If you own a property in Spain and do not reside in the country, it is important that you are aware of your tax obligations related to the Non-Resident Income Tax (IRNR). This tax applies to income generated in Spanish territory by non-resident individuals or entities.
Why do I have to pay this tax?
Spanish legislation establishes that all owners of property located in the country, regardless of their residence, must declare and pay tax on the income generated by their property. This includes both rents received and an imputed yield if the property is not rented.
How does the IRNR work?
- Taxable income: The taxable income is calculated on the basis of the income generated by the property. If you rent the property, you must declare the total income received. If the property is empty, an imputed yield equivalent to 1.1% or 2% of the cadastral value of the property is applied, depending on whether this value has been revised or not.
- Tax rate: The general tax rate for non-residents is 24% of the taxable base. However, if you are resident in a country of the European Union or in a State that has a double taxation agreement with Spain, you can benefit from a reduced rate of 19%.
- Declaration: The IRNR return must be filed annually, and the deadline varies depending on whether or not income is generated. If there is income, the return must be filed within 20 days of the end of the quarter in which it was generated. For imputed income, it is filed annually.
- Payments on account: If your property generates income, it is advisable to make payments on account throughout the year, which will allow you to avoid a higher tax burden when filing the tax return.
Consequences of non-compliance
Failure to comply with the obligation to declare and pay the IRNR can lead to financial penalties, surcharges and even legal problems in the event of inspections by the Spanish Tax Agency. It is therefore essential to keep up to date with these tax obligations.
What to do if you have doubts?
As tax regulations can be complex and vary according to the particular situation of each owner, we recommend that you contact us for specific guidance and to help you comply with all your tax obligations in Spain.