# Spanish tax on uk rental income



## dazbear (Feb 22, 2016)

I am thinking of making the move to Spain next year and just need to check my initial understanding of Spanish tax on UK rental income.

I will ultimately take professional advice - but I just need to know if the idea is a general go-er at the moment.

I have got this right?

Rental income on my UK property will need to be declared to UK HMRC
After personal tax allowance and other deductible expenses there will be 20% to pay.

It will also need to be declared on a Spanish Tax return with the following allowances...
50% reduction
less allowed expenses
less 3% of property value as set out in council tax band as 'depreciation' (seems odd)
less tax already paid in the UK

Any gap will need to be made up, but no refund will be due if I have already paid more tax in the UK than would be due in Spain.

Based on my calculations it would result in no additional tax to pay in Spain.

Have I got the right gist?

Thanks for your help.

Lewis


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## dazbear (Feb 22, 2016)

*bump*

Come on guys - surely someone can help by saying - yes or no that I am on the right lines??

The main query is around the 3% depreciation against Council Tax value. Is that correct?


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## xabiaxica (Jun 23, 2009)

dazbear said:


> *bump*
> 
> Come on guys - surely someone can help by saying - yes or no that I am on the right lines??
> 
> The main query is around the 3% depreciation against Council Tax value. Is that correct?


Hi

None of us are professional tax advisors, so unless anyone is in the same position as you, and does their own tax returns in both countries, I'm not sure you're likely to get a reply to such a specific question.


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## dazbear (Feb 22, 2016)

Thanks for the reply.

To be honest I thought it was a pretty generic question for anyone who rents out their UK property whilst living in Spain.


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## snikpoh (Nov 19, 2007)

Looks fine apart from the 50% reduction - why do you think you can get this? (links to info?)


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## dazbear (Feb 22, 2016)

snikpoh said:


> Looks fine apart from the 50% reduction - why do you think you can get this? (links to info?)


Pretty much every website I looked at said you only pay tax on 50% of the net rental as a resident. Apparently it has not long gone up from 40%??

Copied below from one site, but they pretty much all say the same thing.

_*"Rental income worldwide is taxable in Spain for a Spanish tax resident, but only 50% of the net rental income is taxable. *The net rental income is the amount of rent due after deducting the usual day-to-day running costs for the period in question including local taxes, repairs and maintenance, managing agents’ fees and commissions, interest on loans for purchase or improvements and *depreciation of 3% a year of the cost of the property excluding land value. *Deductible items do not include improvements that add further value to the property rather than just restoring it to its former state."_

Spanish income tax for expatriates - Spanish Property Insight

I suppose technically the 50% reduction should have come at the bottom of the Spanish list, as I am reading it that you only have to pay tax on 50% of what is left after all those deductions.

Am I not reading it correctly?


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## mozzo (Feb 23, 2016)

Hi Dazbear, we will be moving to spain this year and will be in the same situation in terms of renting out our UK property. It would be good to know what advise you receive about this but we were just going to declare in spain and pay whatever needs to be paid. Ultimately I think it should work out to be parity or nearly given the bi-lateral arrangements in place between spain/UK government. I cannot see there being a big advantage either way but I could be wrong.
I however think such a question would need specialised tax advise from someone familiar with Uk and Spanish tax


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## dazbear (Feb 22, 2016)

Hi Mozzo

I have done a lot of further reading on this today.

I agree that professional tax advice is ultimately needed, however I needed an initial handle of things as could mean the difference between moving or not!

It seems I was pretty much correct.

CALCULATE AND PAY UK TAX
- Deduct allowable expenses from your rent to calculate UK Net Rent
- UK Net rent is declared to HMRC
- Tax paid at 20% payable after Personal Allowance

THEN CALCULATE AND PAY SPANISH TAX
- Deduct allowable expense to calculate Net Rent Spanish style _(Rent minus expenses minus 3% of house value as set out in your council tax band as depreciation)_
- Declare 50% of your Net Rent on the Spanish Tax Return
- Tax is payable after deducting Personal Tax Allowance (5500 Euros) and any tax paid in the UK converted into Euros

So for me would work out as only 150 Euros per year to pay extra.

Make sure you apply to HMRC to have your rent paid to you Gross, otherwise your agent will take 20% in UK tax on your behalf and you have to then claw it back.


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## mozzo (Feb 23, 2016)

Thanks, I will get my wife to refer to this information. When in Spain she will need to use a registered gestorial service as an autonomo for accounting and this can be incorporated.
We will be renting the property ourselves so no agents to deal with. Less than 4 more months before off to Tarifa.


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## dazbear (Feb 22, 2016)

mozzo said:


> Thanks, I will get my wife to refer to this information. When in Spain she will need to use a registered gestorial service as an autonomo for accounting and this can be incorporated.
> We will be renting the property ourselves so no agents to deal with. Less than 4 more months before off to Tarifa.


Rental from our UK properties will be our only income, so really important we get it right  Have a few more months to wait than you guys though!


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