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What taxes do you in pay in Spain?

What taxes do you in pay in Spain?

Suma & Taxes in Spain

So, you´ve decided to move to Spain? One of the pleasant surprises awaiting you happens every year when you go to pay your tax in Spain! (Please note, Spanish Homes.Online are not lawyers or accountants. We simply work with the best in the business to ensure deals for our clients. Any advice is just that- You must speak directly to one of our approve professionals before knowing your obligations for sure. Also, rules change, these are the regulations as of October 2018).

You first job is to get the very best deal on buying a property on Spain- If you are dealing with Spanish Homes.online, you know that already. Congratulations on saving thousands of euro.
As a happy homeowner in Spain, you are liable for Spanish tax.
There are 2 yearly taxes which all Spanish property owners in Spain must pay… They are:

1. Real Es­tate Tax (SUMA tax)
2. In­di­vidual In­come Tax. (even if you pay income tax at home)

1. Council Tax / Real Es­tate Tax /SUMA

We understand why we pay tax, especially local tax. Council tax in Spain, (IBI or Suma) is a local tax which the local town hall (in reality the coun­cil) im­poses on all prop­erty own­ers. That is you and me.
This will cover rubbish collection, street lightening, maintenance of the beaches, anything that benefits the local community in other words.
Each home in the particular mu­ni­cip­al­ity is in­cluded in a census and a value is as­signed to each property. For example in Villamartin, all two bedroom townhouse might have a valuation of 100,000 euro (land value or ca­das­tral value) meaning a yearly tax of 400 to the council. Yes, I did say that you can pay 400 euro per year in Spanish council tax-
The tax cost is based on a sliding tax scale es­tab­lished by the area. Taken into consideration is: the land value, the size of the prop­erty, in­clud­ing all the relevant com­pon­ents like the house itself, pool, gar­age, any extensions etc. If you have ex­ten­ded the prop­erty. Or built a pool without permission- you are in trouble. The councils are using drones to catch people trying to add value to their homes without paying the additional tax. We don’t get it, council tax in Spain is so cheap- why not just register and pay the fair amount?? Anyway, if you or worse still the previous owner of your resale Spanish property, took a shortcut here and the Coun­cil has not been in­formed… you should be aware you can be fined, and you probably will be. If you use one of our recognised legal professionals before you buy, you will not have to worry. Contact us today to see how you can have your legal work done for FREE, if you buy through us!
Cer­tainly the situ­ation must be sor­ted out be­fore you sell your Spanish property and as already stated the local councils in Spain are not ignoring these breeches any longer. If you need help with up­dat­ing the leg­al­ity of your prop­erty in Spain, get in touch! (even if for some strange reason you didn’t buy through us, we´ll try to help!)
The no­ti­fic­a­tion for your SUMA bill or IBI bill is mailed out dir­ectly to the prop­erty for the pre­vi­ous cal­en­dar year. Please make sure the council has the correct address. This tax is usu­ally paid by early Oc­to­ber of the fol­low­ing year. If you know how, you can simply set it up to be paid direct from your bank account- If you´re on dir­ect debit, you needn’t do a single th­ing, maybe go to the beach. If you have not set up a dir­ect debit, we can help- its pretty easy though. The no­ti­fic­a­tion you receive by mail, has a slip at the bot­tom of the page and this should then be taken to be paid at any of the par­ti­cip­at­ing “friendly” Spanish banks. (We advise you just to get us to do it, saves so much stress).
If you already own a Spanish property and you have not been pay­ing this SUMA or IBI bill, we absolutely urge you to con­tact us to get up to date. The only reason you have not been pauing iis becuase your Spanish property agent did not understand the rules or they already had their commissions and no longer care!
Be careful…. as at some stage be ready to see an em­bargo (lien) on your car, or your bank ac­count, or your house. Death and Spanish taxes…. Can’t be avoided, but considering the value for money we get from our local Spanish tax- its a joy to pay it!!

2. In­come Tax /In­di­vidual in­come tax and Non-Res­id­ent tax

Now, the other bit. You can live in Spain and not be a resident, or live abroad and be a Spanish resident. People often quote the 183 day rule but if like most of us, you have family here in Spain ( wives, husbands, kids especially)- you attend work here, have a business here, cars dogs and pet boa all live here and you ( I can’t think of any other way to say it) LIVE here, you must declare income tax in Spain. It might be a Zero debt but either way it must be declared- your worldwide income will be recorded by the Spanish Government. Cal­cu­la­tion and if required pay­ment of the Spanish In­di­vidual In­come Tax can be a com­plic­ated busi­ness. You need to employ a really good accountant- please don’t try to save money here- Its insane.
Officially in Spain in­di­vidu­als are deemed as res­id­ent, once they meet any of these con­di­tions…
they spend more than 183 days per cal­en­dar year in Spain
their main place of busi­ness is in­dir­ectly or dir­ectly loc­ated in Spain
They clearly are living here without a business and speand less than 183 days in Spain.
Ex pat res­id­ents are taxed on world­wide in­come, rental income, pension form the UK or whatever.
Non-Res­id­ent tax or just NRT, is the com­monly used term for the tax on Non-res­id­ent, non Span­ish, prop­erty own­ers in Spain. Its just a small tax, less than 100 euro per year and we can set up a direct debit for you so you never even think about it. This is not a tax on rental income in Spain, in fact many people do not real­ise that they have to pay NRT tax in­di­vidu­ally each and every year, re­gard­less of whether or not their prop­erty in Spain is ren­ted out for a profit.

If the Spanish prop­erty is owned by a mar­ried couple or vari­ous dif­fer­ent people, (families, trusts etc) each per­son lis­ted on the escritura (Title Deeds) is defined as an in­de­pend­ent taxpayer. Each one pays the tax but again it’s not much- A couple might pay 150 for the year- you’ll save that one two runs to the local market.
Once the prop­erty in Spain is only used by the owner and not rented out, the tax is based on an es­tim­ated in­come of the prop­erty´s ca­das­tral value as we discussed above. This particular re­turn has to be presen­ted and paid by 31st Dec each year, for the pre­vi­ous cal­en­dar year.

3. Prop­erty Tax or Wealth Tax.

We loved the idea of paying “wealth tax” back in the day- it suggested we were wealthy. For those of you who re­mem­ber the famous Wealth tax, this was ab­ol­ished in 2009. The government missed it more than we did so then reintroduced it tem­por­ar­ily for the years 2012 and 2013. Good news, it’s been abandoned again. Nothing to see here!
Being tax compliant in Spain makes sense and the government will reward you for keeping up to date with perks of various kinds. Tax in Spain is not high in our opinion, certainly compared to what most of our clients are paying back home. One of our buyers recently said that the cost of his house in Spain was less than his local council tax in Manchester- We hope he was exaggerating!
Span­ish Homes Online can provide fiscal ad­vice, tax and legal as­sist­ance and rep­res­ent­a­tion with all of these taxes. Please con­tact us and we´ll help as best we can.

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