Dec 152011
Spanish Tax Office


Did you know that if you have a holiday home in Spain that you are liable to pay an annual tax and that you must file a tax return, every year, with the Spanish authorities?  In fact, you are liable to pay two different annual taxes in Spain on your Spanish property – to be strictly accurate.

Almost everyone knows that they are liable to pay Spanish rates (IBI – Impuesto sobre Bienes Inmuebles) on their property in Spain and that this is payable to their local authority.  However, less well known (to put it mildly) is that non-resident home owners with properties in Spain are liable to a further tax on their homes payable to the Spanish state.  This tax is called, rather horribly, a ‘Non-Resident Imputed Income Tax on Spanish Property’ or Renta, to give it its Spanish title.

The ‘Non-Resident Imputed Income Tax on Spanish Property’ is a tax calculated on the imaginary income of your property in Spain – as if you had rented it out and received an income from it.  However absurd this may seem, it means that you, as a non-resident home owner of Spanish property, must make an annual tax return and pay the tax assessed on the perceived income earned by your property in Spain.

Needless to say, very few non-resident owners of Spanish property are aware of this particular tax in Spain and so, obviously, they do not pay it!

However, not making a tax return as a non-resident (let alone not paying any tax) can cause real problems and expense.   Usually this occurs when you sell your Spanish property – only to find that you are suddenly faced with paying back taxes that you never knew about, together with interest and penalties.

Bad news!

Recently, I had a meeting with Ábaco in Torrevieja to talk about taxes in Spain and the need to make an annual tax return in Spain even if you are non-resident in Spain and your Spanish property is a second home that you do not rent out.

I went to Ábaco because they are Spanish tax specialists with an international client base and because the Spanish tax authorities have just sent out one million letters to non-resident home owners in Spain warning them to make a tax return.  This letter (see below) from the Agencia Tributaria and entitled COMUNICACIÓN has already caused a good deal of consternation!

In fact, as Caroline Clinton of Ábaco makes clear, it is not just the people who have received the letter from the Spanish tax authorities who should be worried.

“Of course, at this time of year, most second home owners in Spain are out of the country”, Caroline says.  “This means that most will never receive this letter and, by definition, not make a proper tax return and then face not just the tax but sanctions as well.”

In fact, as Caroline points out, “the Spanish tax authorities have been known to remove money owed directly from the bank accounts of non-resident homes owners in Spain.  This is not something anyone would want and may destabilise a bank account for when bills and direct debits fall due”.

So, what is the answer?

Well, frankly, there is no getting around it.  If you have a holiday home in Spain and you are non-resident then you must make a tax return in Spain and pay the tax in Spain that the Spanish tax authorities assess on it.

Meanwhile, be aware that whilst the Spanish tax authorities were not known for their efficiency, in the past, this has been changing, probably spurred on by the present economic crisis. Indeed, during the past year the Spanish tax authorities have finally been allowed to communicate directly with the Spanish Land Registry and with services providers such as the water and electricity companies.  This allows them to establish, more or less, whether a Spanish property is being used full time or not or whether a property is probably being rented out.

My point is that the laissez faire days of old regarding paying tax in Spain should be considered past and so you must now act – if you are to avoid problems and unnecessary expense.

But what can I do and how do I make a tax return in Spain as a non-resident, I hear you ask?

There are a number of ways of making a tax return in Spain but, almost certainly it is quickest and easiest to employ a professional lawyer, gestor or tax expert in Spain to help you.  After all, it is never simple to do anything in another language and ‘fighting’ bureaucracy in Spain is definitely not for the faint hearted!

I have to say that I was impressed by Ábaco who have a solution designed specifically for non-resident homes owners of property in Spain . ÁbacoConnect is an online Spanish tax advisory service.   The service is an excellent idea as it allows you to instruct and enable Ábaco Asesores to file a Spanish tax return for you, even if you are not in Spain.  Their fee is modest and currently, I gather, they have a special offer making their filing of your 2010 tax return in Spain free!

Incidentally, a final word on Ábaco.I was impressed when I saw them, not least because they are a ‘proper’ firm of lawyers and tax advisors, as opposed to the ‘one man bands’ so prevalent in Spain.  Ábaco have 35 employees (in two offices), speak 7 languages, are sophisticated and have specialists in litigation, Spanish inheritance tax, conveyancing and general Spanish taxation.  They also have a strong bias to English speakers and work in an efficient atmosphere that reminded me of a quality UK lawyer’s office in London!

Finally, I should stress the obvious – and that is that if you are non-resident and you rent your holiday home in Spain then you must, in any event, make a tax return in Spain declaring your income.  This should be done every three months.

Nick Snelling


See Ábaco Connect – for Spanish tax advice

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