This post will provide you with further details on the fiscal/tax obligations that should be taken into account when initiating the process to acquire a property in Spain, and more specifically the obligations that arise from owning a property in Spain, and what a correct CONVEYANCING service should anticipate in the interest of the client.
These fiscal/tax obligations should be taken into account not only by future property acquirers, but also by current owners, in order to comply with the fiscal/tax obligations ownership is subject to, and to avoid any surcharges or sanctions that may arise from it.
- PROPERTY TAX (IBI). This is a Council Tax managed by the District Council corresponding to the property location, and is annual. It is calculated based on the cadastral value (not the sale value of the property), and the District Council will inform you of the payable rate and the corresponding settlement period, within the yearly voluntary settlement period
Expert advice.
During the property acquisition period, one of the most important aspects in the task of CONVEYANCING is to investigate and certify the absence of debt or taxes affecting the property. With regard to the Property Tax lien, and according to state regulations, it could result that the responsibility of settlement of the last four yearly rates (if unpaid) are to be settled property acquirer. Therefore, it is necessary to demand a Non-debt certificate from the vendor. The certificate should be issued by the corresponding District Council (in many cases the latest payment certificate is presented, this does not mean that no previous debts exist)
- NON-RESIDENT INCOME TAX (IRNR). In accordance with the regulations in force, non-resident taxpayers who are owners of property in Spanish territory for their own use, are subject to Non-Resident Income Tax corresponding to that property. This is an annual tax that should be settled before the 31st of December subsequent to their accrual (the Non-Resident Income Tax corresponding to 2016, should be settled before the 31st of December 2017)
Expert advice.
The tax rate is published officially for each year, for 2016 the following rates are applicable:
- Citizens of the European Union, Island and Norway. 19%
- Other taxpayers. 24%
Therefore, the taxpayer’s country of origin determines the tax rate applicable, as we can see, this is one of the few clear suppositions where the consequences of BREXIT could directly affect the legal rights of non-resident British citizens owning property in Spain. On the other hand, and as we stated in a previous post, it is also relevant to mention that citizens of some non-EU countries (Island and Norway), have the same fiscal/tax rights as EU citizens via the corresponding bilateral agreements.
Do not hesitate to contact MSG LEGAL for advice on the different fiscal/tax and legal aspects our CONVEYANCING service comprises.
