Spanish Taxes

What taxes could you have to pay?


Imputed Income Tax.
You pay this version of income tax in Spain if the following conditions apply: 1) You do not reside in Spain, 2) You own property in Spain, 3) The property is exclusively for personal use and you do not rent it out, 4) You have no other source of taxable income in Spain. Although you do not earn an income from the property, in the eyes of the Spanish tax authorities you still derive a benefit from owning a property in Spain and therefore have to pay an imputed income tax.

Tax base: 2% of the cadastral value of the property (found on the IBI receipt), or 1.1% if the cadastral value has been revised since 1st January 1994. Tax rate: 24% (temporarily increased to 24.75% for 2012 & 2013). It used to be 25% in 2006 and before.

Wealth Tax (Patrimonio)
Foreign holiday home owners pay non-resident income tax on their property in Spain. Up until 2008 non-residents also had to pay wealth tax in addition to income tax, which could double or treble their liability to Spanish tax. The main problem was that non-residents didn't receive any allowances to reduce their liability so they had to pay tax from the first euro of assets they owned. They got neither the individual allowance nor the principal residence deduction on property, and so a 450,000€ villa would have cost 1,414€ annually in addition to any income tax on earnings.

The wealth tax is not punitive this time around. There is a starting threshold of 700,000€, In addition, there is a 300,000€ allowance against your home for residents.

Non-residents get the same annual allowance as residents, because the EU would find it discriminatory otherwise (the EU have already made Spain treat non-residents more equally on non-resident income tax for rental income and capital gains tax). However, they do not get the principal home relief because by definition their holiday home is not their main residence.