Non-resident income tax on a Spanish home

This is the obligation foreign owners most often discover years late, usually when they sell and the lawyer asks for the filed returns.

Imputed income

Where a non-resident owns a property that is not let and not their main home, Spanish law attributes a notional income to it. That imputed amount is a percentage of the cadastral value, with a lower percentage applying where the cadastral value has been revised within the relevant period. The tax is then charged on that imputed figure at the non-resident rate, which differs for EU and EEA residents and for others.

If you let the property

Actual rental income replaces the imputed figure for the days let, and the imputed calculation still applies to the days the property was available for personal use. Residents of the EU and the EEA with an effective exchange of information may deduct expenses directly related to the rental, such as community fees, IBI, insurance, repairs and management costs, apportioned by the days let. Non-residents outside that group are taxed on gross income with no deductions.

Joint ownership

Each owner files their own return for their own share. A couple owning fifty per cent each files two returns, not one joint return, and each declares half the imputed income or half the rental income. Getting this wrong is common and easy to correct, but only if it is noticed before the tax office does, since voluntary correction carries a lower surcharge than an assessment.

A worked example: a cadastral value of 180,000 € with an imputed rate of 1,1 % gives an imputed income of 1,980 €. Taxed at the 19 % rate applying to EU and EEA residents, that is 376 € for the year, or 188 € each for 2 joint owners. Professional filing typically costs 60 to 150 € per owner per year, which is modest compared with the surcharges that accumulate on 4 or 5 unfiled years.

Why it matters at sale

When a non-resident sells, the buyer is required to withhold a percentage of the price and pay it to the tax office on account of the seller's capital gain. Recovering any excess requires the seller's tax position to be in order, so unfiled returns from earlier years surface exactly at the moment the money is being distributed. Filing each year, even when nothing is owed on the letting side, avoids that.

One more figure to plan against: professional filing at 60 € to 150 € per owner per year comes to 1,200 € to 3,000 € across 10 years for a couple, while a regularisation of 4 unfiled years with surcharges routinely exceeds that. The cheaper path is also the simpler one.