There are probably not many people who wouldn’t feel a sense of fear at finding the Spanish tax man at their door. Even if you’ve declared every penny that you should you can’t help but feel irrationally guilty.
They are the kind of official who you want to keep at arm’s length and preferably restricted to a signature on a letter, the end of a phone line, or best of all no communication at all. If you are a non-resident with a property in Spain then you can rest assured that the Spanish Tax Authority will be unlikely to be paying you a visit in person. At least at your UK address.
However, before you get too complacent, the latest announcement from the Spanish Tax Authority includes a number of warnings. Some of which take the Fiscal Fraud campaign to a new level. We reported last week about how ‘The tax man on foot’ is the latest weapon in the Spanish Tax Authority’s arsenal. It’s not just communities of owners that they are going to be visiting.
Undeclared rentals are a key issue for La Agencia Tributaria (Spanish Tax Authority). They have already been checking websites to spot non-resident landlords who don’t declare their rental income. Their next tactic is to pay you a visit. Not to your home country, of course, but to your property in Spain just to see if it’s empty, if you’re there in person or, if it is being rented out after all.
Non-residents must pay income tax on the property they rent out in Spain to the Spanish Tax Authority. The rate for the tax is set at 24.75% of the gross rental income.
The rental is payable four times a year:
* 1st quarter (Jan/ Feb/ March) Tax payable before 20th April
* 2nd quarter (April/May/June) Tax payable before 20th July
* 3rd quarter (July/ August/ September) Tax payable before 20th October
* 4th quarter (October/ November/ December) Tax payable before 20th January
The good news is that there are costs that you can claim against it. For example, a mortgage, community fees and council tax charges. Making these deductions can greatly reduce the amount of income tax to pay.
No one wants the tax man making enquiries at their door. It’s much simpler to take advice and pay your tax. With back tax, fines and interest to pay, ending up on the wrong side of the Spanish Tax Authority is no laughing matter.
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.