Spain Explained

Disclosing property rentals in Spain

In 2012 the Spanish tax authority uncovered 4,700 undeclared rentals as a result of information received from the electricity companies. This is probably the tip of the iceberg. Many non-resident property owners who rent out their property in Spain still seem to be unaware of the need to declare their Spanish rental income to the Spanish Tax Authority.

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Sometimes property owners have been encouraged to think that it doesn’t matter where they declare their income as long as it is declared somewhere. This is misinformation as there are strict rules that govern where tax should be declared. The good news is that wherever you do have to declare it you are not charged in duplicate. The double tax agreement between the UK and Spain means that you will not have to pay twice.

The tax on rental income for non-residents should be paid in Spain. It is due every quarter during the year that the property is rented. That some property owners remain confused about this has lead to massive underpayment.  The last guesstimate was that 3,000 million euros of tax on Spanish rental income remains ‘unpaid’.

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Understandably, there is a clear drive to ensure that those avoiding paying tax on rental income in Spain are followed up. One of the measures being used is the sharing of electricity bill information between the electricity company and the tax office. A property owned by non-residents that is rented out will have all-year electricity use.

If you don’t rent out your property and you are a non-resident then you should be paying imputed Spanish income tax instead. If you’re not paying either, you are breaking the law. There is a new offensive with  high hopes for the amount of extra revenue that the Tax Authority should be able to recoup by targeting illegal lets. Last year 10,043 million euros was allegedly collected as a result of tightening up on fiscal fraud. The authorities are hoping that they’ll be seeing more than the tip of the rental-tax-avoidance iceberg very soon.

To help navigate the bureaucracy of the Spanish tax system, our dedicated advisers are on hand to help at every step of the way. Contact us and we will offer you a free consultation without obligation.

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4 comments

Glenda Lake

14 October, 2018 7:48 am

Will I pay more tax if I sell
Will I pay more tax if I sell my Spanish house as rent to buy than an outright sale? I understand I need to pay tax on the rental income. I am non resident.

Suzanne O'Connell

23 October, 2018 2:07 pm

Hi Glenda

Hi Glenda

The tax is the same on selling. However, if you rent before then you pay rental tax on the income. 

Alistair Ness

20 January, 2020 2:19 pm

I am a UK resident with a second home purchased in Arboleas. I propose to live in this property for about 6 months of the year, and intend to rent the property out, and have been advised that if the property is rented out for less than 120 days a year, then the rental income is not liable for Spanish tax. Is this correct.

Oscar Paoli

20 January, 2020 3:16 pm

Hi Alistair,

You are liable for Non Rental Income tax, irrespective of the number of days rented out. For British nationals once Brexit is completed on the 31st of January you will be liable to pay the Tax at 24% (19% before Brexit) on the gross income received, after taking into account costs.

With kind regards,

Ábaco Advisers