If you haven’t made an annual Tax declaration as a RESIDENT in Spain, but you own a property here, then you are obliged to make a Tax Declaration as a NON- RESIDENT each year before the end of December.
A typical case is a couple who live permanently outside Spain (in the UK, Ireland, France, Germany or any other country), but own a second home in Spain which is used for their holidays, etc. The Spanish Inland Revenue automatically assume a benefit from the property, to cover the assumption that a property owner is using the infrastructure in Spain, i.e. roads, airports, public services etc., and therefore, should be contributing to the Spanish tax system. They have developed, a self assed, NON RESIDENT TAX DECLARATION to cover this situation, called Deem Income Tax.
Although an owner may not receive any real income or rent from the property, the law presumes an income of 1’1% or 2 %, of the “Cadastral” value, of the property, (the rate used depends on whether the “Cadastral” value has or has not been modified and updated), and the resulting amount is the assumed income for the enjoyment and benefits resulting from owning a second property. This assumed income is then taxed at a calculated rate of 19% for residents in EU, Iceland and Norway and 24% for the rest of the countries.
Many non-residents who live for less than 183 days in Spain and therefore are not fiscal residents, but are owners of second residences in Spain, are not aware of their tax obligations because they have never been made aware of the Annual Deem Income Taxes. As unlike the local IBI taxes, which are calculated and prepared by the local authorities every year, this assumed Income Tax is operated on a self-assessment system and paid to directly to the Tax office. This means that Non-residents have the obligation to prepare, calculate and pay their own Deem Income Tax every year.
The Tax Returns form to be submitted is called, Form 210, and the period for submitting this declaration is a calendar year, from 1st January to 31st December. Any Annual Deem Income Tax due for the tax year 2016 must be paid before the 31st December 2017, so you are still plenty of time to comply with the Tax laws.
Ignorance of the Law is not an excuse for not paying this tax, so we are informing any NON-RESIDENTS who own real estate property in Spain that they should be aware of their tax obligations, and should get professional assistance for preparing, and calculating their annual tax, to ensure that the form 210, is submitted on time. Otherwise, they could be fined in the future by the Inland Revenue.