AC Advisors

Taxation for non-tax residents

Have you ever wondered whether as a non-tax resident in Spain you have to file a tax form if you have obtained income in Spain?

The answer is… almost always, but in this post we will explain the differences between the cases that mostly occur among our clients and we will focus on the income obtained without a permanent establishment in our country.

We can differentiate the type of income according to the source of the income.

Income obtained from work

As a general rule, if you carry out work in Spain as a non-resident, you will have to pay 19% if you are a tax resident in another Member State of the European Economic Area or the European Union, and 24% if you are a resident in third countries.

Normally, this remuneration is subject to withholding tax and is paid by the employer, so in this case you are not obliged to file form 210. If, on the other hand, you have received a gross salary without withholding tax, then you must declare this income using form 210.

Income from real estate capital

If you have fulfilled your dream of owning a property in Spain and enjoying more than 250 days of sunshine a year, you are in luck, but you must pay taxes.

If you rent the property, this declaration through the 210 form must be quarterly and follows the following calendar:

– Income from the first quarter: declaration until 20 April.

– Income from the second quarter: until 20 July

– Income from the third quarter: until 20 October

– Income from the fourth quarter: until 20 January of the following year.

In addition, on an annual basis, in the event that the property does not generate income because it is unoccupied, the rules relating to the imputation of real estate income provided for in the Personal Income Tax (IRPF) apply. Thus, by means of form 210, the non-resident taxpayer must declare, as income from real estate capital, 2% of the cadastral value of the property; or 1.1% of the cadastral value when this has been revised in the same tax period or in the previous 10 years.

With regard to income derived from movable capital, this includes dividends and other income derived from participation in the equity of entities resident in Spain, interest and other income obtained from the transfer to third parties of equity paid by persons or entities resident in Spanish territory and royalties paid by persons or entities resident in Spanish territory, or by permanent establishments located in Spanish territory, or which are used in Spanish territory.

For this type of income, the applicable rate is 19%; however, various exemptions are provided for. Thus, when the taxpayer is resident in a European Union country, income derived from Spanish Public Debt, income from non-resident accounts, dividends distributed by subsidiary companies resident in Spain to their parent companies resident in another Member State of the European Economic Area or the European Union and royalties between associated companies, paid to a company resident in a Member State of the European Union or to a permanent establishment of such a company located in another Member State of the European Union, among others, will be exempt.

As regards capital gains, these will be calculated on the basis of the difference between the transfer and acquisition values, being subject to taxation in Spanish territory when they derive from securities issued by resident persons or entities, when they derive from other movable assets located in Spanish territory or from rights that must be fulfilled in that territory; or when assets located in Spanish territory or rights that must be fulfilled or exercised in that territory are incorporated into the taxpayer’s assets. Form 210 must be filed up to 3 months after the sale of the movable or immovable property.

Do not hesitate to contact us to help you with your tax obligations in Spain.

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