefficient from unity will require that the investment have been made more than a year in advance of the date of the transfer of the real estate property.

    If the property that is now transmitted had been leased, the value thus determined must be reduced in the amount of the repayments corresponding to the lease period. These repayments are also updated according to the year to which they correspond.

    The transfer value will be the actual amount for which the transfer has been made, reduced by the amount of any expenses and taxes inherent to the transfer paid by the seller.

    The difference between the transfer value and the acquisition value thus determined will be the gain which is subject to taxation.

However, if the property is transferred by an individual who acquired it before 31 December 1994, the gain previously determined may be reduced by the application of a transitional regime.

If the transferor has acquired the property on two different dates, or the property has been the object of improvements, the calculations must be made as if they were two gains.

Partial exemption:

Capital gains deriving from the sale of urban properties located in Spanish territory acquired from 12 May 2012 until 31 December 2012 have a 50% exemption. This partial exemption is not applicable:

  • In the case of individuals, when the property has been acquired from or transferred to the spouse or any person related to the taxpayer by straight-line or collateral kinship, consanguinity or affinity until the second degree, inclusive, or from or to a company associated with the taxpayer or with any of the aforementioned persons through any circumstances established in Article 42 of the Commercial Code, regardless of the residence and the obligation to prepare consolidated annual accounts.
  • In the case of companies, when the property has been acquired from or transferred to a person or company associated through any of the circumstances established in Article 42 of the Commercial Code, regardless of the residence and the obligation to prepare consolidated annual accounts, or from or to the spouse of such person or from or to any person related to him/her by straight-line or collateral kinship, consanguinity or affinity until the second degree, inclusive.

Exemption for reinvestment in usual residence for taxpayers in the EU, Iceland and Norway (applicable to earnings accrued since 1 January 2015):

In the case of taxpayers resident in a member state of the European Union or the European Economic Space with effective exchange of tax information, the capital gains obtained by the transfer of what has been their habitual residence in Spain may be excluded from taxation, provided that the total amount obtained through the transfer is reinvested in the purchase of a new habitual residence. When the reinvested amount is lower than the total of the amount received in the transfer, only the proportional part of the capital gain obtained corresponding to the reinvested amount will be excluded from taxation.

When the reinvestment has occurred before the date on which the form 210 is to be submitted, the reinvestment, total or partial, may be taken into account to determine the corresponding tax liability. When it occurs later, an application must be submitted on the form which is approved according to this purpose, within three months following the purchase date of the habitual residence, enclosing with the application the documentation certifying that the transfer of the habitual residence in Spanish territory and the later acquisition of the new habitual residence have actually taken place. 

Tax rate
Year of return20112012-201420152016 and following
Tax rate 19% 21%

Until 11-07-2015:

20%

From 12-07-2015:

19.50%

19%

The person acquiring the property, resident or otherwise, is obliged to withhold and deposit with the Treasury 3% of the agreed price. This withholding has for the seller the nature of payment on account of the corresponding tax for the income deriving from this transfer. Therefore, the purchaser will deliver to the non-resident seller a copy of the form 211 (with which he/she has made the withholding), so that the latter can deduct this amount from the amount to be paid resulting from the declaration of the gain. If the withheld amount is greater than the amount payable, the refund of the surplus can be obtained.

If the withholding is not deposited, the property will be subject to the payment of the smaller amount of the withholding or deposit to the pertinent account and the corresponding tax.

Tax return form

Form 210, approved by Order EHA/3316/2010 of 17 December, declaring income type 28. However, when the exemption for reinvestment in a habitual residence is applied, the type of income will be declared as 33 or 34, as corresponds.

Filing methods:

  • on paper, generated as a result of printing the PDF form contained in the web portal of the Tax Agency.
  • online, via Internet.

When the property is of shared ownership by a married couple in which both spouses are non-resident, exceptionally a single self-assessment may be made.

Term: three months from the end of the period which the purchaser of the property has to deposit the withholding retention (this period is, in turn, of one month from the date of the sale).

Refund of the withheld surplus In the case of capital losses, or if the withholding made is greater than the liability which should have been deposited, the taxpayer is entitled to the refund of the withheld surplus. The refund procedure commences with the filing of the tax return form.

The Tax Agency may apply a provisional settlement within the six months following the end of the established period for filing the return. When the return is filed late, the six months will be counted from the filing date. If the provisional settlement is not made within this six-month period, the Tax Administration will proceed on its own account to refund any surplus paid above the self-assessed amount, without prejudice to making any later provisional or definitive settlements which may correspond. Once the said six months have elapsed without the payment of the refund having been ordered for reasons not imputable to the taxpayer, the corresponding late payment interest will be applied to the amount pending refund.

3.- Capital gains tax

On a temporary basis, Capital Gains Tax has been re-established temporarily for tax years 2011, 2012, 2013, 2014, 2015, 2016 and 2017, accruing on 31 December of each of these years.

Tax base: The tax base will be reduced, as exempt minimum, by 700,000 euros.

Obligation to declare: All taxpayers with a positive tax liability are obliged to file a tax return. Those taxpayers whose assets and rights have values greater than 2,000,000 euros are also obliged to file a tax return, even when their liability proves negative.

4.- Property tax

This is a local tax, that is, levied by the Municipal Councils, which must be paid by owners of real estate property.

All the real estate properties of every municipality are included in a census and have an assigned value (rateable value). The amount to be paid is obtained by applying the tax rate established by the Municipal Council to the rateable value.

A bill for the payment of the Tax is issued every year for every property included in the census. Usually the Municipal Councils establish the possibility of direct-billing the payment in a bank account, which ensure that this is done within the established payment period and surcharges are avoided.

The period for making the payment varies in every municipality, although it is usually around the months of September, October and November of each year.