# Taxation if not resident



## Zena143 (Nov 28, 2009)

Hello everyone

I have been reading the residency thread with interest, but if I could go off at a tangent and ask what the situation is regarding non residents and tax. My Husband and I bought a holiday home last November, we have not stayed in it yet but hope to soon be able to enjoy holidays in this apartment. We have an NIE number and a bank account and have signed up to the Padron and generally started to pay all the various sums to do with owning a property in Spain. However, when it comes to tax I am completely confused. We have no intention of letting/renting the apartment, intend to visit less than four months a year at present (not fully retired yet) but it would seem that there is a need to declare all these negatives just in case on a tax form ? Is this correct ? What should we be doing not to fall foul of the tax authorities?

I have been told that even not renting out - I may be obliged to pay tax on the basis I have (rather like the fact I paid less than the tax authorities consider the apartment was worth and are now demanding a further tax bill on what they considered I should have paid) - anyway can anyone tell me what the amount is and how to go about paying it and is there any point in stating the obvious that I should not have to pay it?

Zena 143


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## Stravinsky (Aug 12, 2007)

Spanish Tax Forms Ltd: Save money! Do your own tax return.

Look in the section saying "what taxes do I have to pay" - That will explain

Ignore the references to wealth tax, thats been reduced to zero

So basically you have to pay a tax on an assumed rental. But its only a percentage, it probably not going to be as horrendous as you think


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## Zena143 (Nov 28, 2009)

Dear Stravinsky

Thank you for that information. I still cannot get my head round the fact that you get charged anyway because the Spanish seem to automatically assume you lie (or is it just British they think lie?) - and that their actions are permissible. Our Abogado has told us to challenge the extra tax they want to impose on our purchase of the property but even he feels we will have to pay some of it eventually, even though he knows as well as we do that we paid X euros and it was all declared to them. 

Still it is almost quaint being ripped off like this, you feel more like laughing than moaning - it is so Fawlty Towerish.

Zena 143


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## Stravinsky (Aug 12, 2007)

Zena143 said:


> Dear Stravinsky
> 
> Thank you for that information. I still cannot get my head round the fact that you get charged anyway because the Spanish seem to automatically assume you lie (or is it just British they think lie?) - and that their actions are permissible. Our Abogado has told us to challenge the extra tax they want to impose on our purchase of the property but even he feels we will have to pay some of it eventually, even though he knows as well as we do that we paid X euros and it was all declared to them.
> 
> ...


Err, well yes I understand your concern. But I'm afraid you aren't being ripped off. It's Spanish law. Spanish law is different to UK law in regard to taxes. You can try and challenge it I guess, probably based on the time that you are in the property yourselves, but I'm not sure how well you will do. Try and keep flight tickets.

As I said to you though, I dont think you will find it is as much as you think its going to be

Good luck


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## bakeja (May 26, 2009)

The non residents' income tax on property they own here does seem something of a mickey take and is ignored by many. This can be a problem if found out. 

We have a client who sold their property last year and paid the 3% retention against capital gains tax. There was no gain so they claimed the money back. Before being repaid the money (about 3000€) they were told to produce all the tax returns for each year of ownership within 10 days. They hadn't done them (because they didn't know of these non resident taxes) and we are now trying to rectify the situation in a very short space of time. Luckily they bought in 2007 so it's only 2 years worth of returns they are late with but there will be penalties.

Another thought on fairness. Rates are much lower here. If you add the rates and the non res tax together it's still probably less than what you would pay on a second home in the UK. Maybe for most people I would think.


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## Rofa (Dec 3, 2009)

bakeja said:


> We have a client who sold their property last year and paid the 3% retention against capital gains tax. .


3% retention sounds a good deal against non-payment of non- residents tax which I believe is 1.1% of the Valor Catastral (revalued post 1994) - at least for non payment over 3 years or so - or am I missing something here? (Yes I know the actual sales value and the valor catastral may differ significantly - though they happen to be about the same for the property I am thinking of in this case)


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## bakeja (May 26, 2009)

Rofa said:


> 3% retention sounds a good deal against non-payment of non- residents tax which I believe is 1.1% of the Valor Catastral (revalued post 1994) - at least for non payment over 3 years or so - or am I missing something here? (Yes I know the actual sales value and the valor catastral may differ significantly - though they happen to be about the same for the property I am thinking of in this case)


The non residents tax is 24% of the "imputed rent" on the property which is, in most cases, 1.1% of the rateable value. So there would be a big difference. EG sell prop for 250.000 which has rateable value of 80.000.

3% of 250.000 = 7.500
24% of 1.1% x 80.000 = 211€ (per tax year)


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## JBODEN (Jul 10, 2009)

Stravinsky said:


> Spanish Tax Forms Ltd: Save money! Do your own tax return.
> So basically you have to pay a tax on an assumed rental. But its only a percentage, it probably not going to be as horrendous as you think


Does the tax have to be paid if the property is a ruin?
How does one go about getting a Certificate of Habitation - does the fact that local rates are paid (uptodate) mean that one has a certificate automatically?


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## Rofa (Dec 3, 2009)

bakeja said:


> The non residents tax is 24% of the "imputed rent" on the property which is, in most cases, 1.1% of the rateable value. So there would be a big difference. EG sell prop for 250.000 which has rateable value of 80.000.
> 
> 3% of 250.000 = 7.500
> 24% of 1.1% x 80.000 = 211€ (per tax year)


Ah - 24% of the 1.1% is what I was missing! Many thanks! 
Mind you the property concerned has a rateable value of 220,00 (and would not sell for much more) and there is 5 years tax outstanding and there would be capital gains - so 3% may still be a good deal on a property bought 10 years ago since CGT is 18% I believe


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