There is an obligation for non-residents in Spain to pay tax, especially for property owners who use Spain as their second residence and even if they do not commercially rent out their property. The relevant tax, known as "IRNR - Impuesto sobre la Renta de no Residentes" (Income Tax for Non-Residents) in Spanish, applies when the property owner spends less than 183 days a year in Spain and is therefore not considered fully tax-resident.
For non-residents who own property in Spain, the law requires the annual submission of a tax return for the personal use of their Spanish property. This process, referred to as "imputación," is not considered in the UK income tax return.
In Spain, all tax matters are handled through the so-called "Modelos." In the case of the tax return for non-residents, the relevant form is Modelo 210, which must be submitted by December 31 of the following year at the latest. Using this form, a calculation is made for a so-called "fictional" income tax, based on the cadastral value of the property. The ownership of property in Spain is considered as income, regardless of whether the property is rented or leased. This tax is personal, meaning that each registered owner in the land registry must submit their individual tax return separately.
The calculation of Modelo 210 is based on the cadastral value, from which 2% is deducted as the tax assessment base. If the cadastral value has been modified by the cadastre in the last 10 years, 1.1% tax is applied. If the property was acquired during the tax year, a proportional calculation of the non-resident tax is made.
It is important to emphasize that the tax rates for the year 2023 are 19% for EU citizens and 24% for non-EU citizens. Failure to submit Modelo 210 on time results in surcharges and fines. This underscores the need to address tax obligations early and take the necessary steps to avoid potential penalties.
If you need assistance in this matter, I am at your disposal. Taxation of non-residents is my expertise, and you are welcome to contact me to clarify any questions. Comprehensive advice can help you avoid tax pitfalls and optimize your financial situation regarding your Spanish real estate assets.