Personal Taxes

Impuesto sobre la renta de las personas fisicas
Income tax - In Spain for tax purposes non-residents must still make an annual declaration for income tax. The Spanish authorities are only concerned (in the case of non residents) with the income you earn from activities in Spain, not your worldwide income. Typical examples of this will be interest on any money you have in a Spanish bank account or income you earn from letting your property.

Impuesto sobre el patrimonio (property wealth tax)
The name "wealth tax" may not sound like property legal terminology, but it is an adequate translation of the Spanish name, as it is exactly that, a tax on all you assets and property, your total wealth. This tax started in 1978 as a special measure to force many Spanish citizens who has been hiding their wealth, especially property, to bring these assets into the open.

The base for calculating the tax is the higher of either the assessed value (town hall value), the assessed value by the tax authority or the declared price shown on the Title Deed when the property was purchased. This real value is almost the base for calculating the property wealth tax.

Impuesto sobre el incremento del patrimonio (capital gains tax)
Anyone who buys a property in Spain today will be liable to pay Spanish capital gains tax when they sell their property in the future, this is the same for both residents and non-residents.

Residents pay a maximum of 18% and their capital gains are calculated as part of their Spanish income tax. Non-residents pay a flat rate of 18%. Buyers from non-resident sellers are required to withhold 3% of the total purchase price and pay it directly to the Spanish Tax Agency, thus making sure that the seller does not take the money and run.

The prices used to calculate the tax liability are those declared in the Title Deed.

The Fiscal Representatives
The Spanish Tax Authorities until recently required any person who had dealings within Spain but who was not a full time resident in Spain to appoint a fiscal representative. A fiscal reprehensive is a person who undertakes on behalf of the taxpayer all dealings with the Spanish Tax authorities. The appointment of fiscal representative is the only way in which you can be sure that the Spanish Tax Authorities, who may be unable to contact you, do not take damaging and expensive action against you to collect any sums of taxes, which they allege to be due.

N.I.E. (numero de identification para extranjeros)
As of the 1st January 2003 any foreigners purchasing a property in Spain need a NIE (National Identification Number for Foreigners).

A NIE is needed to hold a Spanish insurance policy, to open a bank account, to buy or to sell property and to pay any taxes. It is necessary for practically any transaction in Spain.

This is obtained at the foreigners department of any foreign office. Your lawyer can apply for it on your behalf, and some estate agents can arrange this for you.

It is impossible to give tax advice without detailed knowledge of your personal circumstances. You should therefore treat this guide as no more than background reading designed to give you some idea of the structure of the tax system in Spain.

We can accept no responsibility for any action that you take or fail to take as a result of reading this document and strenuously recommend that you seek professional specialist advice in these matters.