09 Feb 2009

Are non-residents property owners taxable ?

Published in Legal & Tax

Since the Spanish Government decided in Spring 2007 to suppress the Wealth Tax as from the tax year 2008, some people hurried to conclude that non-residents property owners would not be taxable any longer, except for the municipal Land Tax (which is a tax on the property, not a personal tax) and that from now on, there was no need any longer to have a tax representative. With the publication at the beginning of the year of the so-called “Tax Calendar” of the Agencia Tributaria (Spanish Tax Office), the situation as regards the taxes due this year for the previous tax year 2008 is very clear: the disappearance of the Wealth Tax has indeed lead to the suppression of the tax forms 714 (Wealth Tax) and 214 (simplified Wealth & Income Tax return), but the tax return 210 is maintained, in order to declare the locative value of the property not rented out (2% or in some cases 1,1% of the catastral value), and pay the Income Tax on the said locative value, the tax rate being 24% for non residents. The said tax form must be presented before the 30th of June 2009. Though the Income Tax amount is in most cases rather low, there is clearly an obligation to declare and we can only advise to fulfil that obligation. Needless to say that if a non-resident is renting the property, his tax obligations have remained unchanged, i.e. to present quarterly tax returns (Form 215) and pay 24% of the rents. Cárdenas Real Estate is happy to continue with the tax assistance service to non-resident property owners and to answer any questions related to such matters. By Daniel García Chagrin & Rolande Chagrin Chevènement