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Fiscal Representation FAQ

Imputed Income Tax

What is non-residents Imputed income tax?

As a non-resident property owner in Spain you will need to make an annual tax return in respect of the national letting value of the property, which is called Property Imputed Income Tax. Property Imputed Income Tax is a personal tax, and therefore is levied on each of the owners in proportion to their share of the property, and paid for those periods of time during which the property is not rented out, as opposed to Property Rental Income Tax, which is paid on the income generated from renting out your property.

How is Imputed Income Tax Calculated?

The calculations use the rateable value (or valor catastral) as the base figure for the calculation. The taxable base is obtained from multiplying the rateable value by a percentage, following the below rules:

  • 2% if the rateable value has not been updated within the last 10 years
  • 1.1% if it has been updated within the last 10 years

In cases where the ratable value is not known, you can use the purchase price divided by two as the base value for the calculations. In this case, the coefficient applied will be 1.1%.

Once we have calculated the taxable base, the accrued tax is obtained multiplying this value by a percentage, which will be (as of 2019):

  • 19% for EU citizens
  • 24% for non EU citizens

Example:

Property worth €180,000 with a valuation set by the local government or, valor catastral, of €110,928 updated in 2014

The tax amount to be lodged with the Tax Authority is €110,928 x 1.1% x 24%: €292.85

Complete instructions on how to calculate this tax can be found on the Tax Office Modelo 210 Instructions (in Spanish).

I pay income tax in my country of residence, must I still pay this tax?

As Property Imputed Income Tax has no direct reference to actual income received, and instead pertains to a direct percentage of the rateable value of the property, it bears no significance to whether or not the property has been rented out, and in turn, therefore, any income received.

I have not made any income in Spain, so how can I be due income tax in Spain?

Due to the fact the Spanish tax authority assigns an income, or imputed income, or notional letting value to the property, a tax return has to be filed regardless to whether or not the property has been rented and to whether or not the owner has actually derived an income from the property.

What are the exact details of any fines for late payment of this tax?

Non-resident property owners in Spain who fail to pay on time their IRNR, this tax payment must be lodged with the tax office prior to the 31st of December of any fiscal year for payment of the previous fiscal year, are subject to firstly a late payment fine of between 5%-20% and further to which a 5% interest rate of the total amount. In addition to this late payers can expect to receive follow up letters from the Spanish tax office which are all independently priced and which can cost as much as €72 per letter. In cases where non-payment has been identified, legal court action can be raised against the non-payer meaning further costs.

I was never told about this tax before when I bought the property, who is responsible/accountable for this?

If you bought your house with Lawyers of Spain or Lawbird, our Lawyers must have explained what this tax is. Furthermore, on our Letter of Engagement there is an option to hire our Fiscal Representation service. When clients decline hiring this service, we understand they have made arrangements elsewhere, and fully understand the consequences of failing to pay this tax.

Do I need a Fiscal Representative to take care of this tax for me?

Hiring a fiscal representative is not mandatory to submit your imputed income tax return, not even if you own more than one property in Spain (a common misconception still very present among foreigners in Spain).

However, most non-residents hire a fiscal representative to take care of filing in, paying and submitting the tax forms. Not only they avoid the hassle of having to go through this process themselves, they also benefit from the extra services included in the fee during a whole year.

What does your fee cover?

Our Fiscal Representation service covers any dealings with the tax office on your behalf for a whole year, including, but not limited to, the submission of your Imputed Income Tax 210 Forms. As your fiscal representatives we are also in charge of receiving any notifications sent from the tax office, and replying within the required time to avoid costly surcharges and fines.

You may be approached by third parties (e.g. someone at your community) claiming they will offer the service for less. Our recommendation is that you ask this person or company exactly what their service includes. In our experience, you will likely be approached by someone who a) will charge you for helping you fill in the 210 forms, b) filling them for you and let you pay them, c) or perhaps will also pay them and submit them with the tax office. Will they also deal free of charge with the Tax Office in the event you are requested to provide further information on your property/ies, have submitted the tax late and receive a letter asking you to pay a fine, etc? It is very important also that you make sure this person or company is properly established and will not disappear one day leaving you in the dark as to what is going on with your taxes, whether they have paid and submitted your tax forms, or they've just run away with your money (unfortunately, it happens).


Property Rental Income Tax

How much tax do I have to pay if I rent out my property?

As of 2019, the tax rates are established as follows:

Residents of Tax Rate
EU, Iceland and Norway 19%
Rest of the world 24%

Can I offset any expenses?

Only EU residents (including those of Iceland and Norway) will be able to deduct expenses. The list includes:

  • Community charges
  • Interest on mortgage payment
  • insurances
  • IBI
  • Agent's fees
  • Accountancy fee
  • Repairs
  • And any other expense related to the rent

Non EU residents will be taxed on the gross income and not able to deduct any expenses.

How is this tax calculated?

As an example, lets say that you've rented out your property for two weeks in november, and two weeks in december, with a total income of €1000. Your estate agent charges 20%.

As an EU resident, the figures are as follows:

Description Amount
Income €1000
Expenses €200
Base (Income minux Expenses) €800
Tax (19%) €152

For a non EU resident:

Description Amount
Income €1000
Base €1000
Tax (24%) €240

When is this tax due?

The period for filing and paying, as applicable, tax returns depends on the type of income in generated
  • Positive tax returns (to pay): Tax returns must be filed and paid within the first twenty calendar days of April, July, October and January for income accrued in the quarter preceding these dates.
    2021 Rent Period from Rent Period To Filing date
    1st Quarter 01/01/2021 31/03/2021 20/04/2021
    2nd Quarter 01/04/2021 31/06/2021 20/07/2021
    3rd Quarter 01/07/2021 30/09/2021 20/10/2021
    4th Quarter 01/10/2021 31/12/2021 20/01/2022
    2022 Rent Period from Rent Period To Filing date
    1st Quarter 01/01/2022 31/03/2022 20/04/2022
    2nd Quarter 01/04/2022 31/06/2022 20/07/2022
    3rd Quarter 01/07/2022 30/09/2022 20/10/2022
    4th Quarter 01/10/2022 31/12/2022 20/01/2023
  • Zero charge tax returns: These must be filed between 1 and 20 January of the year following accrual of the income in question.
  • Negative tax returns (refund): These must be filed from 1 February of the year following accrual of the income in question and within four years following the end of the period for filing and paying withholdings. This is applicable to all self-assessed tax returns, irrespective of whether the refund derives from.

Do I pay property imputed income tax in addition to rental income tax?

You only pay imputed income tax for those periods during which your property is not being rented out. For example, if you rent out your property for 6 months in a year, and declare the income, you will only pay imputed income tax for the remaining 6 months.