INCOME TAX FOR NON RESIDENTS:
The GENERAL TAXATION RATE is 24 %.
For residents in the EU, Norway and Iceland, taxation is 19 %
Regarding taxation on Urban Buildings Owned by Non-resident Individuals, when those properties are not rented out, there is an income calculated as the 1,1 % of the cadastral value, or 2 % of the cadastral value if that value has been revised within the last 10 years. The taxation applicable on that resulting income is 19% or 24 % depending on residence of the tax payer, as explained above.
CAPITAL GAINS TAX FOR NON RESIDENTS
The Capital Gains arising from the Sale of Real Estate property is subject to a general taxation of 19 %.
There is an exemption that applies to 50 percent of the capital gains resulting from the sale of urban real estate in Spain which has been purchased between 12 May 2012 and 31 December 2012, but there are some limitations to this exemption.
The calculation of the capital gains takes in consideration the price and costs of the purchase, and the net value of the transmission, but the tax office may assess and verify value of transmission and recalculate the capital gains, under certain circumstances. There is a compulsory 3 % withholding of the selling price, to be paid by the buyer to the tax office, on account of the sellers’ capital gains
WEALTH TAX FOR NON RESIDENTS
Wealth Tax for non-residents is due every 31st December and is applied in relation to properties and rights at the end of each year, and in general, the minimum exemption from which the non-resident must pay tax is the net value of 700,000.
According to Law 19/1991, of 6th of June, of the Wealth Tax, the non residents must pay Wealth Tax on the goods and assets in their name that are “placed or can be exercised or fulfilled in Spanish territory” (article 5.1.b)
The additional Rule fourth of the same law rules:
“The non-resident tax payers that are residents in a country member of the European Union or the European Economic Area will have the right to apply the rules approved by the Autonomous Region where the major value of rights and assets is placed and for which the taxes are demanded because those are placed, or can be exercised or must be fulfilled in Spanish territory”
Subsequently, said tax payers can chose between applying the general state Spanish rule or the rule for the Autonomous Region where the majority of assets is placed.
Non-resident taxpayers are obliged to file a declaration for Wealth Tax in any of the following circumstances:
– Their tax liability, determined in accordance with the regulations governing this tax, and once the appropriate deductions or allowances have been deducted, results in payment or
– When, in the absence of the above circumstance, the value of your assets or rights, determined in accordance with the regulations governing the tax, is greater than 2,000,000 euros.
The above is only an outlook of the basics. If you wish to obtain the complete information and advise applicable to your case, please contact us.